it is 5:00 a.m. at cnbc global headquarters. here is your top "five@5." wall street waking up with a black eye after yesterday's broad based selloff with the dow swinging more than 1,000 points before ending the day sharply lower. this is all after fed chair jay powell delivered a 75 basis point hike for the fourth time in a row and admitted rates will top out higher than expected investors are bracing for a one t

one-two punch from the bank of england. and elon musk gets set to pull the atrigger on the cost cutting measure that could cost employees their jobs. and the china stock market rebound ends as beijing reiterates support for zero covid policy we have reaction ahead it is thursday, november 3rd, 2022 you are watching "worldwide exchange" here on cnbc good morning i'm dominic chu in for brian sullivan let's chieck on the stock futures. stable dow imply lower 16 points. s&p down 5 and nasdaq down 25. not bad. it is not great. this is all after a wild swing for stocks

the dow moved 1,000 points from the high point to the low point only to end the day sharply down lower. we got a nice move higher and the fed rate announcement and move to the lows of the session down 506 points by the time things were said and done. it was worse for the s&p and nasdaq ending down 2.5% and 3% respectively fed rate hikes jay powell delivered the fourth straight 75 basis point rate hike he warned the pace of hikes may slow down, but the central bank's terminal rate will top out higher than they thought in the wake of that sentiment and statement, yields are moving higher the 10-year benchmark at 4.15% 2-year treasury below 4.69%. in energy prices, we are seeing a drop off there demand is a concern.

economic slowdown is a concern u.s. benchmark wti is $88.70 down 1.3%. ice brent is off 1.25% natural gas down 3.5%. in cryptocurrency. they are stable compared to other parts of the market. we are watching the 20,000 level for bitcoin. we are higher today. $20,307. a third percent gain for ethereum post fed reaction around the world is obvious we are seeing red. more in china. we have the hang seng and hong kong down 3% .20% for shanghai composite. let's go to what is happening in europe right now we are off the session lows. we are still down fractionally

dax off .50% similar for the cac in france and ftse 100 in uk is down .25%. and it is not just the fed here, but the bank of england policy decision is on deck the boe is expected to announce the biggest interest rate hike in more than three decades amid the market turmoil joumanna bercetche is outside the boe and joins us now joumanna, good morning what can you tell us about the expectations it is pretty much baked in what will they do? >> reporter: that is the question a 75 basis point hike is priced in if there is a price, it would be a dovish surprise and 50 basis point hike 75 points is the highest the

bank of england will deliver since 1979 this all with the pressures in the economy. headline flinflation at 10.1% wage pressure at 6%. the bank has the price stability to set inflation at 2% these numbers are making them feel uncomfortable af this is all after the mini budget turmoil i would say, dom, one of the bigger issues here is the bank of england attempt to restore credibility in themselves as an institution. the whole country has been going to the credibility crisis not just because of the fiscal outlook, but concerns of the bank of england's handle on inflation given how high inflation levels are running in the economy. yes, we will get an interest rate hike today.

similar to yesterday, they want to see what happens going forward and how willing they are to take interest rates in the environment where we see growth dropping off as well >> joumanna, i wonder, we've been reporting on this idea we have seen in the u.s. four straight 75 rate hikes for four straight times for the bank of england, why did they take so long given their inflation picture is worse than ours here in america >> reporter: very valid question the question that the governor has had to respond to. i supposed the same question to him. he said if we could do things retroactively and we had all of the information, we would have acted differently. the bank of england started hiking cycle sooner than any of the other developed central banks. they started in december

it took a while for the jumbo hikes. this is the first time they have done this since 1989 this is the issue, docm. they are forecasting recession for 2023 they will likely downgrade that further come today they are in a tricky situation where inflation is sky high. the growth outlook is getting worse and worse as the market accounts for higher terminal rate one thing at the end, going into the last meeting in august, the market was pricing the rate at 3 percentage points. now 4.75 the market still has some way to go as well similar to the fed to get the inflation levels in check. >> joumanna bercetche live in london outside the bank of england. thank you very much. let's get to the top corporate stories with silvana henao. >> dom, good morning

elon musk is finalizing plans to fire asf much as half of the wor force. musk will have in-office mandate. the cost cutting measure as musk is struggling to keep advertisers on board and plans to rollout a premium $8 subscription service fisker confirming to cnbc it is on track to begin production of the suv later this month and has 62,000 reservations for the vehicle. that is up from 56,000 back in august the company ceo says his company will be able to produce just over 42,000 ocean suvs by the end of next yeear. executives at trump's truth

social are naming parler and rumble as acquisition targets. among the documents a photo depicting a flow chart describing trump's new media empire that could also include one america news and news mask and discord, dom silvana henao, thank you very much. back to the top stories. investors reviewing the fed's fourth straight rate hike and jay powell's promise to keep his foot on the accelerator. >> it is very premature to think about pausing. people hear about lag and think about pausing. that is premature in my view to talk or think about pausing our rate hike. >> joining me now is vice president linda bakhshian. linda, we saw the knee-jerk reaction in the markets.

that is not uncommon for the catalyst of this nature. why the disconnect what was so confusing about the statement and then the clarification need from jay powell from the press conference to say don't tilt as dovish. we're hawkish about this >> well, i think essentially powell really needed to thread the needle here. if he even gave the notion he was easing up on rate increases, then the markets would have had, you know, a crazy amazing day moving higher and creating move of an issue. he opened the door of a possibility of a lower rate increase in the future, 50 or 25 in the next couple months also knowledge that financial conditions are tighter and also raising the notion that higher

rates will stay higher for longer as the clip mentioned, no pause whatsoever for the markets to misinterpret what he is going to do once the dust settles, i think it is acknowledging the pace and level offed increases that has been so far this year and hopefully they are not on auto pilot, essentially driving the economy off a cliff, by stating there is considerable developments that actually should be positive longer term for the market is. that will mean going from data dependent to being forecast dependent. once the dust settles, that could be positive for the markets. >> linda, at the end of the day, you mentioned this could be the right course of action is it enough and when would we

likely see some of the real inflationary pressures start to ease off in the u.s. economy is it the middle to the end of next year or in 2024 or beyond there is a policy lag. how long will it take? >> so the first set of rate increases went into effect the second quarter of the year given there is almost a six-month lag between the first rate hike and once you see it in the economy, you will start feeling the effects of the third quarter and current rate increase some time in the first half of next year. with energy prices coming down or moderating and tougher numbers in march and april of next year and wage growth is starting to moderate and you are starting to see companies, you know, essentially freeze or as mentioned earlier in the

newscast around twitter firing people, i think that means you will see inflation march downward again, going to 2% could be a little bit longer toward the end of next year you will certainly see the pace of that inflation start to fall and numbers moderate from here. >> all right linda bakhshian of federated, thank you. when we come back, china doubles down on zero covid policy not shocking. and carl icahn has a new policy taking on a beverage. and ad-supported subscription tier for netflix. we have a very busy hour when "worldwide exchange" returns after this break

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welcome back to "worldwide exchange." china reiterating support for the zero covid policy. crushing rumors china is creating a committee markets reacting in kind after the two-day rally on the possible, hypothetical reversal rumors major attention remains on the area of iphone city where a

nine-day lockdown gets set to close out the second day eunice yoon has the latest from beijing and the zero covid policy eunice >> reporter: dom, local authorities told reporters they will disinfect the foxconn plant in the next three days they said anyone who is quarantined is going to have to take a covid test every day for the next seven days before they will be allowed to go home this all comes as china continues to vow to stick to zero covid policy. the national health commission, the top authority, said they would unwaveringly go zero covid and residents need to stay alert in the early days of covid meanwhile, the costs of the covid policy have been mounting from the economy not only is the latest october data showing that the services

activity have fallen off, but local authorities across the country have started to announce they will pass the cost of the covid test which is free currently, on to the chinese public this is covering the manufacturing area all the way to certain poorer parts of the country in guizhou the fee range is still ref relatively cheap there is grumbling of the added pressure for the people. we have some good news despite all of this. nio, the ev maker, resuming production after yesterday saying it had to suspend production after, dom, macau has reopened after testing everybody there.

resulting in the all clear for them to reopen >> so, eunice, we have an interesting story up on cnbc.com right now talking about the business environment in china and the economists basically reporting that what we are hearing from companies, their words, they are moving ahead with supply chains diversification plans because this start/stop economy is here to stay in china is business going to be affected given we see real world examples of businesses shutting down and restarting because of the zero covid policies this would be the policy for any issue going forward with regard to public health >> reporter: absolutely. we've already been seeing it on large scale as foxconn and also on the smaller scale as small business that maybe selling laundry or clothes or what not

it is very difficult to plan a lot of businesses, you might think you open one day and suddenly you are caught and told there is a close contact you don't know anybody who has gotten sick, but suddenly locked in your home or isolation facility for ten days. you have no idea there is no consistency of the way the regulations are carried out. because of that, business people here are having to plan for a lot of the uncertainty it is difficult to do which is why so many are looking at other ways to keep the business going which might not meaning having as much investment in china. >> eunice yoon live in beijing with the latest on zero covid. still on deck, the biggest money movers and the tech stock hit hard by the advertising slowdown we are back on "worldwide exchange" after this -reward anas

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welcome back to "worldwide exchange." time for the big money movers. etsy reporting a third quarter loss with the charge of the write down of acquisitions including d-pop. revenue rose as sales declined following the increase of the transaction sellers on the

platform up next, roku. posting a smaller than expected third quarter loss as revenue grew 12% shares are tumbling as the company warns sales from the two main businesses. advertising and streaming hardware will fall in the faourt quarter. they are reducing spending with economic uncertainty roku shares are down 19% pre-market finally qualcomm fourth quarter profits topping estimates, but revenue missed forecasts. it is slashing the forecasts for the chips for smart phones again. qualcomm has a hiring freeze and could make further cuts if necessary. the ceowill be on "mad money" with jim cramer at 6:00 p.m. you had amd yesterday and you have qualcomm today. a lot of chips covered on "mad

money. traders look as an indication for the tech sector. as we head to break. history in the majors during the world series game four as christian javier and astros combine to throw the second no hitter in world series history 66 years after don larson's perfect game for the yankees back in 1956 this series now tied 2-2 with the phillies hosting game five tonight. what a pitching display by the tros good job we'll be back after this break

no pivot no pause that's the message from fed chairman jay powell. >> it is very premature to be thinking about pausing so people when they hear lags, they think about a pause that is premature to think about or talking about pausing our rate hike. >> he is contradicting himself putting the kibosh of anything resembling a pivot investors seeking safety with stocks off the sharply lower session yesterday. futures right now are mixed this morning. netflix rolling out its long anticipated ad-supported tier

today. is it too little too late for the stock that is down 50% this year it is thursday, november 3rd, 2022 you are watching "worldwide exchange" here on cnbc welcome back to "worldwide exchange." i'm dominic chu in for brian sullivan let's kickoff this half hour with the dow implied lower by 8 points s&p lower 3 points nasdaq down 18 points after the selloff. in the bond market, yields are on the rise. 10-year treasury note is drifting higher to just a little below 4% again, the entire yield curve all maturities moving higher

with rates that means bond prices are falling. all of this with the fourth straight 75 basis point rate hike in a row and downplayed any speculation of a pivot in the months ahead >> it is very premature to think about pausing. people when they hear lags, they think about a pause. it is very premature in my view to think about or talking about pausing our rate hike. we have a ways to go our policy, we need ongoing rate hikes to get to that level of sufficiently restrictive we don't really know where that is we have a sense. >> then there is double line ceo jeffery highlighting the fed policy tightrope. >> he contradicts himself with the dovish we tightened a lot already and suddenly we think rates are

going higher than we thought about. he put the kibosh of the idea of anything resembling a pivot or plateau of some time i think that really was intentional. >> a lot of commentary to digest joining me to talk about it is josh wein at hennessey funds josh, you saw the market reaction yesterday very big to the up side and then to the down side we closed at session lows. is now a time that you think that stocks will be revalued again based upon this outlook from the fed >> good to be with you, dominic. i think we're at the end of this cycle where investors think that we're going to pivot or pause or they will moderate and change their language dramatically. the fed either a governor or chairman powell comes out and says no, not so fast

i think that the five stages of grief. i thought we were in the acceptance stage now we're back in depression i think the fed is just making it clear that, you know, we waited too long and now we're doing this, we have to put the economy in a little bit of a fed induced cocoma i think we see the light at the end of the tunnel where bad news or unemployment rates or gdp growth, bad news is good news. the fed will have the ability to cut. might not be in the next six months, but next 12 months i think that the fed is doing their best to look serious i think we all know that certainly the days of 75 at a time could be over i think that is what they were trying to say. i think 50, you know, we will see more 50s and then maybe some 25s for a while. i think we're kind of coming to grips with that. i think we're near the end of

this dramatic up and down intradin intraday like yesterday. >> josh, you get paid to make stock predictions. did anything you do yesterday change how you do your job today? >> no. we look out at a year if not longer if it was looking out a week or two, i'm sure we would have to, you know, change our thoughts and positioning. no, i think we are still looking at our hennessey cornerstone midcap 50 looking atomentum. there are plenty of great ideas. things that fly under the radar. no, i think that's the problem notwithstanding the move yesterday and i don't think a lot changes. >> what's on the shopping list, josh >> sure. i think names that fly under the

radar. we talk about the same names as investment community sunoco products. consumer and industrial companies. just very slow and steady wins the race and super microcomputer. one of the tech companies that no one talks about the low margin equipment side of technology less than ten times earnings we see revenue acceleration. they expanding capacity. they sell storage products we saw a great earnings report some of the names don't get a lot of attention nothing very sexy about them this is a great environment to have companies like that a lot of visibility and a lot of stab stability in their business model. >> a rare winner in the down are

market josh wein, thank you very much let's get to the top corporate stories of the morning with silvana henao >> dom, good morning loreal is denying reports of suspending advertising on twitter. it is one of the top ten advertisers and spent billions on the products promotions alone. musk-owned twitter according to the financial times is having difficulty of keeping advertisers on board asking them to stay with us as we move through the leadership transition this comes as musk is reportedly preparing to fire up to half of the work force as soon as tomorrow and rollout an $8 a month subscription service carl icahn has taken a stake in crown holdings and urging to sell non-core units.

according to the wall street journal, the investor has a stake worth $700 million making him the second largest shareholder. crown has a market value of $8 billion. shares have lost 40% of the value this year. reports that the justice department is preparing to inde adobe and figma. if confirmed, the investigation would be the latest in a string of actions from the regulators targeting market power of the biggest tech companies >> silvana henao, thank you. blackrock is responding to critics in the investment community pushing back on the esg initiatives. leslie picker is joining us now with the story

>> reporter: dom, blackrock is one year into the voter choice program. this is something chairman and ceo larry fink says is part of the shareholder revolution he is saying the status update on the program and in a new letter to the clients and ceos the goal of voting choice is to give the clients the pension funds the option to vote on behalf of the stock they hold passively through index. the voting decisions, including matters like board composition and executive pay and disclosures of esg issues were outsourced to blackrock's stewardship team to date, clients representing 25% of the $1.8 trillion in eligible assets are enrolled the program is blackrock's asset

manager has become too powerful and has an esg oriented agenda 1.5 billi$1.5 billion has been d from the state funds with the efforts of esg which run counter to the state fiduciary duties. blackrock says it delivers the best outcomes. dom. >> leslie, there is a lot. you mentioned the political side of things. this is not a political story, but there are politics at play with that much money taken out we have an estimate, i think, the last count was 36 gubernatorial races up for grabs in the mid-term elections coming up next week 36 out of 50 what is the likelihood we could

see more change in terms of how states invest their money given an election outcome where there could be a lot more red representation, hypothetically, when it comes to this investing? >> you bring up a really, really important point here as much as we like to that i passive versus active investing is not political it is dollars and cents. 2022 shows it is political there could be more backlash where more states could take money out and divest from blackrock. if it is true, if it amounts to be the case that more republicans take control of gubernatorial elections and win, then it would not be surprising to see some of them follow suit with many of their peers

divestindi dives divesting from blackrock leslie, thank you. is it too little too late for netflix which stlo half the stock value this year? we will debate that coming up next another busy day? of course - you're a cio in 2022. but you're ready. because you've got the next generation in global secure networking from comcast business. with fully integrated security solutions all in one place.

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now data is available anywhere, securely. and your digital transformation is helping find new ways to unlock energy around the world. welcome back to "worldwide exchange." netflix is rolling out the ad-supported tier in more than a

dozen countries. it is $6.99 a month and basic with ads plan coming a month before disney plus launches its own ad-supported plan. this netflix is the streamer in. you have shows like "you" and "grey's anatomy" at risk as well as others. joining me now is alex kantrowitz alex, is this the savior or silver bullet that solves netflix's growth problems? >> i don't think it is you heard jay powell yesterday we are going through a fundamental issue with tech problems unlike amazon, it is not a platform the company is commissioning the entertainment appearing on that

service. so you don't have user generated content to build on top of it. netflix was worth more than disney at some point disney can build a streaming platform and it did. now you see this shake out netflix versus disney. instead of netflix in a different category i don't think ads is the savior. we are revaluing tech companies and it is tough for netflix. >> alex, this should lead -- you are giving consumers more of an option let's say i pay for the netflix service right now, but i'm okay with ads do i downgrade my subscription or if i don't have netflix, do i think about getting one because it is no longer $16 or $18 a month? it is only $7? >> dom, i'm with you this could be good for netflix i think it could reduce termubss

they did have a good quarter this recent one. when you asked the question about this being a savior for netflix. you mentioned netflix is dow 54% on the year. it is still fairly expensive $121 billion company disney is $185 billion netflix doesn't have theme parks the last time i checked. this is going to be good for netflix. say it will reverse on the 54% decline on the year? that is a stretch. >> if you look at the ad tier and disney plus. i look at results from paramount yesterday and some of the other streaming platforms out there. i hear the roku comments what does this mean then if there is an economic downturn at play for the streaming platforms and the prospects? >> the economic downturn will be

rough. there is positive in there for the streaming. if you are not going out, you are sitting home and entertainment services are valued more than before. it will be tough for everyone. you mentioned economic downturn. you have more competition. one of the streaming services you didn't mention is prime. $139 a year. that's $11 a month on annual basis. they are just going to keep investing in content over at amazon they are able to take on more tough sledding for all of the services i think netflix in particular has a rough hill >> streaming state of the union. alex kantrowitz. thank you. on deck, this morning's rbi and under the radar names that have been quietly making investors a lot of money in the down market. we'll be right back after this

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welcome back there is a slew of economic data weekly jobless claims and october services pmi and the manufacturing services numbers as well. you have earnings from conoco and starbucks all set to report results. you have president biden heading to new mexico to deliver remarks on student debt relief a plethora on the docket today. now for something random but interesting, we go to brian sullivan >> it is time for the morning rbi. something random butting inter interesting that has caught our eye. we will not mention the federal reserve.

we just did. let's focus on stocks. you know, apple and aemdmazon a usual ususpects get the top nod but there are others let's highlight the market all stars. we will use one month returns to find the best three stocks in the s&p and midcap 400 and 600 in the last 30 days. the big dogs in the past 30 days, the biggest moves up in the s&p are norwegian cruise lines rose 49% dexcom up 47% oil services firm halliburton up 47% in 30 days not to be outdone, the biggest moves in the midcaps championx. involved in the natural gas and oil business avis budget.

try to rent a car lately stock has been rocking and macerich the mall owner and the big dogs of the small cap world. you have rayonier. it doubled helix energy up 80%. and oil states international up 76%. oil and energy and natural gas in the one-month all stars it is the small caps for the win. many winning for are investors lately it is a random but interesting reminder that as much as you have to focus on the big names, you also want to look for some of the smaller names which are often left out of focus. hopefully random but interesting. >> random but interesting. thank you, brian sullivan. let's bring in sam stovall he keeps his eyes on the markets all day. he gets paid to do so.

sam, you heard brian's report there on what has been leading the way higher i guess there is so much focus on energy and materials and commodities. is this the area which still has opportunity or has gotten too expensive in the last year >> when you say this area, i presume we continue with brian's forecast of small cap stocks looking relatively attractive. from the momentum perspective and from the thought that they peaked in the latter part of 2021and experienced their own bear market well ahead of large cap stocks i think they are trading at valuations that do look relatively attractive. i think, however, because of the markets response to yesterday's fed decision to not sound as dovish as the market anticipating, we will still look for those areas in the defensive

and inflation hedge areas likely to do relatively well. s staples and health care and energy from the inflation side. >> could i bring back to the small cap conversation we opened the door for it there, sam. the conventional wisdom had been in the past that when you have a forecast for what could be a market economic down turn, it is the large cap stocks that tend to do better because their balance sheets are stronger and they hold upp better in the downturn why the outperformance right now and why do you think small caps could out perform given the inflation and recession narrative over the next6 to 12 months and beyond? >> i think, dominic, as we see today, the market is really not

continuing its nose dive that it incurred yesterday what is happening is ourselves including and a lot of economists are projecting the fed will go to a 50 basis point hike in december from the 75 expectation. as we enter 2023, we will probably have another 50 hike followed by 25 with the fed then looking to pause and pivot by lowering rates late in the second half of next year i think investors are beginning to look across the valley. they are looking at those areas that will likely benefit from the pause then pivot from the fed. the mid and small cap area is getting attention. >> the bottom is in? >> i think the 3,500 level appears to be the bottom in the near term. expectations are we could look

at from the technical perspective that is the target from the head and shoulders pattern that developed earlier this year. also looking at pe ratio declines on average during bear markets, et cetera i think the line in the sand is the 3,500 level. we are in the best six months of the year from the seasonal perspective. we probably could see encouragement and seasonal optimism kick in between now and year end and early in the new year. >> regular seasonal optimism is at play in the fourth quarter of any calendar year. this year is somewhat different. it is a midterm election year. how much do the elections coming up next week affect the way you are looking at how the markets are valued right now >> dom, the fourth quarter of the midterm election year is the

second strong evident with average price change up 6% since world war ii and frequency of advance is 80% positive if you look at the first quarter after, the first quarter of 2023, average gain is 6.9% frequency of advance of 90% of the time even depending whether you are looking at a change to the house or the house and the senate, historically 12 months after the october 31 date of the mid dete ter election year, market is higher. average total return is 21% sglfr21%. >> sam, risk free money at attr? >> i think they are. we will see 10-year treasurying moving higher.

we will end 2023 lower than 2022 sam stovall, thank you very much let's look at stock futures right now. pointing to marginal losses following the selloff yesterday. that does it for us here on "worldwide exchange. "squawk box" has coverage coming up next. see you tomorrow this is financial security. and lincoln financial solutions will help you get there. as you plan, protect and retire. ♪

good morning fed chair powell pledging to stomp -- stamp out, get rid of v vanquish inflation hopefully it is not our terminal rate a full recap is straight ahead. new reports say twitter may layoff 50% of the work force

this comes as new owner elon musk traded jobs with aoc on the platform plus, stocks in hong kong retreating jerk after chinese officials reaffirm commitment to the zero covid policy it is thursday, november 3rd, 2022 the morning afternoon. "squawk box" begins right now. good morning welcome to "squawk box" here on cnbc we are live from the nasdaq market site in times square. i'm rebecca quick along with joe kernen and andrew ross sorkin. that's right this is the morning after. look at the u.s. equities futures. you will see red arrows. you are no