Well see if the fed numbers have any effect. In our road map this morning. Tesla slapped with a downgrade on valuation. Well hear about the companys future from the ceo. Microsoft set to cut more jobs. And apple watch sales plunge 90 . Well run through some of those numbers. First, futures are up sharply. Steps by chinese officials to stabilize markets and restore Investor Confidence failing to start the slide. A lot of the trading, brokerages people are obviously upset. Companies are being asked to buy their own shares in the national interest. Its getting interesting. I think that its terrible. I think that i want to be really clear about this because panic is a bad, not a strategy. Someone was saying on twitter, is it a falling knife . This is 100 signwayteinways coming at you. And this market is a little bit bigger than we thought. Its only 40 of the gdp but there are some horrifying statistics and these numbers are all phony. 74 of the stocks arent even trading. You cant get out of them. If they let this thing fall you would have seen a 1987 sell off. This market has to get to where it has to go. Heres some figures i think should be front and center. Nasdaq composite, we were at remember, we peaked in march of 2000 but when 123099 we were at march, we were at 5100. Keep these in mind because the decline is as vicious over there as it was here. The the shanghai peaked on june 12th. It was dune in 29 days 36 . Our market in 29 in three months was down pretty much the same but you could actually make the case if you look at nasdaq comp versus s have amazing versus shanghai 36 decline in china. There is some overlap being done on the two market declines. You wouldnt be able to tell which one. A lot of people doing work on the correlation between shanghai and the u. S. Shanghai the world of the rest. The spokes saying there is no market in the world less correlated to everything else. It was up 150 earlier in the year. We did something. Are we expected to follow them on the downside. That would be good if there were no connections between wealth and consumer. And there are a lot of people over there, you know remember, they were opening 1 million accounts a week. We dont even know the real numbers. You could have 20 accounts one person, by some account, there are maybe 20 million accounts that opened between the beginning of the year and the top. These were margin accounts. The paper are saying not great wealth but what i think is important is the fact that the new york times, im going to hold some papers up. They do not mention china. Its not there yet. Thats worry some. The front of the business page has a big piece on whether this decline is going to put the it off the table completely. Usa today, there they have it at the bottom. China stocks look awfully like 2000. The one thats distressing is the wall street journal, the front page they have this graph that makes me nervous. Wasnt anything like a lehman moment. I am telling you that there could be Systemic Risk if it goes down faster. Im not sure that would be necessarily the case. I understand the correlations to what is still an export led economy. Not a consumer led economy. A mirror image of our own in terms of where with are, almost 70 of your economy is consumer led. Thats not the case here. I wonder how much of an impact it will have on the economy. But when you say systemic i mean, other than all the Chinese Companies that wanted to buy out their listings here i think theres about 25 u. S. Listed companies that had buyout offers on the companies so they could relist them in china because everything was going great guns before. But other than that its not clear to me i dont know where the systemic nature of things would be. I think the systemic would come from the fact of if this market would fall theres a decline in the consumer power. Its a spending story. It is. Iron oar . But thats the export part of the economy. That wouldnt necessarily be hurt by a decline in chinese stocks. 90 of this market is owned by individuals. Many people got in at the top. Now, what i am saying is if the market continues in the fashion of the nasdaq there would be Systemic Risk. There is no s p over there. The s p didnt fall. And the average shanghai stock is at 50 earnings. Theyre index, im not going into, its selling at 110 times earnings. Thats unsustainable. What will it mean for our market . You will see a continued move like we had yesterday at 11 35 with the consumer packaged goods began an incredible run. It was remarkable. You will see the utilities lead. This will be an american first market. Kroger will go to markets you didnt think . On the up side . Yes. And i can say one thing, david, because the age of walmart may have begun yesterday. Did you see the reversal in walmart. I did. I tell you this is about american retail and restaurants, gasoline going down. Costco was in the black almost from the get go even when the market was down 200. This is going to bring more money into Retail Stocks helped by oil, into restaurants, super markets, utilities, consumer packaged goods that yield 3 . Why . Here we go to the guys who love to focus on this. No rate hike. Off the table. Were hearing that this morning on squawk on the street. Youre hearing it here on squawk on the street. Saying september 25th or less . Yeah. Im going for 100 at this point. It seems unlikely given the fact, lets understand each other. Greece and china happening at the same time is data dependent. You cannot get the declining well hear from alcoa later today. Let me give you one company that did kind of get it all right. There was a company and this companys name was alibaba, and it came public at what i regard to be the assent of the great Chinese Market and they came to america, curiously, june 10th and met with one of our people. You have a lot of paper this morning. He does. He came prepared. The market peaked over there june 12th. What was he trying to do . Get u. S. Investors. Charm offensive. As youre talking microsoft was out with news. It was not unexpected. They say lay offs were expected. Up to 7800 jobs. Snigs in addition, restructuring charge moving from a growing stand alone phone business to a growing vibrant windows eco system as ten is in the wings. Much of this related to the nokia acquisition under the former ceo before nadella took over. Theyre taking a 7. 6 billion charge. Related to assets associated with that acquisition, of course there were many. In fact some certainly many investors, maybe some on the board who didnt want them to do the nokia deal and some hope it would get undone. That did not happen. Now its kind of been undone as a part of microsoft and so you do have again, a substantial charge in addition to restructuring charges of between 750 million to 850 million. That impairment of 7. 6 billion. Why they did that deal is anybodys guess. Well that was the kind of deal where you had two choices. You could do the deal or take that pile of money and put it in a furnace, and the furnace may have had fewer repercussions. The microsoft piece from Morgan Stanley, the cloud will become more visible. It will become more cloudy and visible which is kind of an oxymoron but because of the restructuring, nadella is doing everything he can to put this behind him. This is like pom, snapple, aol. It was in that category. But everybody knew it when it was suspected. There was some speculation. There was one man who didnt. And hes now in the nba and successful. He moved onto overpaying for nba assets. Hes an overpayer. Apparently to the tune of 7. 6 billion. Let me go back to remember what they paid for nokia. 2 billion for the team. He made the playoffs. The 2 billion was his. This was shareholder money. Well i lumped it together. Thats probably not right. But this nokia deal was a gift. It was a gift to nokia. The write down of 7. 6 is a little more than they paid which was 7. 2. Thats hard to do. Its hard to have a write down that exceeds what you paid for the business. He could have bought the river in finland that nokia is named after and done better. Still an important story eurozone leaders now setting a sunday deadline for the country to reach a bailout agreement with creditors. We are in brussels with the latest. Good morning. Reporter well we may have just taken a step back from the edge. Hard to tell at this stage but the greeks have put forward a letter asking for Financial Support from the esm. This is the european stability mechanism. Basically its an emergency bailout fund. Finance ministers now from the eurozone will have to consider if theyre prepared to grant the extra funds. At the same time the greek government has said theyre extending capital controls through friday ahead of that sunday summit. Not everybody thinks the greeks should stay within the eurozone though. Prime minister tsipras was, this morning, at a European Parliament meeting and the antieu politician made his opinions clear. Lets listen. You cannot have your cake and eat it. They will give you no more these people. They cant afford to. If they give you more theyll have to give other eurozone members more. Your moment has come and if you have the courage, you should lead the greek people out of the eurozone with your head held high. Get back your democracy. Get back control of your country. Give your people, give your people the leadership and the hope that they crave. It will be tough for the first few months but with a devalued currency and friends of greece all over the world, you will recover. Reporter just briefly to mention, the eu has said there is a deadline for greece to put forward more detailed and comprehensive plans for a restructuring of the economy. That deadline is midnight thursday ahead of that summit on sunday. Back to you. Well come back to you later this morning. When we come back another day, another town grade for tesla and elon musk talks about the companys future. Well keep our eye on the futures as well and talk about this ground stop nationwide for United Airlines. That and much more when squawk on the street continues. Verizon say neversettle. Tmobile agrees. Never settle for verizons overpriced gimmicks. Try the uncarrier riskfree for 14 days youll love it, or well pay for you to go back. Getting word from the faa this morning that all United Airlines flights have been grounded due to what theyre calling computer issues. This was something that had broken not unexpectedly on twitter. People writing in saying im at dulles. Theyre handwriting tickets. The tsa not accepting the tickets. The second time in two months theyve had to deal Something Like this. Last time it was attributed to issues. American merging with u. S. Air, thats also going to be an issue. Delta reports second week of july if you want to get a read on the airlines, theyve been able to hold in because of oil. It has stabilized but this is the kind of thing that makes people wonder about earnings. Do you lose a couple of days . It matters because average revenue per receipt will get hit. This is the group that has been down 17 to 20 . In the meantime another downgrade for tesla. Lowering the car maker from sector weight from overweight. Elon musk told us hes optimistic about the future. The event for suvs and sedans is about equal. That would suggest if the model is accepted it would double our volume. I think its going to be a great car and i think its transformation mall in the suv sector. They had great things to say about the company. They say the differentiation is nothing short of total. Thats all baked in. The comments he made ever since my friend who is a very big bear on tesla the model x doubling has been in the plans since 2012. It is a bit recycled. They have a great deal of debt coming due. I know that that debt there are companies frantically putting together debt packages i shouldnt say frantically. Frantic meaning theres a lot of people who want to own this debt and believe in tesla. Its not in trouble but im saying it needs a re they need to raise some capital. Its still a good market to do that. Its the perfect market to do that. The spacex, the recent one that blew up eni had the recent ceo of viasat and he pointed out the technology is superior in rockets as well. I know there are other companies that are going to get into this market. Out aud di is going to be in it. A lot of people are looking at competition and knowing debt is coming due. And are you valuing them as a car company or a utility play . Right. Wasnt morgan the stanley the one that originally introduced that as a theme . Indeed. Im railroadingegarding it as a disruptive play but its a cold stock, and they dont play by the rules. I remember the ceo of costco former ceo telling me amazon doesnt play by the rules, meaning they dont play by the price earnings multiple rules. Tesla when we saw the downgrade hes still using a 20 number in 2020. I think hindsight will prove that 20 20 20 was not 20 20 20. Well get the mad dash and a a look at the premarket and a statement from united themselves on this nation when we come back. Were back in a moment. Im here at the Td Ameritrade trader offices. Ahh. Steve, other than making me move stuff, what are you working on . Let me show you. Okay. Our thinkorswim Trading Platform aggregates all the options data you need in one place that lets you visualize that information for any options series. Okay, cool. Hang on a second. You can even see the anticipated range of a stock expecting earnings. Impressive. Whats up, tim . For all the confidence you need. Td ameritrade. You got this. Time for a mad dash on hump day. How about i create a stock thats right for this moment where china is going to slow down, i think. Remember slow down. Only if its really bad do we have more risk where europe is in flux. How about i create a stock called kraft heinz. This is, started today, bank of America Merle starts it as a buy. The money yesterday went at 11 35 a. M. Went to the 3 yielders after the leaders in the market were utilities and the realize Investment Trust that yielded 5. Ive got to tell you, this is the kind of stock people are looking for. Theyre looking for Consumer Product stocks in part because theyre pack kalkageing and fuel is going down. They like this. This is going to be a colossus thats going to make a lot of acquisitions and divestitures. I got a box of things from them yesterday. Other than the mustard and ketchup, i would find most of the stuff in the pantry. And ive depantried. You talk about natural and organic and when this deal occurred, we said not natural and organic. The opposite but there is room for mcdonalds. Theres room for kraft heinz. Its not the kind of room that i want. 3g running the company in a sense, cutting expenses. Buffett, they control it more or less. Kraft may have been fat, i dont know. 3g seems to find ways to cut that i never thought of. Theyll call it mac and. Save a little money. A lot more things to watch here on squawk on the street. Stay with us. Behold, these are two wind turbines. Can you spot the difference . The wind farm on the right was created using digital models and real world locationbased specs that taught it how to follow the wind. So while the ones on the left are waiting the ones on the right are pulling power out of thin air. Pretty impressive, huh . Now, two things that are exactly the same have have never been more different. Ge software. Get connected. Get insights. Get optimized. I built my business with passion. But i keep it growing by making every dollar count. Thats why i have the spark cash card from capital one. I earn unlimited 2 cash back on everything i buy for my studio. And that unlimited 2 cash back from spark means thousands of dollars each year going back into my business. Thats huge for my bottom line. Whats in your wallet . Youre watching squawk on the street live from the Financial Capital of the world. The opening bell in 90 seconds on day where were chasing a stock market crash in china. Greece now with five days to secure its place in the euro. Playoffs at microsoft and this worldwide ground stop at United Airlines affecting 3500 flights. The company now saying theres no timetable on a fix here. Thats a lot of traffic thats going to need to go somewhere eventually. Yeah. It also puts you in mind of when the systems, and i doubt very much this is the case but the risk of cyber and what people can do there as well. Given now reliant everything is in including the airlines of course. On these systems. I think that im always surprised they work so well. I know the ceo of red hat ran delta and he just you have no idea how much they have to compute. By the way, they used to do them over night with a machine. It used to do that kind of wow, and now they do it stan tans you. Sparn boroughs. The power of two. Were you at the power of two meeting . I dont know. I may have been. Holy cow. A look at the s p at the bottom of your screen. Columbia Pipeline Group and at the nasdaq amerco. All of this after the dows biggest up side reversal since 2011. I think a lot of that was because if you look at what happened at the 11 35 kimberly finished at 109. Clorox went from 106 to 108. Pepsico 94. 7 to 96. 4. Thats people saying rate hike off table. That was the consensus that built midday and then you have the china news. Opening up our futures low. I think this is the beginning of what remember i think of that very major shift in two stocks people abandoned. Costco was going on walmart was one of the worst performing stocks. Were going to see money go back to jack in the box. Chipotle was a leader yesterday. These are just flow of funds into u. S. Going into kroger. This is as ugly as it was beautiful yesterday. I dont trust any of these markets. Go ahead and buy it. Sea of red. Unlike china we havent head opened the liquidity spouts yet. Theyve cut rates. We have rates at more or less zero. We havent cut margins or created a rescue or in the case of china, how many stocks arent selling at all . 74 . Get it over with and then start anew. It hasnt helped. I was telling david maybe gdp slows in china. Im looking at a piece who says theyre not going to give you the real number. Were down to 7 officially in terms of gdp growth. And the stock market is not as nearly as important as it is in other places. But it can impact the ability of consumers to want to buy more. You keep an eye on apple because it has a huge market there. Alibaba shares were down yesterday. Came back fairly dramatically but getting hit at 3 . That has the affect of bringing yahoo down. Its spinning off roughly 16 of ownership. Were seeing that play out. Yesterday free port you hit late in the show. The double whammy of oil and copper. It had been down 9 . Copper is down 0. 08. It rallied a little bit. Oil a major reversal. Get some numbers here. Yum, 48 of their business. Nike had almost a billion in china. The winner in china, im going to give this quiz. Which American Company is the Biggest Tech Company is the biggest winner in china . This is the trick question but david was in jeopardy. You have to put the answer in the form of a question. Star bucks. Google. Nice. By the way, the number of companies halted in china for trade . 1300. Thats 40 of the market value and actually people were trying to raise cash. They sell bonds. Worst day for the tenyear in a month. If 40 of their market was not trading, would that instill confidence . No. Thats not necessarily a confidence builder. No but i do point out that you can monitor these things. Theres ashr ashs. We are getting some sound from secretary of the treasury jack lew hes addressing things like greece and china. Take a listen. Chinas markets are still pretty much separated from World Markets. Theyre obviously moving towards being more integrated but right now theyre not. I dont think seeing the direct link there. I think the concern that is a real one is what does it mean about long term growth in china. I think that that i would break into two pieces. One is how do chinas policy makers respond to this and what does it mean in terms of the core condition of the economy . Interesting take. Like i said well talk to david wessel whos asking the questions. Have they rain fenced themselves in some way . I think thats right. I they rain fence is right word. Guys are saying dont forget the markets arent year. Year over year the comp is up 69 . These are still big begin gains and i said i used to hear that in april and may of 2000 and it didnt hold true. The dekriencline in the u. S. 5100 and then april of 2001 you were at 1,638 one year later. I do point out that yes, there is a substantial part of the consumer economy that will be hurt there which leads me to believe its too early to buy vipshop. And singles day is going to be sacrifice fly day. Thats not until november. Things can change dramatically in a month. One month ago everything was good. We havent gotten to hog. Downgraded today. Container store narrower than expected loss. Stocks up 5 . You do badly and then at a certain point you dont do as badly and people like the stock. I was struck that that was such a terrible performer that lets put it in the every dog has its day camp. Shares of microsoft are up. It purchased nokias device business not long ago. Writing down actually more than what it spent to acquire the business which is not something you see every day. 7. 6 billion is the charge it will take related to assets associated with the acquisition of Nokia Devices and services and as carl said the deal was worth 7. 2 billion. A restructuring charge that related to the layoffs of 7800 employees largely from again, that business. The market reacting positivity, jim, to the move there by mr. In a dell la who was given that. That came along with the job. Cloud is in the Conference Call and i point out that they were in talks with sales force to become even more cloudy with the goal of having a huge percentage of the business cloudy. The Morgan Stanley is having great cacher a price target bump to 51. The sumemi conductor stocks continue to get hit. One acquirer that we watched yesterday potentially is horizon pharma, that bear hug they made for depo med. The stock went down. Today it is up 1. 5 . Interesting to know horizon didnt set a ratio in the offer. They said well pay you this much in stock. But they may have thought the stock price was going to go up and hence they would be benefit benefittingbenefit benefitting from not setting the ratio. But they dont have a path here in terms of the annual meeting, it took place a while ago. I heard depo med is going to fight for now. I am a big fan of horizon but you cant have a fight. That derailed their strategy and takes them off their game. Stick with it 33 goes to 40 price target. But i happen to like the company very much. Its a true roll up. There was a piece today in the journal. It just talked about which companies are doing the roll ups and how exciting they are. And all the ones that do the roll ups have Tax Advantages by being domiciled offshore. Every one of them. That goes along with the roll up strategy being inverted even though youre a u. S. Company, you dont pay u. S. Taxes. The money investing pang bottom right bottom left is a piece about alcoa but tax inversion wave control and they talk horizon and endo and those are the leaders. Endo will buy anything. They might buy your mexican place. Will they buy the shenzhen . I dont know. But we can ask. Theres a lot of companies that will be owned by the government soon in that country that started with the government. Josh brown said theyve even stolen our qe. Thats how much they want to hack everything in this country. Finally unite seconddegreed is the number one trend of twitter. Well be talking to the former person who ran Continental Airlines. Lets go to bob on the floor. Good morning. All ten sectors in the s p to the downside. I want to concentrate on china. Frankly, that is really occupying the minds of the trading community. You see the shenzhen down and the shanghai down about 6 on top of all sorts of efforts to either restrict trading or encourage trading by the Chinese Government. The important thing here is where we are from the highs. And particularly on the shenzhen, the maulersmaller caps. Were up 30 on the year but the 40 decline from the june high is important because essentially there have been tens of millions of new accounts this year that are new under water. New people who have come in nature they have top ticked the market essentially, and thats why the chinese authorities are very worried. Take a look at the shanghai. Its a bigger exchange. Its still up 8 year to date. If you got in in the middle of march, you are now even for the year. Theres 90 million retail accounts in china. Probably 20 million new ones this year. So 25 of the chinese stock market is new this year investors and they have come in in the last few months and now theyre flat or under water. Thats why the chinese authorities are worried. You cant blame them for their big effort here. They encourage the creation of these new accounts by allowing these very liberal margen accounts to be set up. The hope is new investors would recapitalize the cash start dpaens in china. It was a great yesterday. The problem is they went on the other side so much they created a bubble. The reality of whats happening is the private savings of millions of investors, we dont know how many of them may be wiped out and theres a concern that those people could start some kind of broad issues in Chinese Society and thats the most important thing. Look at the restrictions. Theres been a lot of talk about Encouraging Companies to buy stocks. There have been trading suspensions, hundreds of them, essentially companies can now go right to their regulators and say, we dont want to trade the stock anymore on almost no grounds anymore work, and that has been a major problem. These are mostly small cap stocks. And the futures authorities have imposed to avoid what they call excessive shorting of stocks. We all know this never worked. They tried this in japan in the 2000s. It didnt work. All we saw when this happens is dramatic drops in trade trading. Credible liquidity problems occur. In general, these kinds of solutions theyve imposed here have not worked in other countries where they have been tried. A lot of people have said we have no idea what the chinese stock market is doing because of restrictions, people halting, trading, and because of these restrictions on futures. Thats not true. These stocks trade here. Etfs that are chinese that are based in the u. S. Do trade. Take a look at ashr. This is the biggest of the u. S. Based china etfs. This is an attempt to find out where the market is going. Its not a reflection of what happened in china over night. Investors in the u. S. Are trying to figure out where china might people and right now its saying it might open down generically down 7 . These are people in the u. S. Betting where the Chinese Market is going right now. This is the beauty of etfs. Here there is price discovery and it was very good yesterday. There was an indication it was down 5 or 6 . Thats what happened in the Chinese Market overnight. Its the internet based names, 500. Com, that are down the most. Finally, i want to make a quick note about the u. S. Market. Oil Service Stocks are weak today. Theres a big frenchbased oil service. This Company Announced huge cost cutting overnight. 6,000 jobs being lost because theres not a sufficient recovery in the oil market and theres too much supply. The hope for a big recovery in the Fourth Quarter and early 2016 is fading fast and most of the oil Service Names have opened to the downside. Although they have recovered from their lows at the open. Right now the dow down 148 points. Thank you very much. Meanwhile we see if the fed minutes have any affect on rick . Reporter i think free market price discovery is trending exactly like greece. Here we are talking about where the Chinese Market is going to go. Are we looking at fundamentals . We should be. Were looking at what the central planners are thinking. Were all going down the same path. Thats why all the markets seem to move about the same. The further we get from price discovery, the stranger it gets. Lets look at one market thats got more price discovery than the rest. Remember, we grade on a curve, whether its our economy or the free markets. One day two day of tenyear note yields. Today is different than yesterday. If you want to follow the money, stick with the margin guys. People putting up margin give you a more true read. The volatility of a 218 print in tens it didnt matter yesterday. We ended up closing at 226 yesterday. The previous day closed around 228. Yes, were lower than we were on friday in terms of yields but that made sense. When central planners are in control, the markets, the downside of china is in control. Heres what youre supposed to be looking at. Look at a twoyear note year to date and it reflects sentiment as to what the fed may or may not do regarding rates. Now look at the crb index for the same time period. They kind of look the same. Commodities are the canary in the coal mine. We could talk about anything you want. But china has been slowing. They dont use commodities for every loan on the planet and its starting to show up and this trend might not end soon and its nothing central bankers can do. Thank god they cant print soy beans. It doesnt look the same because of the curve imp caseslications but if you check the highs and lows its moving and correlating with commodity prices. Foreign exchange . Close to close to close, historical volatility. If you look at every minutes trade, its implied. Look at a oneday of euros, today, doesnt look bad. Hook in yesterday, holy cow. Look at the volatility there. But weve been on record saying if you really want a close to move markets, its got to be below 110 or above 115 and we did not get it yesterday. Carl, back to you. Rick santelli doing what he does better than anyone. Thanks for that rick. Well get inventories for oil. Good morning. Thats one of the reasons that we are seeing the Energy Complex a little bit higher this morning. The opposite direction of what were seeing with equities today. Crude oil trading at 52. 82. Off the session lows at one point during this morning. More than a dollar. It could be a volatile session. But the factors, the weaker dollar, thats one of the reasons were higher. The department of energy coming out with an inventory number. Were expecting a draw. Thats what we heard from the api last night as well. And of course waiting on greece. Still waiting to hear more about china, the Nuclear Talks with iran as well. But i would say this. Prices are lower are higher across the board also because of what were seeing in the products. Gasoline taking a big hit yesterday and now rebounding. Were not looking at the broader markets but more technical factors taking us higher. Thats what i was watching yesterday. We took it out but we werent able to close under it. Interesting to see how this all pans out today. Otherwise well see you at 10 30. When we come back well get to stop trading with jim. Dow is down about 159. Squawk on the street continues in a moment. Ah aflac . Aflac i thought you said this guy was the best . Oh, hes a horrible stylist. Gah . But hes the best at paying claims fast really. Mmhmm. Paid mine in just one day. One day . Yea. Aaaflaaaac in just one day, we approve and pay. One day pay, only from aflac. [ male announcer ] we know theyre out there. You cant always see them. But its our job to find them. 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Cheese markets these markets, if you believe the future earnings, this is not the nasdaq of 2000. Its more like the s p of 1987. If you let these stocks fall. In this progression, the price earnings multiple of the shanghai comp is going to be around 15. From 50 . Yes. Declining that much. These companies have real earnings. In the shenzhen is going to be 15 or 16 times earning. The flip side is that as these markets come down the Chinese Government may not be so farfetched in seeing that theres value here. Right. They always overshoot but there will be a bull case made and maybe thats the difference the valuations arent as nutty if you believe the earnings per share estimates. Just so hard to get a read on it. Institutions of course, control far less of that market than they do here. 90 individuals or kormscorporations or only 10 is institutionally held. There, i said it. I said something good. On the latest on this United Airlines worldwide ground stop. Lets get more on that with additional details. Reporter we talked to some folks at united and there are a series of issues being worked on right now. They dont have specifics in terms of what this computer glitch is but it would be my impression from talking with united this this is not just one single issue, that there may be a series of issues with different systems within united and i think people need to understand, i hear this occasionally from people whenever we have glitches how is it an entire system can do down for an airline. Its not just one system. The reservation system theres a crew mapgt system theres a fleet operation system. Theyre all working together and the connectivity has got to be there. If its not, they make a decision to stop flights. This is at least the fourth ground stop that im aware of over the last several years involving United Airlines where theyve had problems with their Computer Systems. Now, a couple of years ago they had one. It only lasted about 40 minutes and then the flights were up and running again. This one, however, it looks like were going on about an hour or so that we have been getting reports of no flights at all. And again, this is a ground stop worldwide. United says about 3500 flights when you add in united and united express, which is the theyre commuter subsidiary. Youve got 5000 flights and now were getting word the ground stop has been lifted. There you have it. We should slowly start to see flights take off. The ground stop has been lifted for United Airlines flights worldwide and certainly that will come as a relief to a lot of people who are waiting at gates frustrating, im sure for them. But thats what we hear from the united ground stop has been lifted. Back to you. We are seeing some items here as well that the ground stop at least is no longer listed with the faa. Well keep your eye on that. Well come back to you in a few moments. Finally, jim, whats on mad tonight . We have alcoa, and i think, they understand china. Well have to talk about how the stock has been terrible and i think that matters tremendously. Why . Because alcoa starts the earnings season and they give you a read on trucks and a road on autos. Obviously the f 150. They give you a read on turbines and so much construction. They have told it like it is. A big acquisition to close too. Yo v you seen a threemonth chart on double a . Its rough. Yeah. I thought you were going to say ksu. That would be another one. Lets hope its more kril man jor row softer. And people also saying 1 00 a. M. Is the new time for people to Pay Attention in markets to see how shanghai is doing. Maybe i just dont go to bed. I thought you were operating on i got four solid hours last night. I did too. Thats why i feel exhausted. Well see you tonight, jim. Mad money 6 00 p. M. And alcoa after the bell. And when we come back russ koesterich. Dow is down 171. Faa is confirming the United Airlines ground stop is lifted. More and more, data is visual. In fact, the number of mris has increased by ten percent a year. And a radiologist might view a thousand images to find one tiny abnormality in shape, contrast or movement. Because its so challenging a Research Project is teaching ibm watson to see. In the future, it could help clinicians spot key patterns quickly and precisely. Ibm watson is working to make healthcare smarter every day. Good wednesday morning. Welcome back to squawk on the street. Im Carl Quintanilla with sara eisen, simon hobbs and david faber. A bloody session in shanghai over night. Greece has about five days to secure its position in the euro. United ground stop has been resolved and well keep our eye on the microsoft highofflayoffs. Oil recovering slightly today but the oil sector still struggling. And United Airlines u. S. Flights were grounded due to computer issues. A former ceo will join us live with his take on how the company handed it. Coming up later, the former u. S. Ambassador to greece. Find out what he thinks about the latest developments there and what challenges still high ahead. We start with china, the eye of the storm. Sell off continues there. Stocks falling almost 6 overnight adding to a 30 loss in the last month. All this despite governments attempt to restore confident. We have more from beijing. Chinese regulators warned of irrational selling and today we saw plenty of both in the stock market. We went down to a brokerage where the mood was panicked fearful, emotions were running high. Many of the investors were very focussed on the mass trading halt that were having here with the Chinese Media has described as the biggest in the countrys history. 50 of the companies have had their shares suspended to protect some of the companies from falling prices but its actually been having the opposite affect. Investors are selling whatever they can. The anger is being directed mainly at the government. One investor said to us that he was very upset with the government saying that its encouraged a lot of investors to make these types of investments but now theyve all fallen into an abyss. That gets at the heart of why the government is behaving the way it is and throwing everything including the kitchen sink at this problem, because theres a concern that the stock market issue could become a social stability problem. The government cede also issued even more liquidity assistance through the central bank and also government authorities called on a Stateowned Enterprises not to sell their shares. They pledged to do so and also other companies as well as executives, said that they would take up what theyre describing as patriotic fight to buy shares and save the stock market. Theyre trying a lot of things. Were going to stick with china. Treasure secretary jack lew spoke about the issue earlier saying chinas markets are separated from World Markets and that there is no direct link. So could the plunge be a buying opportunity or should people brace for another bubble. We have russ with us. Since you are a global strategist, would you be a buyer of chinese stocks with so many policies after this 40 slide in three weeks . Well i think i would still wait for most investors y. We spoke about this in our weekly note. This was a market that was driven by speculation. The market more than doubled in many cases, went up multiples of that and almost all the gains were based on expansion. Weve seen a significant correction but when you put that into the context of the buildup over the last six months, theres more downside for chinese stocks. Were getting closer to something resembling fair value. Im not sure were there yet. Dont look for opportunities there. What about the impact here . Do you agree with secretary lieu and others who have told us theres not a direct correlation between their u. S. And the u. S. Stock market and not to mention, we dont know exactly whats happening in that economy . I think thats true as far as it goes. I dont believe the sell off in the chinese equity market affects the u. S. Economy but it affects investor sentiment. Its also true with stocks. If we have an environment which is characterized by a risk all sentiment because of the crash of the chinese stock market and the issues in greece its unrealist to believe that wont affect u. S. Investor behavior. We didnt follow the chinese stock market up when it went up. Should we follow it down. More importantly how are the authorities dealing with this in your view . The idea that you have systemically important bodies in china being asked to step in. The Chinese Central Bank has given the commission extra cash to directly buy blue chips and small caps. The stateowned funds are being forbidden to sell and the insurers are being asked to buy here. How close are we to a stability problem in china that we need to worry about this now or is this just white noise at the edge . I think there are two issues. One of which is the underlying chinese economy. We know its decelerating but i believe its decelerating in an orderly fashion. So i dont see this as a major risk as of today for the chinese economy. For the market my views over the long term prices are going to settle closer to fair value, and that could happen quickly or more slowly but its very hard to keep a market up if prices are divorced from the underlying economics. So what do you do now that were going into this do or die deadline with greece on sunday. More pain ahead for the chinese stock market which is having an impact on sent. If youre a u. S. Invest or or, are there places you should be hiding . I think for long term investors, im not sure i would change my plan but in the near term wait and see. We have china and puerto rico and of course we have the issue on greece. Now, i think that even under the worst Case Scenario europe and the Global Economy can survive a greek exit but similar to the story about china, if we do wake up on monday and it looks like a deal is out of reach, there is going to be a knee jerk reaction. So for longer term investors, think about how to position but im not sure id be pulling the trigger this morning. And for u. S. Equity investors, earnings season. Another decline of earnings expected. Are we going to beat the low expectations like we have done so many quarters in a row . That probably is a Silver Lining and a reason for a little bit of optimism for the u. S. Market. As you point out, the expectations have come down very hard and there have been a couple of positives developments since q 1. Weve seen the dollar moderate. Its not as much of a head wind. And i do believe it will help u. S. Companies to get over a cross bar which is much lower than it was three or four months ago. What do you make of this concern that we may be entering a period where were going to test the outer limits of what Central Banks and authorities can do . Be that with a greek exit in europe or whether the ecb can contain the situation or whether the chinese authorities can inflate their stock narcotic . If you dont believe if Central Banks like you used to youll pay a lower multiple for a given stream of earnings this this country, arent you . I think thats a fair observation. To some extent multiples have been affected by the central bank policy. In the u. S. , if we youre not going to get the tail wind of multiple expansion that has powered the market the last five years. On europe i believe, and i think europe is a little bit different than china, the European Central bank has a tool set that can help contain any contagion should greece leave the euro. Im looking at treasures. 223 on the tenyear. Lower yields. Youre seeing a stronger japanese yen. Markets now the s p down a little more than 1 . Which market are you watching in terms of cross currents and what would raise alarm about your longterm view on u. S. Stocks . Well i think there are a couple things. The first of which is i would watch europe. Europe is going to affect market sentiment. If you have a solution, i think youll see a risk on rally but watch europe. In particular watch the peripheral bond spreads. The key issue for investors is if there is a greek exit if it happens can the ecb contain the contagion to other peripheral countries. Well be watching. For now the yields are lower. Theres hope of a deal by sunday. Russ, always good to see you, the chief global strategist at black rock. Getting confirmation United Airlines. The ground stop being lifted. Reporter good morning. We dont know exactly what caused the computer glitch or if it was a series of failures involving a number of different systems within united but whatever it was, it has been resolved. Thats the good news. The bad news is that for thousands of people who went to the airport this morning, went to several arnltsirports around the world waiting to board their flight for United Airlines, its going to be a long wait and they may have a cancelled flight because of the ripple effect. As they start to get flights back up in the air, this is going to take time. This issue will linger all morning long and well into the afternoon. United has about 3500 flights worldwide. You add in the commuter subsidiary, you have about 5,000 flights worldwide and you have so many connections involved with 7 hubs in the u. S. And then hubs overseas. Its going to take a long time to work this out, and one more thing, guys. Ive had a couple of people ask me is it just one issue at united . Why do we continually see these problems with united . This is a great question. This is the fourth time im aware of a ground stop because of computer glitches at United Airlines and every time the airline has said we know there is a problem. Were working on that. We have some calls in united to see if we can get answers as to what caused this latest ground stop. For more on what this means for united a former ceo joining us on the cnbc news line. Good to talk to you again. Good to talk to you. You just heard fill four times in the past few years. Is that outside the normal range of error . Well i would say yes, an anomaly. I dont know what normal is. Obviously this is a dispatch issue so that they cant write. Everything is so automated today. All your flight plans are filed with the faa which includes the flight path the balance, the passenger manifest and so that system evidently has failed and thats what happened. Do you take seriously the notion that they were somehow hacked or did this happen internally . The system failed for some reason and i dont know why. You have the computers down. Obviously they have restored service. Its a ripple effect. Anything that starts off four hours late itll take them probably more than 24 hours to get things back to normal but the system itself is again, working so theyre able to file a a flight plan and take off and land. Can you give us an idea of the state of. T. Within the Airline Industry in many of them were struggling not long ago. Theres an extreme focus on margin. You have big i. T. Systems attempting to interact. Are they behind the curve on the type of i. T. That they have in this industry . You know just look at our modern existence, its more i. T. Intensive in every part of our life. Certainly in the airline, and airport operations we can file we can make a booking on our iphone on the way to the airport. To that extent that that permeates everything we do it permeates everything that all airlines do and if they lose that system, you know its like your heart stops. The rest of the body just doesnt work, and so we are dependent and thats why they go to some extent to have backup systems and i dont know how long it took to get the backup system going there, whether the main system is restored but we are 100 dependent on i. T. A lot of people wondering what Network Connectivity issue means. Can you turn that into plain english . Its a tough one even for me. Its the writing of a flight plan, a dispatcher licensed dispatcher mostly a canned plan but itten include with weight and they file that with the central faa and puts it into the record and releases the aircraft. The plane while physically able to fly cannot leave until it gets the authority. If that Computer System doesnt connect with the faa, there wont be a flight. And then what does a Scheduling Office look like right now as they try to untangle this big mess of spaghetti . Everything is late. People miss connections. And that airplane has got a flight that maybe six different segments that day, or at least one round trip to europe and so that will have to be restored. Those people reaccommodated in some day, and of course that is lost when you dont fly. You lose all that money. Its a ripple effect. Its almost like you had a snowstorm in new york but you got it worldwide. Everything comes to a stop. Were going to hear a lot more about what it cost them im sure once earning season with them kicks off. Thanks for the insight. All glad to help. Former chief of Continental Airlines and united shares are off a little more than 2 today. And the s p struggling over the last couple of months. Sector hasnt had a positive week since the month of may. What should you be doing . Well talk about that with the dow down 192. Businesses. If you have a business idea, we have a personalized legal solution thats right for you. With easy stepbystep guidance, were here to help you turn your dream into a reality. Start your Business Today with legalzoom. If youre running a business legalzoom has your back. Over the last 10 years weve helped one million Business Owners get started. Visit legalzoom today for the legal help you need to start and run your business. Legalzoom. Legal help is here. Were watching the Global Markets sell off here while in the u. S. Dow down 19. Oil is rebounding today off three month lows after iranian Nuclear Talks didnt get a deal. What should oil stocks investors be focusing on now. An oil analyst at Raymond James is with us thing. We know you like chevron the latest slide in crude oil prices, do you see it lasting a little bit longer on the idea that chinese demand isnt what we thought it was. Chienese demand was relatively slow over the last several years. Ten years ago china used to grow oil demand 10 a year. Now its more like 2 a year. If that were to decline even further, thats negative. The biggest reason its down is the obvious one. Its greece and the eurozone. Anything that pushes the u. S. Dollar higher like these eurozone headlines is bearish for oil prices in the short run. Thats just how the correlation works and lastly you eluded to this earlier, the iranian talks. If there is a deal that lifts the european oil embargo against iran, and there will be some more supply coming on the market. Not a ton. Its not going to be a game changer. But adding to the to some of the pain. I guess the question is do you have to recalibrate your expectation for where the price goes because earlier this year we were rebounding almost up to 61 a barrel. Now back down to 50. Sure. Prices are still well off the lows from january. Barring some sort of real economic catastrophe, we do not see oil falling back to where it was in january. In fact, we see oil higher in six months than where it is today. You know really important will be to watch where oil exits this year because thats when company budgets are going to be set, and you and i have talked about this before. What ive called austerity an steroids. The oil and gas austerity cannot last forever, otherwise oil supply is going to go into perpetual decline and were going to be sitting on a shortage of oil 12 or 18 months from now, not a glut. So prices need to rebound from current levels. Over the next 6 to 12 months to enable a more sustain ablelevel of investment in the industry. Theres no way to get around it. At the same time, people are focussed on the dividend paying qualities. Chevron is above 4 at the moment on the dividend. How stable are those . How should that attract investors given what may happen in treasurys . Just because oil prices are down in the last two weeks does not Mean Companies are going to cut dividend. In fact, even though oil is down 50 from a year ago does not Mean Companies are going to cut dividends dividends. The largest oil and gas producers, the ones who alluded to they are certainly not cutting dividends. Its entirely out of the question. There have been some smaller players that have done that but certainly not the blue chips. The dividends are safe. Really Capital Spending is where theyre making up the difference. Were seeing cap exgetting cut across the board. Im just looking at the s p energy group right now. Its not getting any relief from the bounce in crude oil. Its down almost a percent. Its been down 26 over the last year. Were expecting another messy earnings season. What are you watching for in those results . Youre right. It will be messy. Generally q 2 earnings will be a lot better than the First Quarter simply because oil averaged about 20 higher. But obviously the question is you know whats happening to investment programs. Whats happening to the rig count, to cap ax into the second half of the year and into 2016. The other thing well be watching is cost structure. We know oil prices are down but the cost structure is down as well. So companies are making up some of the lost revenue by squeezing out costs, obviously not a good thing for the Service Providers to these companies but the operators are getting some relief on the cost side and were probably going to see more of that in the next six months. All right. We will see. Thanks for joining us today on the energy stocks. We are just a week away from this years delivering alpha conference where well hear from some of the biggest names on wall street. Last year some stock picks, not all of them did well. But some of the winners from last and year and what we can expect. With a rout in energy, you were just talking about killing a bunch of investment ideas. Two of the speakers stood out. Jeff smith, and nelson pelts. Some had double digit losses alongside their winners. Smith is known for his successful Activism Campaign and his cage rattling at his company. He focussed on mead west. We believe the some of the parts value conservative values the company at 59 a share. There are many levers to pull. There are many opportunities to unlock this value. Sure enough it hit a high of 55. Nelson pelts also faired well with a bunch of names he discussed. Family dollar and bank of new york. Other names were in the green including pepsico with whom he settled some of his differences early in the year. Hopefully next week well hear more from him. And no doubt youll be able to get a new idea out of receive smith. Hes going to be on our best ideas panel. Cramer and i hosted that last year and we have made some references to the fact that the ideas were not particularly strong. Were hoping for a better performance but jeff being on the panel and he is going to offer a new idea. And at activist we have an activist focussed panel. Well get a new one from tom sandel. Looking forward to it. I wonder with activists have a disadvantage does they pump up the value of stocks and those tend to stay in the game. There is that but he was impressive last year. His only pick did great and pelts too. Everything he talked about except for dupont was in the green. That took up a lot of the year. He probably has some other strategies in mind. The delivering alpha conference starts next week. Well be there. Join us. Straight ahead on the program, treasury secretary jack lew speaking out today about the sell off in china and the crisis in greece. Learn what we had to say after the break. Nobody told me to expect it. Intercourse thats painful due to menopausal changes. Its not likely to go away on its own. So lets do something about it. Premarin vaginal cream can help. It provides estrogens to help rebuild vaginal tissue and make intercourse more comfortable. Premarin vaginal cream treats vaginal changes due to menopause and moderatetosevere painful intercourse caused by these changes. Dont use it if youve had unusual vaginal bleeding breast or uterine cancer, blood clots, liver problems, stroke or heart attack, are allergic to any of its ingredients or think youre pregnant. Side effects may include headache, pelvic pain, breast pain, vaginal bleeding and vaginitis. Estrogens may increase your chances of getting cancer of the uterus, strokes, blood clots, or dementia so use it for the shortest time based on goals and risks. Estrogens should not be used to prevent heart disease, heart attack, stroke or dementia. Ask your doctor about premarin vaginal cream. Here is your news update at this hour. The ffa saying United Airlines flights are no longer grounded. Their flights were grounded due to computer grounded. Second time in two months that carrier has been hit by computer issues. Microsoft taking a 7. 6 impairment charge to restructure the flagging phone hardware business. The move was outlined from the ceo to the employees saying the unit will now be run more effectively. Toyotas highest ranking official in japan who was arrested was released from custody without charges. She she resigned from the company last week. And japan, the ancient capital topped the poll for the best city. Leaders praised the temples and the traditional question zone. Its a beautiful city, having been there a couple of times. Reporting from the floor. A status report sending oil prices into negative territory. 52 is where we stand. The report showed a slight build, about 400,000 barrels in crude oil and gasoline saw we were expecting to see a draw down. As you can see kwarks we have a reversal on our hands here despite is tf that is correct thatfact that we have a weak dollar. Traders still telling me the downside biases remine. Thank you very much. U. S. Markets falling. The dow just now down 198 points in the wake of that extended sell off in asia centered around china and theres concerns about greece. Brookings institutes davis wessel spoke with jack lew this morning about how worried investors should be here about whats going on. If you look at china, you have to separate whats happening at the stock market with the core economy of china. Im going to comment on market moves on a day today basis in the United States or china but chinas markets are still pretty much separated from World Markets. Theyre obviously moving toward being more integrated but right now theyre not so youre not going i dont think i dont see the direct link there. I think the issue that is a real one is what does it mean about long term growth in china. I think that that i would break into two pieces. One is how do chinas policy makers respond to this and what does it mean in terms of the core condition of the economy . I think the first is quite critical. The director of the Hutchins Center for fiscal and Monitoring Institute joins us now. Welcome to the program. Thank you. The treasury secretary doesnt feel too sure about the policy in china and how theyre dealing with this market rout. I think his major concern is this will lead the chinese leadership to slow down the pace of economic reform. He said the chinese always say theyre in favor of the reform and the u. S. Always says yes but youre going too slowly and hes worried its hard to make the case for markets are great when the market is crashing. Thats the big worry rather than it spilling over to us. Its rare that we talk about the possibility of social unrest these days as a result of markets are doing. That seems to be the concern from beijing. You can understand the concern. Absolutely. I mean it looks like there are a lot of really ordinary people some of whom didnt even have High School Educations speculating on the markets and it never occurred to them that they could lose their money and now you see a desperate effort by the chinese. Theyre banning executives cant sell shares. Stocks arent being traded. It has the earmarks of the government throwing everything they can at this thing and being able to unrest the rest of the markets. You can imagine how frightens it is for them. We are vhave dueling crises that threaten things in greece and europe and china and the u. S. Is powerless in both of them. Thats got to be a little bit frustrating for president obama and secretary lieuew. Absolutely. Theres a question about how long can we keep Getting Better an better if the rest of the world is getting worse and worse. The treasury secretary sounded very frustrated in his conversations with the europeans. He mentioned hes talked to the greeks and if europeans and he kept saying he doesnt think the policy differences are that great but if political differences are so large and theres such a lack of trust. As far as china goes i think he knows theres not much he can do or say to have influence so he said very little except keep your reforms going but in both cases he seemed complacent about the risk to the u. S. Economy. He made a point of saying how much better europe is now than if this had hit two or three years ago. We keep hearing from critics of the fed and treasury saying how can they lecture china on reforms after trying to take care of the pain we went through in 08. Was that evidence in the room . Not really. I think the reason the secretary of the treasury came was to celebrate the anniversary of dodd frank. I think hes proud of what theyve accomplished in terms of making our system more resilient but its hard for us to lecture the chinese on how they ought to handle their Financial System after what we did. I think thats weakened look at what we went through with the fiscal cliff and the deadlines. At one point they talked about using triggers. And im thinking im not guilty sure id be wanting to advise them to follow our system of budgeting here. I think weve lost a lot of moral authority because we didnt do as well as people expected us to do and then there are compounding factors like the fact the administration cant get if its one thing they will do, they make calls. And the europeans make calls in return. Tsipras appears quite often to appeal over the heads to the americans. I infer asking them to knock heads together. When you see the secretary of treasury say its not clear to him that europe will find a solution to the crisis now that were on a fiveday count down i find that concerning. Normally you would expect a treasury secretary to say hes confident they would find a solution, wouldnt you . I agree. He didnt exude a lot of confidence. He did use the word restructuring of the debt. He came down on the side of the greeks and he said he thought it would be better for europe and the rest of the world if greece stays in the euro. Im not sure hes not much influence. Im not sure chancellor merkel cares about what jack lew says. Shes trying to manage the economics of europe. Its conceivable that she told him the truth about where they stood which is why hes not confident. He said he thought very few people in europe wanted greece to leave the euro and when you listen to the german finance minister it sounds like hes ready to throw them out. Hes the toughest of them all. We have to leave it there. Nice to see you. Okay. With the dow down 213 points lets catch up on events in greece. Reporter as you highlighted, five days to go for the greeks to get their act together. They took step one today sending this fresh letter to the dutch finance minister and to the other finance ministers. Significant change in tone we think. First, i want to read to you from a june 30th letter that tsipras wrote. He wrote greece requests that the efsf debt be restructured and reprofiled. Restructured is a meaningful word. It means a write down reprofiling means give us more time to get back and usually at a lower interest rate. Now todays letter they write greece welcomes an opportunity to explore potential measures to be taken so that its official sector related debt becomes both sustainable and viable over to long term. That appears to be a softens of the demand for a restructuring. The esfs is the european facility that was used to give greece 131 billion in euro money. Youll hear the germans say its not due until 2023. Why are they complaining about this now . Do some reforms, get your economy going and revisit it later when you actually commit to doing something. In the meantime tsipras got beaten up in the Parliament Today but a lot of the members from other countries. Take a listen to a comment from the united kingdom. If you have a courage, you should lead the greek people out of the eurozone with your head held high. Get back your democracy. Get back control of your country. Give your people give your people the leadership and the hope that they crave. It will be tough for the first few months but with a devalued currency, and with friends of greece, all over the world, you will recover. Reporter and there was a lot more than that that we could have played for you from other countries as well. Back to you, carl. Its going to be an exciting few days no matter where you two. Well talk to you see. Sticking with greece, well talk to the former u. S. Ambassador of the country and well talk about what can be done if anything to find a solution. Dow down. Were back in a moment. By the time Police Arrive on a crime scene they could have little to go on. A vague description. A single piece of evidence. A partial plate number. With an app from ibm officers can now access over a billion police documents to find hidden connections and identify potential suspects. Ibm analytics helps one hundred thousand officers work smarter every day. When youre not confident your companys data is secure the possibility of a breach can quickly become the only thing you think about. Thats where at t can help. At at t we monitor our Network Traffic so we can see things others cant. Mitigating risks across your business. Leaving you free to focus on what matters most. Your moms got your back. Your friends have your back. Your dogs definitely got your back. But whos got your back when you need legal help . We do. Were legalzoom, and over the last 10 years, weve helped millions of people protect their families and run their businesses. We have the right people onhand to answer your questions backed by a trusted network of attorneys. So visit us today for legal help you can count on. Legalzoom. Legal help is here. Forget china. It could be the golden time to get into one forgotten asiabased market. Well tell you what that is on trading nation. Catch our live segment on power lunch. For squawk on the street coming up next. Lows of the session yesterday. The dow was down 218 and you know about the big up side reversal the biggest for the dow in almost four years. Waiting for it today. The dow is currently down 170 and the s p another 20. Lets get to rick santelli. Reporter if you were getting ready for Quarterly Earnings earnings, we have rebecca with us. When it comes to the surveys whether its investors or economists, mainstream in both categories always tend to use the center lane. How can we prove that. The top chart is when your investors globally are polled when do they think the when first rate hike will be . Weve landed on the second half and investors are slit between the third and Fourth Quarter. Were pulling globally. These are longterm institutional investors. Reporter now, it does show from a survey perspective everybody seems to have the same answer. Everybody is looking at third quarter. But there really to no way to know. Theres no way. Its been a moving target with the announcements from the fed. Weve landed on the second half. Well see what today does in terms of how the fed is thinking and what the last week lets fast forward and look ahead for 12 months. Based on recent survey results, what is the area of the world that is the most bullish in the eyes of investors. U. S. Remains the most bullish in terms of the text 12 months but the yards is gaining steam. The feedback that came back from the survey this quarter buzz overly bullish sentiment in europe and we asked them are you concerned about the greek exit and 41 said theyre concerned but theyre still bullish. Reporter this tells me my original thought about a herd mentally was correct. Greek is center stage politically, in my opinion. From that standpoint they win. I was surprised japan was doing well but they avoided china. China and latin america, very negative september negative sentiment. In china, the Asia Pacific Investors are looking for a significantly worse than expected earnings. They expect to markets to come down. This mass i sell off is not surprising. Reporter so theres discrimination between the central planners of china versus japan, theyre a little more optimistic on that. Lets look at Second Quarter earnings by region. Let me talk about going into earnings investors are largely, okay, u. S. Based investors are largely expecting in line better than expectations. They reset the expectations in the First Quarter and they were surprised to the up side. Were going in and theyre pointing to Corporate Fund talls driving the markets. We might have the perfect storm. Expectations come down. Stronger fundaments for a market rally. Reporter quickly. I was not surprised at our last chart the most bullish sector and the top of the heap is health care. When you partner up with the government, expect to make a lot of money, you read it differently. Theyre focussed on margin expansion. Energy, we have seen continuation of positive sentiment increasing for energy. The bears are coming down. The bulls are coming up. Reporter weve seen the big correction but one thing about energy, you use it every day. Were going to figure this out. The price scales are lower than many anticipated. Thank you for joining us today. Back to the gang. All right. Looking ahead to earnings season. Thank you for much. Still ahead on the show will the china fall out ripple across the pacific to one of the most popular Real Estate Investment places for the chinese. Tomorrow the im sf releasing the latest World Economic outlook. Very important. We will be joined by a chief economist on cnb for an interview on china and europe and the imfs advice for the fed. Lets debt a check on stocks. Selloff across the board. Dow down 140 at this hour. The s p 500 down 18. Was down a full percent a little less. Nasdaq taking it the hardest down 49 points. Interestingly, guy, european markets stocks are rising on some hopes of a deal with greece ahead of the sunday deadline with the dax up nearly 1 so u. S. Stocks are cueing off the move in asia. Without getting too far the weekend is a huge event risk so might be a squaring of positions. When you might cover your shorts arguably in advance of the biggest events in the european project so far. Whether greece stays or goes i guess. Meantime, as you can tell the u. S. Markets still in the red. Dow session low was down 220. Watching developments in china and in greece the greek Prime Minister tsipras formally requesting this bailout. Waiting for some figures on volume. Question is, is it too little too late . Joining us is former u. S. Ambassador to greece and former undersecretary of state nick burns. Now a professor of diplomacy and International Relations at Harvards Kennedy school of government. Mr. Ambassador its great to have you. Thank you. Thanks. Thank you. Weve talked to some bankers for whom an exit is a base case. That does not sound like where youre coming from. Well i think theres two options here. One is the rational option would be greece make a deal with creditors by sunday. The greeks have promised continued reforms on pension and taxes but in a frustrating way have not given the europeans a detailed Reform Program which is kind of astounding given the fact their banks are closed and people are living on a razor thin margin. The other option its a radical government and theyll drive this into a brick wall and be no agreement by sunday. I tend towards the former. The rational expectation greece has nowhere to turn. They have to stay in the eurozone and will have to make a deal but frankly after tsipras performance from brussels and strasbourg when he was defiant and saying its a european problem and taking very little responsibility for whats gone wrong in greece it makes me wonder if ideology will trump reason. Do you believe the referendum helped him build any Political Capital at all . Was it simply a time delay mechanism and if he does have capital from it why would he not spend it now . Oh i think the referendum clearly helped tsipras at home. Helped him in greece. I believe he believes it gave him greater leverage with chancellor merkel and the other leaders. Theyre holding to the line you saw that yesterday in the meeting in brussels willing to help the greeks. Theyre willing to give extend another bailout package and may possibly be willing to deal in some minor Debt Reduction although thats unclear. But the greeks have given them nothing to work with and i cant quite understand what the strategy is by the greek government. It is a new government. Theyre very inexperienced. Theyre highly ideological and theyve got divisions within the governing party. To that point, were all looking for financial contagion and whether we see rising bond yields in portugal or ireland or even spain and italy. Do you see poengs for political contagion and that is for other governments to also come you know, be toppled by this idea that people are going to reject austerity and move toward more add cal left governments like greece . Well, the place that could possibly happen would be in spain, which is Holding Elections this autumn. And i think thats why chancellor merkel and the other european leaders are trying to hold the line on greece because they got this precedent in mind. They know if they cave in to all of tsipras demands this could come back to haunt them in the spaniards or portuguese or even the italians in the future could come forward with similar demands, that is an important principle for the leadership. I dont think theyll budge much. If there is a deal on sunday itll be the same deal that was offered two weeks ago with some face saving change sdmrz running out of time. I want to ask you the crucial question. Your analysis acute of what you saw him do today. What is your analysis of how the rest of the eurozone will respond on sunday or the european union. Do you think theyll kick greece out. I dont think they want to and prefer to keep them in the eurozone but greece has to give them something to work with in terms of detailed reform. If they dont, ambassador . I dont think theyll give substantial debt renegotiations. If greece doesnt offer what they want by sunday will they kick them out of the eurozone . Do they have the guts to do that, do you think . I think they will cut them loose and itll be greeces decision to leave the eurozone as you know. I think they will cut them loose and greece will have to go to go back to its own currency because theyll have no other alternative. Mr. Ambassador thanks so much for your time. Much appreciated. Nick burns joining us talking about greece. All right, keeping an eye on the market dow down 148. John has a look at whats coming up next on squawk alley. Were continuing to watch the followon effects of that Chinese Market plunge down nearly 6 overnight. Also were going to look at the effects if any on apple with an apple analyst and finally microsoft claims to cut loose 7800 more employees on top of the layoffs theyd already announced. Why are they doing it and whos losing their jobs and what are they investing in instead. All that and more coming up on squawk alley. Push your enterprise and you can move the world. But to get from the old way to the new youll need the right it infrastructure. From a partner who knows how to make your enterprise more agile, borderless and secure. Hp helps business move on all the possibilities of today. And stay ready for everything that is still to come. I built my business with passion. But i keep it growing by making every dollar count. Thats why i have the spark cash card from capital one. I earn unlimited 2 cash back on everything i buy for my studio. And that unlimited 2 cash back from spark means thousands of dollars each year going back into my business. Thats huge for my bottom line. Whats in your wallet . Here at the Td Ameritrade trader group, they work all the time. Sup jj . Working hard . Working 24 7 on mobile trader, rated 1 trading app in the app store. It lets you trade stocks options, futures. Even advanced orders. And it offers more charts than a lot of the other competitors do in desktop. You work so late. I guess you dont see your family very much . I see them all the time. Did you finish your derivative pricing model, honey . For all the confidence you need. Td ameritrade. You got this. Good morning, it is 8 a. M. And 11 00 a. M. On wall street. Squawk alley is live. In the days of my youth i was told what it means to be a man now ive reached that age ive tried to do all those things the best i can welcome to squawk alley for wednesday. Big market day obviously. Joining us as always jon fortt and kayla tausche. One of the topics we were going to discuss at the top was apple and the fact that apple watch sales according to some third party studies are coming down. As were speaking getting flashes on dow jones regarding the new iphone. Apple preparing a r
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