Transcripts For CNBC Worldwide Exchange 20180206

Yesterday. The nasdaq down less than 4 wiping out all of this years gains for the dow, the s p and the nasdaq just holding on to positive territory it wont be if this is anything to go by at the open we are down 434 points for the dow. The s p is down 28 the nasdaq down 23 points. We have higher volume yesterday. 8. 6 billion shares raided. 50day moving average 5. 7. We saw vix spike very much at the end of the session so every everiedy kate y edindi risk off indicator lets look at the tenyear treasury note. Rising yields over the coarurseo the move has been a spark for this selloff we saw yields come back a bit yesterday, right at the end of that chart 2. 85 or so at the peak last week the trend in yields is sill intact rising yields over the course of this year. The trend in equities is no longer intact. We have pulled back away from those highs. Full Team Coverage of this Global Market selloff. Dominic chu is with us in the u. S. , Steve Sedgwick is in london lets go to Nancy Hungerford live in singapore. Nancy . Hi. A lot of attention around the nikkei 225 today, closing lower by 4. 7 . This is coming off the lows of the session we saw the nikkei 225 down more than 6 . Still the tokyo market was sharply lower. Thats the worst percentage drop since the election and the worst point drop since tbrexit other key milestones it was the worst drop for the shanghai composite for two years. Look at the hang seng here off 5 this is still positive on the year tencent, the tech hch heavyweigt dropping 7 on the session still plenty of selling pressure here back to you for now. Thank you very much for that. Early action in europe Steve Sedgwick is live in london for us steve . What is interesting about the european session, were in the best position, ie where were where asia was, which was absorbing full declines before the turnaround the twoday decline on european indices at the moment is modest compared to elsewhere. The ftse 100 yesterday lost around 1. 5 . We lost 1. 9 so far today. So a cumulative 3. 4 , which is mild by comparison to markets were seeing stateside and in asia we must take a step back and say at one point the ftse was down to 6950 in todays premarket session. But rallied aggressively, a full 250 points as well so as we see the turnaround in the u. S. , waiting for the u. S. Market open, the market decline netnet has been relatively modest the dax, it was down around 4 at its peak losses today but rallied aggressively we were talking with nancy about the prebrexit move. The German Market is still up around 22 since brexit. That puts a few of these markets in context yes, were seeing selloff but its nowhere near as bad as in asia and the United States thank you very much for that. Lets round things out here in the u. S. Dominic chu is with me on set in terms of the main takeaways from yesterday. As we talk about the markets in the u. S. , they are the ones who have taken the brunt of the force. Theyre arguably the driving force behind whats happening globally if you look at whats happening with the dow, the biggest percentage losers, you look at stocks, you say exxonmobil, chevron, the energy trade has been hot of late, as Oil Prices Pull back, exxon and chevron have btri driven them lower also dow dupont another laggard. The dow was a price weighted index. If you look at a price basis, United Health shaving the most points, then 3m and home depot and caterpillar. They are in the mode of take points off the dow looking at the s p 500, about 75 stocks have fallen by at least 10 , just since january 26th some people will call it correction territory well say they have fallen by that amount in that amount of time you look at the s p 500, the energy trade playing out hess and Chesapeake Energy some big decliners. Metlife and Tractor Supply also in the mix if we look at how the stock markets are shaping up in the u. S. , one thing to keep in mind, we mentioned that 75 stocks in the s p have fallen by 10 since the 26th Ryan Dietrich notes we have gone 404 days without a 5 pullback from record highs. That streak was broken yesterday as well. While we have been talking, futures now down 570 points or so on the dow. 572 or so. The nasdaq down 52 s p 42 the course of the overnight action has been one of recovery in european markets. In the last 15 minutes things are picking up again if we look back at european markets, germany down 2. 5 . Ftse 100 down 2 just the last half hour more selling. We will broaden out this conversation tim seymour of triogem Asset Management joins us. Yesterday afternoon the other massive move we saw was in volatility right talk us through your expectation of that and what it means. Yeah. You think about whats happened since friday, where you had a lot of this systemic strategies, starting to really push the market around. Systemic selling kept many investors on the sidelines also a selffeeding process. For a lot of folks, this is referred to High Frequency traders, algos, whatever you want to call this, this is a process which has significant ramifications across asset classes. In terms of how folks are approaching risk and how a lot of professional risk are approaching risk, i think a lot of the tra digditional players e these risk parity strategies are ones that will continue to dominate the market over the next week or so. The expectation of a quick turnarou turnaround, i think even though we get into the fundamental story, thats being hampered by what we came the Systemic Risk strategies so tim brings up an interesting point. This is what traders ive been speaking to have been talking about. The idea that the consensus trade for a long time has been to bet on low volatility theres a way to make money betting on low volatility. Its been a consensus trade for a while. The problem is when that unri unwinds, you feel some people are unwinding bets, trying to make money by generating income and selling volatility perhaps thats a reason why the drivers have been limited to the stock market overall we have not seen the Ripple Effect elsewhere tim, my question is wlofrhether not that volatility picture plays out in a day or two or three, or whether this is a trade that needs more time to unwind i sense that you get you often will get a nice bounce after the type of move we have had. Dont underestimate the impact that you could get from some type of a policy response at this point i dont think you will see the changes in real life and vols be eradicated over the next couple of days. Its almost impossible thats one reason why. The fundamental story in the market a week ago seemed so extraordinary. While you can point to a handful of things, we are seeing higher volatility into fridays payroll number that changed the story we have a friend who has written a note, his point is well taken. Fridays move on its own was significant pushing up vol, but it was a signal for these volatile star getting strtargeti the u. S. You have extreme divergence between the fundamentals and technical picture, im not sure Market Participants need to jump in, theyll get into a layer of where we went into this entire event where market complacency, i think, was running high. Thats almost glib to say after the move weve seen cle clearly people have been caught offguard, but everybody expected we needed pullback a lot of players believe this is a market to buy the dip quickly. Thats something even though theres huge opportunities out there, i think the next couple days could be rocky. Were now down more than 600 points on the dow, back to 596, continuing this slightly negative momentum. Quickly on the technical points, all of these markets moved below the 50day moving average. How significant is that for what you talk about about the shortterm momentum continuing to the down side well, its extraordinary if you think about it and if you think about where we went from overbought to oversold if i look at a nine day measure of market momentum of the s p through yesterdays close, we were trading at a 20 nineday rsi, which is something we have not seen in a couple years if you look at the eem etf, your proxy, you went from friday of last week being the most overbought since 2014. And now in a measure of six trading sessions, youre now the lowest rsi in two years. The technical position changed dramatically were at lets see how we trade into this session. I think this is important. You see some of those sessions are able to decline. The 100day, the more medium term indicator, thats important for a lot of these indices we watch todays session if you want to get into trader talk and how people would like to view this as a nice, simple analog, which its not lets wait and see how europe closes and see if we can have this turnaround tuesday action right now obviously i think its a volatile situation tim, thank you very much for that thank you to dom chu well have more from dom during the show quickly, have a oneyear chart of the s p of course we must put into perspective massive selloff in terms of the two and threeday moves. Relative to gains over the course of the last year. Relative to the gains in chan, which was 5 , 6 of gains. Thats one of the reasons valuations move. If it is Interest Rate driven, which people say clearly whilst the economy continues to be strong, Companies Continue to be strong, this suggests a valuation pullback, not a fundamental pullback very sharp selloff at the end of that chart, but people have had strong gains coming into this. We are down sharply in the premarket. Up next, the selloff goes global europe deep in the red at this hour headed back to london for the latest action there. They just increased their selling over the last 20 minutes or so. And another check of u. S. Futures. 600 points nearly the decline on the dow. I0 points now lower on the dow. Backn a couple of minutes. Im. Nothings wrong with the elevator. Right. But you want to fix it. Right. So who sent you . New guy. What new guy . Watson. My analysis of sensor and Maintenance Data indicates elevator 3 will malfunction in 2 days. There you go. You still need a pass. Welcome back to Worldwide Exchange. Lets get you up to date with the market picture following those big declines yesterday. Down 4. 6 on the dow yesterday were expected to open lower by 540 points on the dow. 38 on the s p. 40 on the nasdaq thats a couple of percent for the dow. The s p over a percent of a decline. The nasdaq is the best performer this morning in percentage terms. Down less than 1 . Lets look at europe, which opened down about 3 rallied back to being down about 1. 5 it sits in between those levels. Down about 2 this morning definitely not down as much as asian trade, which was playing catch up to the dow side with the u. S. We saw the nikkei close down over close to 5 . Hong kong down over 5 well dive into all of this International Picture when we come back and look at oil. Major factor in the market slide. Energy has been a sector thats suffered over the last couple of sessions another check in on the u. S. Futures board. Down sharply this morning. 550 points on the dow. 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And try febreze small spaces to clean away odors for up to 30 days. Breathe happy with febreze. Welcome back to Worldwide Exchange. Lets get you up to speed with the market picture were down 2 in europe. Were down about that amount for the dow. The s p and the nasdaq and the futures market down less than that asia down 4 , 5 for the japanese and hong kong markets joining us now is Peter Spiegel from the financial times. One of the factors discussed yesterday stateside is markets sold off so severely was that the fundamental economic picture remains intact there hasnt been a spark on that side, the Economic Data side to cause the selloff. Is that the same in europe would you say this is a momentum markets driven move as opposed to something out there, a red flag in the political, economic world . I think the dynamic is the same yes. The economic numbers in europe are still very strong. But i think the dynamic in the u. S. And in europe are the same in that we dont know whether this is a valuation move or a more fundamental move. Both in the ecb and the bank of england, as with the fed, we have had almost a decade of free money. Theres cash pumped into companies for ten years to try to gin up economic growth. And suddenly the ecb is tightening that off. I think the question is is it just a shortterm valuation move or are we moving from a world of free money to ra moa move of moe normal Monetary Policy, and if it is, are there company theres a overleverage, that did m a deals at frothy levels Credit Suisse was off 7 because a lot of products they were seming were tsem i selling were tied up in the volatility short so the fundamentals are strong, but theres a lot of concern that theres bubbles built up over the last decade and people dont know where they are now. I wouldnt be so sure to call this a valuation shift in europe, the same underlying cause here is a shift in Monetary Policy going back to normalization of rates that could cause an upheaval here Credit Suisse, a lot of focus on it, down 4. 3 in terse of whether tms of whets likely to adjust its path based on what markets are doing, how likely is that european markets, ecb, they have done a version of this dance before, 2010 to 2012, when they made sure they will do whatever it takes to stop the markets falling out of bed do you think thats likely that if markets are selling off, mario draghi would assess his plan for the economy and adjust it to keep markets supported or not . I think that would be his instinct the problem is, unlike the fed, theres much more politics in europe than in the u. S. Because of the german question germany overheating, they have a Budget Surplus so the big engine of europe is pushing very, very hard on draghi to basically continue the path of tightening the rest of europe, which is much more concerned about the market pullback. Next year draghis term is over. The head off the bundesbank is set to take over its very political now in europe and draghis task is complicated. Peter spiegel, thanks for joining us. Energy has been a big factor as well over the course of the last couple weeks. The etf for energy down nearly 9 since friday. Lets get to Jackie Deangelis with more on the slide in oil prices good morning. I want to put this in context. Commodity prices themselves are not reacting as sharply to the market selloff as many expected. Oil is holding under 65 a barrel copper was up in yesterdays session. Gold did not spike that dramatically either. The relative stability in commodities is telling us theres confidence in Global Growth and demand. Copper is a widely used metric when it comes to appetite for Global Growth because of various industrial uses. Its up 2. 5 in the last month going a step further, the energy stocks, earnings misses from exxon, chevron, hiss, they have been dragging the sector down. That drop in the xle was significant. Chevron and exxon are numbers 14 and 20 on the dow. When they see losses of 5 multiple days in a row, its an issue. For these companies, elevated oil prices in the Fourth Quarter alone, they were not enough to mend what was broken but still there is optimism that another quarter of higher crude prices, positive tax benefits and more time for rebalancing will pave the way for better earnings next quarter. Yesterdays overall market losses were significant. All bets will be off if the market decline stops being orderly. But for the moment the commodity market could offer insight into longerterm stability. Watch those gold prices carefully too. Jackie, thank you very much for that. Up next, financials falling. The banks having their worst day since the brexit vote in june of 2016 an analysts take on the move. As we head out, another check on futures. That the hour, down over 600 points for the dow 630 points the s p is down 45 thnaaq ie sds down 50 points were back in a couple minutes at t. Rowe price weve helped our investors stay confident for over 80 years. Call us or your advisor. T. Rowe price. Invest with confidence. Mom anits not theirs. Car. Its mine. Mine. Mine. And it always will be, forever and forever. The new rx 350l with three rows for seven passengers. Experience amazing at your lexus dealer. Swho live within five miles of custyour business . 54, like these two. And that guy. Or maybe you want to reach women, ages 18 to 34, who are interested in fitness. Namaste. Whichever audience youre looking for, well find them were the finders. We work here at comcast spotlight, and we have the best tools for getting your advertising message out there. Anywhere, any way your audience watches. Consider them found. Global markets in meltdown mode the dow posting its single biggest point drop in history yesterday. Right now futures indicating a big plunge at the open. What should you be doing with your money its tuesday, february 6, 2018 Worldwide Exchange continues this is cnbc breaking news, market selloff good morning a warm welcome to Worldwide Exchange on cnbc. Im wilfred frost. Its another disappointing picture for markets this morning. Yesterday that huge selloff, 4. 6 on the dow. The s p down more than 4 as well the nasdaq was down 4 volume up, 8. 6 billion shares traded the 50day moving average is 5. 7. Volatility and the vix soared in the afternoon. We see markets yeartodate for the s p and the dow below where they began the year. Despite januarys strong gains the nasdaq just higher futures suggesting that might turnaround we are sharply lower the dow off over 600 points. The s p down nearly 2 in the premarket. Nasdaq down a full percent or so but it is outperforming the others as it did slightly yesterday. Clearly another big selloff here in the premarket one of the factors that people have been pointing to for sparking this selloff has been rising yields. Yields have pulled back a little bit in the last couple of days you can see we got to 2. 85 last week, were at just below 2. 7 its important to note yields are still markedly higher for the year as a whole. It can still be pointed to as a spark for the selloff. The trend in yields is one thats moved higher. The trend in equities is one that is moving lower for the year as opposed to the course of january which was higher markets around the rest of the world, asia playing catch up to the downside we saw over 5 of decline for hong kong. Japan off almost 5 as well. Shanghai down around 3. 4 . Europe opened down about 3 . It came back up to about 1. 5 down its somewhere in between that level. Down in and around 2 . I point out that as we know with the big three indices in the u. S. , all hong kong, japan, korea, germany, france, uk, all of them pulled below the 50day moving average, a bearish technical signal some markets below the 200 moving day average as well even more bearish. If you like those technical signals and chart moves. Nasdaq futures turned positive early this morning befor heading back lower down about a percent at the moment lets get to Bertha Coombs with a look at techheavy index thank you very much the nasdaq composite gained more than 8 by late january when it hit that alltime high the index is still up for the year compared to its peers it is down 7. 5 in the last six sessions after that historic high apple had not really been a lead driver in the run up in january. And after those earnings last week were noisy, apple started to break down technically. We started seeing bearish signs. Yesterday was a factor in the decline. The stock breaking through Technical Support levels, plunging through the 200day moving average in late trade and now down 13 from its recent alltime high. Apples concerns, concerns about what kind of chip supplies and orders are going to be made in the wake of the last quarter have weighed on the semiconductor index. Thats been a drag the chip index not quite in correction at this point but a number of big movers there. Lam research is actually right around bear market territory a couple other stocks moving down, not just because of concerns of apple but amd and nvid nvidia, moving up on the back of bitcoin, a bit of a whammy there dragging those lower biotech, this is where were seeing some of the worst technical bearish breakdown. The ibb, i looked and only about 10 not in correction or bear market territory in that index back to you. Thank you very much for that. The nasdaq still just over a percent higher yeartodate before today, but the nasdaq futures are down a percent so like the s p and the dow it may well break into negative territory for the year as a whole. Heres how yesterdays record drop played out. Youre looking at a time lapse of the dow we nearly went positive early in the session before the bottom fell out at the lows the dow was down nearly 1600 points it rebounded to finish down 1,175 points lower the biggest point drop in history. Percentage terms not the biggest, but still significant, down 4. 6 . Lets get more on the Global Market selloff, dom chu is back with me. Late effort thougst thought its a little icnsane as we looked at that time lapse. I remember being on air yesterday afternoon. We were doing segments during closing bell and before that on power lunch. As i was making the transition from going on set to power lunch to closing bell, we watched the dow go from minus 600, 700, 800, 900 at the end of the 2 00 hour to the beginning of the 3 00 hour this morning in the wall street journal, stock plunge erases 2018 gains the story below it says dow tumbles over 1100 in biggest point drop ever and panic type selling thats above the fold in the wall street journal. Thats saying stock erased 2018 gains its early in 2018 were not erasing 2017 gains if were talking about the cause, the spark being rising yields, yet the economy is still strong, companies should continue to have good earnings its a great point we make about whether or not the markets are the economy and the economy is the markets this is not suggesting that the u. S. Is on the brink of a big recessionary event, or that the economy has stalled out. Whats interesting about the move, many people have shown its that the bulk of the action is happening in the stock market itself. We have seen the yield picture the trend has been higher. It was only yesterday that we saw the real big drop in yields. They rebounded a bit today you have not seen as much activity yes, dollar yen and the yen crosses currency against the yen have moved but not quite in as dramatic fashion as you would think during a panic type selling situation. And gold prices, thats Something Else we looked at. Yes, they were higher, they went from around 1330 an ounce to 1340 not exactly a huge price move you would see to the upside if people were that fearful either the safe haven trade is not what it used to be or this is a very interesting type of event in terms of a selloff. We talk about risk on and risk off in the past. It seems risk off but only in certain parts of the market. Selling equities, raising cash, not necessarily buying other traditional safe haven assets thank you very much for that going to bring in larry mcdonald, from acg analytics, editor of the bear traps report. Good morning to you. Hi, wilf. Your take in terms of the spark . Is it still rising yields, even though yields have moved a bit back the other direction were really heading for a regime change. In the 70s and 80s there were multiple instances of talking like 20 instances where stocks and bonds went down together in the 90s, only two. In the last decade, zero were heading for a regime change where bonds threatening equities theres a decent chance this year we see 3. 5 , 4 on the tenyear, globally sovereign countries, the credit quality is the weakest probably in 50, 60 years. Its a bond shock story. So, that, i guess, implies that valuations become more focused on equities, and perhaps they were overstretched, they are coming back. At what level would they have come back enough that they become more attractive welltiree to bonds again some sectors are attractive throughout history there are periods where commodities started to outperform equities thats what were coming into. Right now were very much like we were in the late 90s like 2010. So were coming into a regime where commodities outperform equities so the oil names, those will do very well this year. A great chance to buy them on the pullback and silver and gold. Silver in particular in 2010, when we had this type of regime change with inflation, silver was up 140 . Gold up 40 . Would you be buying commodities at the moment . Last year equities outperformed commodities by the most in 20 years gold, silver, natural gas is a screaming buy because of the global picture and what the Trump Administration is doing globally theres some real good buys here larry, great to hear about some screaming buys early this morning. Not many times ive heard that larry mcdonald, thank you very much banks are another big part of the selloff Financial Sector having its worst day since the brexit vote yesterday. Lets bring in chris whalen. Good morning to you. Good morning from. Dom still on the set. Rising yields, still the trend yeartodate, its meant to be good for banks why are they selling off the banks were fully valued they had run nicely. Bank of america was one of the best performing stocks of last year but the markets are trying to figure out what is value given that the Central Banks are not going to be the primary buyer of debt and Equity Securities since thats changing, were going through a price discovery. Were going through the same thing in real estate highend real estate is softening, and the sellers have not quite come to jesus in terms of how good it is theyre at selling their house. Yesterday, during the rise in the markets when we almost turned positive on the dow, we saw a couple sectors and Industry Groups make that move higher into positive territory one is regional banks. What is interesting about the regional banks are they more levered into the policies more than the larger banks. In terms of growth, yes pnc, look at them. That sized bank is allowed ede grow, think are allowed to acquire, but the bigging guys cant. As an investor you can buy high quality names that were at two times book or more two weeks ago. But i will say this, we dont know what the world looks like a year or two out with a 3. 5 tenyear bond and a lack of central bank buying. In equities, too plus the leverage behind equities when we talk about volatility picking up a lot and the fact that someone like Goldman Sachs is underperforming for the last year or so relative to the market, is this a time to buy Goldman Sachs, be brave and go for a stock like this . Youre right. The thing killing all of the big universal banks is the fact that the lack of hedging, the lack of activity generally because the Central Banks own everything, theyre drying up the business mortgage business, too hedging for Interest Rates has been down. Well be down this year. So i see an interesting pattern, which is less demand for credit than one and two years ago yet were still in this narrative about growth, which i agree with i think you get Interest Rates to move significantly if you get stocks to come off, youll put a different cast on this economy chris, we have to leave it there. Thank you very much. Thank you. C dom, thank you very much. Coming up, the pedestrian facto fed factor and another check in on futures. Weve recovered significantly. The dow was off over 600 points, off over 2. 5 . Its down less than 500 points, less than 2 clearly still a lot of red on those screens. Were back on Worldwide Exchange in a couple minutes. Directv has been rated 1 in Customer Satisfaction over cable for 17 years running. But some people still like cable. Just like some people like banging their head on a low ceiling. Drinking spoiled milk. Camping in poison ivy. Getting a papercut. And having their arm trapped in a vending machine. But for everyone else, theres directv. For 1 rated Customer Satisfaction over cable, switch to directv and get a 200 reward card. Call 1. 800. Directv welcome back to Worldwide Exchange. Im wilfred frost. Lets get you up to speed on the market action, coming off of yesterdays massive sell jouoff, down 4. 6 for the down we are down over 444 for the dow, down 1. 8 in the premarket, having been down as much as 2. 6 20 minutes agolf t the nasdaq is down a third of a percent. The nasdaq is the only one of the three indices in positive territory for the year treasuries, yields came off the highs yesterday. We are moving higher again, but not significantly, 2. 72 the yield on the tenyear. Peak last week was 2. 85 big moves in the equities and bond market highlighted a concern about a rise in inflation which could prompt the fed to act more aggressively on rates this year. Good morning, steve. I think the issue is that fridays wage number really spooked the markets. The trouble is theres no evidence now of that inflation if you look at the core cpi number or the core pc number, the one the fed watches the most, not a whole lot of movement there the big story this year, you see that peak in that chart there . When it came down. Everybody thought it would come up so the idea that were heading back towards 2 either way, that should be normal but that wage number spooked the market, even though it didnt cover about 80 of workers out there. It was the toch workp workers tt those wage gains global yields have been rising and pulling u. S. Yields higher big adjustment. Its true as well in terms of the inflation picture there in europe, 1 core inflation. Thats a single mandate ecb. Are we overexpecting how much globally Central Banks could tighten . How much how worried you are depends on your position i think the story here may be that the market was so overextended that any little bump really when i think about what are the keys to this selloff, the data im looking at are the inflation and wage data. Thats the first thing second thing is fed speak coming up you have powell at the end of this month who will give testimony to congress. Thats key, we have to recalibrate the action with the new fed chair. What is it going to take what Interest Rate will it take to finance these growing u. S. Deficits because of the tax cuts and the bond auctions will be significant. On thursday we got the scenarios for the stress tests from the fed, over the weekend we got a slap down on wells fargo. Is it possible that this deregulatory environment that everyone has been so hopeful for and expecting is now not going to arrive . I think it will arrive. Powell is committed and i think Randy Quarles is committed to let me say this. Committed to taking the edge off of some of the excesses of doddfrank the question becomes is Congress Also committed theres a bill out there that i think should have bipartisan support, whether congress can get that done this year, and that would alleviate some of the most stringent requirements on the small and medium sized banks. I dont know if that will happen it should happen theres political questions about it financials the worst performing sector yesterday. Thank you very much for that were approaching the top of the hour the team is getting ready for squawk box. Becky joins us good morning. Something to wake up to this morning, you have been covering it so well all morning long, the dow under pressure again the futures across the board looking like its going to be another rough start to the session even after the declines. The dow futures indicated down by 450 points this will come as a surprise to people already hearing reports on the radio that theyre not measuring fair value correctly who knows what will happen this morning we have all hands on deck. Well cover this from just about every angle. Looking at the volatility you were talking about, tim freeman and Nelson Griggs will join us to talk about that looking at opportunities in the bond market. Ken fisher will join us to talk through some of those issues and getting the view from the white house. Kevin hassett will join us with reaction from the white house. Not only what the white house is thinking about this and is there anything in the economy that would be pointing to this . Kevin oleary is with us for three hours, mike santoli, dom chu will be here as well becky, thank you very much for that that futures market picture, down 430 were back here on worldwide exan thchgewi much more analysis in a couple minutes your brain is an amazing thing. But as you get older, it naturally begins to change, causing a lack of sharpness, or even trouble with recall. Thankfully, the breakthrough in prevagen helps your brain and actually improves memory. The secret is an ingredient originally discovered. In jellyfish. In clinical trials, prevagen has been shown to improve shortterm memory. Prevagen. The name to remember. Welcome back to Worldwide Exchange. Futures pointing significantly lower again today. 450 points on the dow. We were down as much as 650 points about a half hour ago so weve improved a bit. The s p is down 30 points. The nasdaq down 30 points as well looking at about a third of a percent down for the nasdaq. A percent down for the s p the best part of 2 down for the dow. Lets bring in joe lavorge and daniel demarti danielle di mar te dimartino boh i think there was an overreaction on friday to the Wage Inflation number. There was a decline in the length of the work week that largely offset that. I have been intrigued over the past 24 hours or so to see the major pullback in bond yields. Theres not much talking about given to that. At one point when futures were down at their lowest point overnight, we saw that the 30year dip below 3 , the twoyear below 2 . That will complicate matters for jay powell he wants the markets to stay on the pathway of at least three rate hikes this year joe, we talked about Interest Rates being a spark for the telloff. Do you think fed expectations for rate hikes have changed and is that justified . They have, and they will if this stock Market Correction continues. If you look at the friday wraj numb wage number, it got people nervous. The futures priced in about 100 basis points of hikes, well unwind that if equity markets soften i dont think the fed will do three hikes. My view is two theres no inflation and the fed has no choice but to see how these tax cuts play out, see if the economy can generate productive capacity through more investment spending. This is the problem with qe and the legacy of the bernanke fed well see if we will get a jay powell put the market now will test that thesis, but as you said, we had a significant correction the data looks good, but this will test whether the fed can try to normalize the way some people think they can. Joe, we did see the dollar strengthen on friday, strengthen yesterday, albeit not much given how weak its been what is your take on where that goes from here to me, the dollar will find a base im not dollar negative. Feels like the inverse of last year when everybody was long the dollar, positioning was extreme. To me its moving back the other way. If you believe the u. S. Is further ray long in the business cycle, the dollar should catch a bid and it will be okay. I dont look for significant dollar weakness. When we look around the rest of the world, is the same true in what you said in your first answer about the u. S. , the economic picture is strong, the fundamentals still support it . To joes point, the reason the dollar is finding a base now is because the markets have begun to look ahead to the extraordinary strength out of the eurozone and the sustainable of that recovery the fact that a german will be running the European Central bank, well know who that individual is by labor day and the market is pricing in tightening in europe the biggest question on my mind in the coming days, we all saw jay powells video statement yesterday and his reassurances about Financial Stability and the fact that the Financial System is more resilient today is whether or not this entire process, if theres an increase in volatility, keeps him with the pedal to the metal on quantitative tightening and shrinking the balance sheet. Thank you very much for joining us thank you a check on futures before we go we were down over 600 points, now down less than 400 points. That is it for Worldwide Exchange. Lots more coverage throughout the day onnb cc including next on squawk box. A Global Market selloff is in the works sharp drops in asia and europe after u. S. Stocks suffered their worst loss in years. U. S. Futures whipsawing all over the place, pointing now to another negative open on wall street its tuesday, february 6, 2018, a special presentation of squawk box begins right now. Live from new york where business never sleeps, this is squawk box. Good morning welcome to squawk box here on cnbc we are live from the Nasdaq Market site in times square. Im becky quick along with Andrew Ross Sorkin sitting in with us this morning is kevin oleary, a cnbc contributor. Also mike santoli is with us for this hour. Heres what youve been waiting for. The look at what happened after those huge declines last night if you were looking for relief this morning, you will not get it yet however, believe it or not, with the dow off 355 points below fair value were off the worst levels of the morning. Earlier this morning it looked like the futures were down by 600 points still youre looking at down 368 after the biggest point decline weve seen in history. Yesterday the market was down by almost 1200 points at the end of theday. T the nasdaq is off by 36. Just in case you missed t you probl probably didnt, heres ho