Transcripts For CNBC Worldwide Exchange 20161012

Good morning to you. Im wilfred frost alongside seem se we saw the nasdaq decline yesterday, 8 out of 11 sectors were out more than 1 , real estate and telcos were the outperformers, but all sectors down. The likes of alcoa disappointing. Will that be a sign for the rest of earnings season . And the pound weighing on sentiment. Futures are called higher, pretty much flat but slightly higher. That may be because the pound rebounded. The fear that brexit could derail markets is helping futures this morning. We are up 1. 16 . It comes after theresa may made a concession to Parliament Offering to let Lawmakers Debate her brexit plan. This is important to focus on. Markets have rallied significantly on this. This is not a vote shes promising. All this move in terms of the pound falling, a lot of it related to the fact shes focusing on a hard brexit, not a soft brexit. If the rally is based on this, i think thats a slight overreaction. Its not a real concession, its yeah, well discuss it. Sure thing. If thats what the rally is based today, i think its a slight overreaction, i think we found the bottom of the range either way. Some kind of bounce back was justified. Some kind of range or support level would be supported by investors given that we have seen massive depreciations down about 18 , since the uk referendum. On that note, lets look at european equities. Keeping an eye on the pound. Its a mixed day of trade. Germany, france and the ftse 100 which hit an alltime high yesterday, a lot of has having to do with the weaker pound is lower by 0. 4 . A bit of green in italy and spain. As for asia, risk sentiment slightly on the low side. Following that selloff on wall street. The nikkei down about 1 . Not helped bay stronger yen. Hang seng lower by 0. 6 . The Chinese Market ending lower. Theres a new concern around the chinese Central Banks management of the currency. The yuan has deprecated for about six days. It was guided lower again today for the sixty session in a row. Thats the longest streak since january. Its about a quarter percent decline from yesterdays mid point. It sits at the lowest level against the dollar since september of 2010, but reigniting fears of what happened in january of this year and august of 2015. Oil prices slipped about 1 yesterday. This morning, lets look at how theyre trading a bit higher. Were still above 50 bucks for wti, just shy of 51. Lets look at the dollar. It was noticeably stronger yesterday, particularly against the pound and also the likes of the euro. Thats one reason why equity markets in the u. S. Sold off significantly. This morning a bit of a Dollar Strength out there, but not so meaningful. Fractionally vong stronger agai the yen. The pound at 1. 227. The tenyear treasury note, thats why we have seen the pound the Dollar Strengthen in recent days. Its risen significantly since the june lows and risen over the past two, three weeks. 1. 776 yield there. In corporate news, we continue to watch Deutsche Bank. The firm carrying out an internal shakeup of its senior banking investment staff and returning to the bond market yesterday raising 1. 5 billion. Last week it raised 3 billion. It faces the highest borrowing costs among european peers. Investors are still waiting for a settlement between Deutsche Bank and the u. S. Justice department. The fed could play a role in todays trade. Minutes from last months fomc meeting will be reemployeleased afternoon. Kansas city fed president Esther George and bill dudley will speak today. Railroad operator csx reports after the close. Landon dowdy joins us with three things to watch in the csx report. The street is expecting earnings to be a bit of a bumpy ride in the third quarter. Heres three things to watch. The numbers. The street is looking for the eastern transport to post revenue of 2. 7 billion earnings, a 13 drop in eps year over year. Most analysts forecasting weakness over the entire sector. Second volume decline impacted nearly all markets, with coal declining more than 30 . And the firm said volume is likely to fall by high Single Digits in q3. Theyll want to see if coal volumes improved. And guidance. Enthusiasm for transports remains tepid given volume pressure. Barclays noting they do not believe 2017 is shaping up to be a robust growth year, but that could make some names in the sector cheap buys. Shares of csx up more than 12 in the past three months. In other corporate news, samsung slashing its forecast by a third. John sculley talking about samsungs problems on closing bell yesterday. Samsung is one of the best component designers in the world. My guess is its a production problem. They made a production error. The challenge is you cant quickly go back and fix those things. You have to go back and redesign if thats a problem. This is not a quick fix upon for samsung. This could take many months to correct. Yesterday samsung confirmed a total fauhalt to the galaxy n 7. The note 7 only makes up 18. 5 of the total model in terms of earnings. So the Share Price Movement compared to that is large, but this is a major brand damage moving forward. Does it damage all the sales. And we also are talking about suppliers, chipmakers, those that make the glass on the phone. Ill be curious to see if there are larger ramifications. Other stocks to watch today. Ericsson taking a hit after the firm issued a profit warning. This comes a week after the Telecom Equipment firm announced plans to slash about 20 of its Domestic Work force. Shares of Barracuda Networks rising. The i. T. Firm reporting earni t consensus. Shares of a suber Security Firm announcing preliminary results for q3. Revenue and eps well below the streets targets for fortinet. Delta announcing an executive shuffle. The executive chairman retiring. Frank bates will take the title of nonexecutive chairman. Shares up 0. 4 this morning. Toyota and suzuki motor announcing plans to explore a business partnership. They say theyll look to Work Together in areas including safety and information technology. Both off a bit in japanese trade along with the market. And sprint is seeking to raise 3. 5 billion and mortgaging off 10 of its wire l wirele wireless airwaves. Add another Music Streaming Service to the lyncist. Amazon is offering a pay Music Service today. Amazon already has prime music, but that only has about 2 million songs. The ecommerce giant says the new service has tens of millions of tunes. Will they be successful at this . Theyre coming late in the game. Apple has come late, but theyre doing well. Amazon prime has lots of subscribers, but its annoying if you have to change all your existing services on to a new platform. I think its much more difficult for them. Is that switching cost, but targeting members who already subscribe to amazon prime that will be key. Next story, lpl financials exploring a potential sale. They are the largest broker dealer and Investment Adviser in the u. S. They are said to be working with Goldman Sachs to look into strategic alternatives. Regulatory compliance that resulted in lower commissions. Coming up on Worldwide Exchange, Vladimir Putin is speaking at a major Investment Conference today. Well tell you what hes saying about everything from oil prices to the u. S. President ial race. A live report from moscow is next. Stay tuned. Youre watching Worldwide Exchange. Welcome back to Worldwide Exchange. Were looking at slight gains in the futures markets, but not significant compared to yesterdays declines. Yesterday all three indices were all more than a percent. The nasdaq off 1. 5 . Every s p sector in negative territory yesterday. 8 out of 11 of them off more than 1 . Significant declines yesterday. Partly because of a strong dollar, partly because some earnings like alcoas were weak and because of wild card factors like the pond fell significantly reigniting fears that brexit risks may have been overly forgotten. Lets look at oil prices. They have been a significant driver recently. They were soft yesterday by 1 . Another factor for the equity market weakness. We are bouncing back today. About a third of a percent. Yesterdays declines in oil prices, were still above 50, just shy of 51 for wti. It was Vladimir Putin who earlier this week said he would be supportive of a production cut. Brent to a 2016 high. The russian president will be addressing a Major Investment Forum in moscow today. Thats where we find Geoff Cutmore live. Its great to see you. Youve been busy from d. C. To london to moscow. What can we expect from the russian leader . Good morning to you. I expect well get clarification on that energy price story, not least because we are heading into russian budget season. We think that the president will release some information about how the government intends to make up its budget short fall. Give than were hearing about president putin in the american election, i wouldnt be surprised if he has the odd word or two to say about Hillary Clintons accusations that the russians have been involved in cyberspying, and also on the issue of war crimes. Hillary clinton again alleging that russia has been involved in indiscriminate bombing in aleppo and syria. I think well get a mix of Economic News and focus on the geopolitical stories when the president gives his keynote address in a couple hours time. Back to you. Jeff, lets jump on those accusations of war crimes in aleppo. Hillary clinton mentioned it. Though stateside most comments around mr. Putin are, as you say, relating to his potential relationship with donald trump. How serious are those accusations around aleppo . We saw Boris Johnson bring it up recently. And a meeting mr. Putin was to have with hpresident hollande o france has been canceled because of it. They are serious and there is a coordinated effort among western countries to show it. The russians are saying our planes are not involved, the Defense Ministry came out and said this was all russia phobia. I think theres a lack of clarity as there always tends to be around these events as far as working out exactly who did what, when, and why. But clearly this is not helping with rising tension more broadly in relations between moscow and washington and western powers that not only involves aleppo, but cyberspying and the apparent movement of Nuclear Missiles in russia towards natos borders. How ever you look at it, we see a ratcheting up of tensions here. I suspect we will get mr. Putins response at this event on some of the more recent comments weve had from paris, london, and washington. Back to you. Geoff, thank you very much for that. Geoff cutmore live in russia. Coming up, donald trump unleashing new attacks on members of had his own party. Details from the campaign trail next. As we head to break, heres todays National Forecast from reynolds wolf. Lets look at that forecast. We do have some ugly weather to deal with. Rivers are rising across the midatlantic. Looker falling from the skies across the midwest. 90s return to dallas. My apologies. Mean while, 60s up in seattle. Los angeles, 71. New york, lovely da plenty of sunshine, temperatures in the mid 60s. Atlanta, another banner day for us, 77 and sunshine. Miami, scattered showers may be poppi popping up. We have more Worldwide Exchange coming up after this. All the networks are great now. Were talking within a 1 difference in reliability of each other. And, sprint saves you 50 on most Current National carrier rates. Save money on your pho bill, invest it in your small business. Wouldnt you love more customers . I would definitely love some new customers. Sprint will help you add customers and cut your costs. Switch your business to sprint and save 50 on most current verizon, at t and tmobile rates. Dont let a 1 difference cost you twice as much. Whoooo for people with hearing loss, visit sprintrelay. Com. Welcome back. Lets get you up to speed on the market action. U. S. Futures calling for a higher open, around 15 points for the dow. Nasdaq indicating a higher open by 5 points. This follows what was a down beat session for wall street yesterday following a disappointing started to the q3 earnings season. Will this have larger r ramifications on the broader q3 earnings season. We have the u. S. Dollar gaining momentum yesterday sending stocks of multinationals lower. Keep an eye on the pound. It is strengthening here, up about 1. 2 against the u. S. Dollar. Still trading at or around a 30year low. In the commodity market, all eyes on oil. Vladimir putin speaking at an Investor Conference in moscow. He will signal further indications of his willingness to join opec leaders to cut production ahead of that meeting in vienna . Wti crude at 50. 98. Brent at 52. 75. Wilfred . Seema, thank you. Hillary clinton is heading out west today, donald trump is trying to regain momentum in florida. Tracie potts has the latest from washington. Good morning. Reporter in terms of these republicans defecting, Donald Trumps attitude seems to be let them go. Hes moving full speed ahead, especially in florida today, a battleground state he really needs to win. We have to investigate Hillary Clinton. Reporter this is donald trump as he puts it, shackles off. Trump tells bill oreilly, hes unfazed losing support from paul ryan. I dont want his support. I dont care about his support. I want to win for the people. Reporter to win, trump needs to win florida. Clinton leads florida by just a few points. Your vote really, really, really counts. A lot. You can consider me as an exhibit a of that. Clintons out west today after campaigning in florida with al gore, focusing on his signature issue, climate change. We cannot risk putting a climate denier in the white house at all. That is absolutely unacceptable. Leaked emails from the Clinton Campaign show an aide checked with the Justice Department about lawsus over her emails. Hillary clinton is one disclosure away from potentially have this race flipflop once again. Shes sending Top Democrats to swing states to talk about trumps lewd comments on women. I, too, believe in forgiveness and redemption, but that doesnt mean im going to elect the person president. Now, the white house is denying that the contact the Clinton Campaign has had with the Justice Department while they were investigating her emails, that there was anything wrong with it. Going to mr. Trump celebrating that he can take the shackles off his campaign, is that going to endear him to his own existing base of support but not so much the swing voters . Exactly. Its that middle ground that he really needs to catch up with, especially now that hes losing support with the party. Great stuff, tracie potts in washington. A new reuters poll gives Hillary Clinton an eight point lead over donald trump. The survey was taken after the tape scandal and sunday nights debate. As for who won the showdown, 53 of those polled say clinton. Which is a surprise to some. Clearly a tough weekend for him, but many thought he did better in the second debate. Over the first debate. Yeah. We have already moved on to sports. The cub s clinching a ticket to the National Championship series. The cubs trailed San Francisco 52 in the ninth inning, but they rallied with four runs against the giants bullpen to win a remarkable game. The other National League game, the dodgers beat the nationals 65 to force a deciding game five in their division series. The winner will play the chicago cubs for the National League pennant. A lot of action in the baseball game that didnt make sense. Baseball series . Keep going. Im good. Lets move on. Still to come, the top stories and a complete roundup of Global Market action. Amazon going head to head with spotify and apple music. Well tell you about the companys new streaming Service Launching today. Stay tuned. More baseball to come. I am benedict arnold, the infamous traitor. And i know a thing or two about trading. So i trade with e trade, where true traders trade on a trademarked trade platform that has all the. Get off the computer traitor i wont. cannon sound i wont. And its got the spring and bounce of a traditional mattress. You sink into it, but you can still move around. And now that i have a tempurflex, i can finally get a good nights sleep. Buy the most highly recommended bed in america for as low as 25 per month and a 90 night free trial. Good morning. Profit warnings, samsung slashing guidance amid its galaxy note crisis. And ericsson shares plunging after demand for mobile broadband is weak. A new day and new round of tests for stocks. The fed front and center ahead of the release of fomc minutes. And the top trending stories including covergirls first ever coverboy. All the news on that coming up. Its wednesday, october 12, 2016. Youre watching Worldwide Exchange on cnbc. Good morning. Warm welcome to Worldwide Exchange on cnbc. Im wilfred frost. Seema, welcome. Thank you. Good morning, wolf. Lets check Global Markets this morning at 5 30 a. M. Eastern. Looking at u. S. Futures pointing to a higher open. Yesterday the dow lost 200 points making it the worst daily performance for the dow jones since september 13 of 2016. Healthcare the worst performing sector. The dow calling for a higher open by 12 points, nasdaq up by 4. We have two fed speakers and the release of the September Fomc minutes that will be in focus as well. Europe, stocks are mixed overall. A lot of focus on the ftse 100 which hit a 2016 intraday high yesterday on the back of the weakness in the pound. With the resurgence in the uk currency, looking at stocks lower. France and germany following suit. Italy and spain are higher on the day. In asia, risk sentiment downbeat following the weakness we saw in the u. S. Weaker currency in china sparking some concern among global i investors. Shanghai composite ending lower a as did the nikkei. Oil prices slipped about 1 yesterday. They are bouncing back by a half percent today. We are just above 51 a barrel for wti. Lets look at the ten ovye treasury note. Yesterday, 1. 774 yields a little bit higher once again today. Big moves in the yield over the last 2 1 2 weeks or so where we were just down 1. 5 recently. There are the dollar pairs for you. Yesterday markedly stronger which did weigh on stocks, particularly against the pound. Also against the likes of the euro. The dollar a bit stronger against the euro today. Fractionally stronger against the yen. The pound is rebounding and is up 1 today. It found a bottom yesterday. Also news that there will be a debate in parliament around the brexit terms, hard versus soft, all that goes with it. But not a vote. If the bounce back is relating to an expectation of a vote in parliament, that might be overdone. Just a discussion. Oil prices were soft yesterday, but theyre up today, gold, 1. 257. Oil producers and companies are gathering in istanbul at the world energy conference. Steve sedgwick joins us live from there. What can we expect from leaders and any focus on that opec meeting in late november . Great to hear from you. I had a terrific run the last couple of days. Ive been speaking to the secretarygeneral of opec, spoke to the russian oil minister, just adding that regardless of what igor sachin says, he is backing his president. He was talking about historic cooperation. I think what is interesting is a contribution i had from the uae oil minister, close ally with saudi arabia. He is talking about a freeze and what it means for the able for a cut as well. Listen and ill explain what i mean after that. I think most of the countries have reach their level of production and are at commercial constraints of the price. Now its freezing production, if you freeze production you have natural decline, or youre increasing. Do you get the point . If you get a freeze, you potentially get a cut. If you freeze and freeze investment, the natural rate of decline means you get less utility out of your wells, youre not replacing the infrastructure, youre freezing production, so youre getting a natural cut. I think thats what we are seeing in some of these countries. Russia producing about 11 Million Barrels a day. Can you continue on if you dont reinvest . Probably not. Its a nuance, a subtlety, but maybe some weight that some deal can be done. Great exchange between alexander novak, and the boss of total in my panel yesterday. Novak said it is all well getting us to cut production, but what about you International Oil companies . Are you going to cut production . He said, no, were not, its a point of pride, but we grow production, too. Can you imagine in exxon or chevron or a big company says were cutting production, i think the shareholders would have a revolt. Steve, interesting point, the difference between those two. Even before we get to the debate about the companies, summing up what weve seen from the individual countries in the last couple of weeks, theyve gone further than the last couple of years. Russians have gotten involved. Are you con if i different this deal will be seen through and that the rally weve seen in oil prices off the back of it is justified . Absolutely not. No. Ive been around too long. But what i will say is i think the power of verbal intervention from the im majors and from the Major Oil Producers is phenomenal. Its way greater than kuroda, carney and draghi can dream of. Heres my point. Prealgiers, we were trading up, and then 7 a barrel before abating the last session. 15 on the oil price, on the back of that. They dont have to deliver too much in terms of getting a consensus to freeze, not spend more money on certain declining wells. Then then youll get some form of stability. I went through these big oil men. Some were ministers, not one thought volatility would disappear. Thats a really important point. They thought there would be shorter cycles, Technology Means you can bring on wells and take them off quickly, as weve seen in the revolution of shale. Volatility will continue regardless of price and regardless of a deal coming out from opec or not. I have been around too long for that. Steve, thank you very much that. Goldman sachs also following your lead, skeptical of the deals. The fed could play a role in the trading. Minutes from last months fomc meeting will be released. And two fed president s will be speaking. Just one notable Earnings Report today. Railroad operator csx, which reports after the close. Then we pick up as the week ticks on. Watch shares of samsung. The smartphonemaker slashing its forecasts b s by a third after galaxy note recall. Shares down 0. 6 . Ericsson taking a hit after the firm issued a profit warning, this a week after the Telecom Equipment firm announced plans to slash 20 of its Domestic Work force. Facebook Ceo Mark Zuckerberg and his wife have hired a technical lead to help them give away billions. The couple promised to give away all of their wealth to cure all diseases, now amazon executive Brian Pinkerton is joining the initiative. He said his team could grow to a couple hundred people over the next few years. Walmart hiked the salaries to entry level managers from 45,000 a year to 48,000 s a year. The new rule for overtime which will take effect in december will require employers to pay overtime to salaried workers earning less than 47,500 a year which is double the current threshold. The new hikes will shield walmart from those additional costs. Amazon is launching a paid Music Service that will cost 8 per month or 80 for the year for prime members. Nonprime members will pay 10 a month, echo owners will pay 4. Amazon already has prime music but that only has about 2 million songs. The ecommerce giant says the new service has tens of millions of tunes. Now to todays top trending stories. Looks like there will be one less clown on the streets this halloween. Mcdonalds announcing plans to limit public appearance of its mascot, ronald mcdonald. The decision comings as neighborhoods across the u. S. Are on edge after a series of scares involving people dressed as clowns. The sightings are terrorizing children and authorities are taking it very seriously. Probably for the best. Creepyclowns has been trending. Exactly. Which seems a little unfair as we approach halloween. Toriticize people for it. There we go. Next trending story, Halloween Costume from an online retailer turning heads. The costume is inspired by Kim Kardashians paris robbery. The yooutfit comes with a white robe, fake gag, and a fake 4 million ring. The criticism she has received since she was the one where the burglars came in and stole her diamonds. Amazing to see the negative tone. Im excited about that. I go quite big for halloween. I do i like a good costume party. Do you know what you will be . I do but im not telling you yet. The next story, meet covergirls first ever cover boy. James charles will be the new Brand Ambassador. The High School Senior is a Makeup Artist with nearly 500,000 social media followers. He will appear in print, on television and digital ads with cover girls other Brand Ambassador katy perry. He said he hopes this shows that anyone and everyone can wear makeup and do anything if they work hard. Im wearing makeup. We all do. Do what you got to do. Still to come, the must reads. First, check out trading in europe at this hour. We are pretty much mixed. No significant declines. But all three major indices below flat. Welcome back to Worldwide Exchange. To the must read stories catching our attention. My pick is titled the markets have taught theresa may a hard lesson on sovereignty. This from martin wolf. A long article, about six pages, he was a fierce remainer, hes critical of the stronger stance on brexit. He writes the uks poor past export performance suggests the depreciation is still not big enough to generate the needed shift in the structure of the economy towards production of tradable goods and services. Its quite likely the huge current deficits will be unsustainable post brexit. If so, the uk will need a big decline in aggregate spend iing. Hes very critical. I think hes fair to say this fall in sterling, weve seen a beg boost in the ftse 100 off the back of it, its wrong to extrapolate off the ftses rally that that means the economy will well. The ftses rally is not because exports are picking up but a translation effect from foreign earnings. So boosts accounting earnings for ftse 100 companies with earnings abroad, not exports because the manufacturing export is very small for the uk economy. Looking at the ftse 100 and the ftse 250, which is more domestically owned companies, that sheds light on the impact of the currency. Absolutely right. This is a Detailed Analysis of the uk situation. My pick is in the wall street journal, a transatlantic revolt against the central bankers no one would disagree that disappointing economic results since the 2008 meltdown have spawn ed political agitation, people want change. But its interesting, quite telling, that the imf assuming democratically determined outcomes make things worse. Not seeing turnarounds in these economies puts pressure on results, and provides more ammunition to the pop list paul parties. In this article theyre saying parties on the right, trump here, and new conservative government in the uk are uniting against loose policy. They miss the same party is still in government in the uk. They can pretend theyve always been against it to capture more of those disillusioned voters they missed out on before. Two ukfocused must reads. Approaching the top of the hour, so the team is getting ready for squawk box. Melissa lee has a look at whats coming up. I ronically, will, youll be here in about an hour or so. We have a great show. As we progress to the premarket session, our Number One Mission is to figure out what went on with stocks. The worst day for stocks since the 1st of september. You have to ask is it the dollar, dollar index at the highest level, or the rates. We have a couple of big ceos on. You guys have been talking about barracu barracuda. The stock is up about 10 in the premarket session. Woe have b. J. Jenkins on. And the ceo from yum brands, whats ahead with their spinoff of yum china and what theyre seeing for taco bell. I know you can enjoy a taco here and there, right . I am. But im often brought up for how i mispronounce it i say taco. Its taco . Taco. Which is correct . Taco. I will get that right by the time i get in. I can say pizza hut and kfc. You got an hour and 13 minutes. All right. Great stuff. See you in a bit. Coming up on Worldwide Exchange, were waiting on insii insight from the fed. John silvia is coming up next. Whats going on here . Im val, the orange money retirement squirrel from voya. Were putting away acorns. You know, to show the importance of saving for the future. So youre sort of like a Spokes Person . More of a spokes metaphor. Get organized at voya. Com. Bounty is two times more absorbent. More sit per roll. So one roll of bounty can last longer than those bargain brands. So you get more life per roll. Bounty. The longlasting quicker picker upper. Sprint . Im hearing good things about the network. All the networks are great now. Were talking within a 1 difference in reliability of each other. And, sprint saves you 50 on most Current National carrier rates. Save money on your phone bill, invest it in your small business. Wouldnt you love more customers . I would definitely love some new customers. Sprint will help you a cuomers and cut your costs. Switch your business to sprint and save 50 on most current verizon, at t and tmobile rates. Dont let a 1 difference cost you twice as much. Whoooo for people with hearing loss, visit sprintrelay. Com. Welcome back to Worldwide Exchange. Lets get you up to speed on the market action. Yesterday significant declines for u. S. Equities. Every s p sector was negative. The nasdaq down 1. 5 . We are expecting a bounce back today. As you can see, only fractional, about six points for the dow. Essentially flat in the premarket. Lets look at some other Asset Classes around the world. Currencies, one of the reasons we were so soft in equity markets yesterday is because the dollar was so strong. Particularly strong against the pound. The pound rebounding a bit today. 1 rebound. 1. 2245. Elsewhere, the dollar is still strong. Not as much as yesterday, but about 0. 3 strength against the euro. Looking at europe, lost a bit of momentum in the last hour. We were broadly flat, now negative. Nothing too pronounced. The pound the ftse 100 sliding onethird of 1 as the pound has rallied. Oil prices slipped 1 yesterday. That 1 slide in perspective to significant gains recently, we are bouncing back again today, just shy of 51 bucks on wti. Seema . Lets continue the market discussion. Joining us from charlotte, North Carolina is john silvia from wells fargo securities. Good morning to you. Good to see you. Following a barrage of hawkish commentary from fed speakers this week, all eyes on the Meeting Minutes what are you look at . Three elements we need to focus in on. To what extent is the inflation model working . To what extent are they bringing in the global outlook, especially after the imf has lowered its Global Economic expectations. Finally, what about asset prices . I know eric rosengrin for some kind of bubble territory, to what extent that applies to other areas. John, as we look ahead to november and december off the back of that, what are the key data points youre focused on, specifically the data points that need to change in order to see the fed to act . Whilst the market tends to look at employment number, i think its the inflation numbers. The fed has to look at some increase in inflation. Commodity prices, oil pretty much stabilized. I think the inflation data is the most important. Thats the evidence suggesting that their model for the overall economy and inflation expectati expectations has really turned and justified higher federal funds rate. Without the inflation numbers, we could continue at current levels for the federal funds rate for quite awhile. Weve seen yields pick up significantly in the last couple of weeks. The tenyear has gone from 1. 5 to loclosely 1. 8. Is that pricing in a rate hike this year or other factors . I think its pricing in just the rate hike. I dont think there is an expectation of Stronger Economic growth. As we mentioned, the imf expectations have been lowered. Inflation still has not picked up when looking at the core pce deflator. From the feds point of view and the markets point of view, its only the fed telling us theyre going to raise rates in december that has moved that tenyear rate. If we look at macro environment what is the Biggest International risk to the Central Banks policy . Is it china or europe and the distress were seeing in the Banking Sector . I think the issue for us is the global trade, and global trade growth being basically zero. So once again, when you look at the united states, this is going to be another year looking forward to 2017 where trade subtracts from economic growth. You have so many countries in southeast asia, china, japan, south korea having an export growth model. If export growth is zero, then you have a real issue. I think thats the number one story that Global Growth and trade has slowed down. And that is really hurting a lot of these exportingoriented countries. John, we saw a selloff yesterday for u. S. Equities. Lots of factors mentioned out there including the stronger dollar, the yields, but also one of the factors that spooked markets was a selloff in the pound. Should u. S. Investors be wary of that again ahead of brexit . Those huge fears of contagion . Thats abated a lot. Is it right people are more concerned again about brexits impact . Absolutely a little bit more concerned simply because while there was a vote, there was an expectation that it was going to sort of be worked out in a framework that was comfortable for everybody. Now it appears the positions have hardened from the uk side and the euro side. And that there are greater threats to the Financial Capital of europe and london. Yes, absolutely. Wove gone from voting to now having to deal with the negotiations. They appear hard. Could be quite disruptive. John, thank you very much for joining us. John silvia of wells fargo. About 20 seconds left. Seema what are you watching today . The earnings season is front and center for investors. Csx reporting today. And fed minutes as well. Thats it for Worldwide Exchange. Have a lovely morning. Squawk box is coming up next. Good morning. The bulls look to battle back after the major u. S. Indices drop by more than a percent. An ugly decline yesterday. The biggest in nearly a month. Had do with this, profit warnings yesterday and today. Ericsson shares plunging after the Company Says Demand for mobile broadband is weak. Samsung is slashing its guidance due to the galaxy note crisis. And the cubs win. Chicago making history with a huge rally in the ninth inning to move on to the nlcs. Yes, thats going on right now. Dont watch as much baseball as i used to its wednesday, october 12, 2016. Squawk box begins right now. Live from new york where business never sleeps, this is squawk box. Good morning. Welcome to squawk box on cnbc. Im melissa lee, along with joe kernen. U. S. Equity futures, a hangover from yesterday. A selloff as joe mentioned. Were set for a higher open on the s p 500 and the nasdaq. Slightly lower on the dow jones. Over in asia, you can see the impact, the nikkei down more than 1 . Hang seng down by 0. 6. Shanghai unchanged. The trade in crude oil, we are lets look at the european markets here. A mixed bag. Dax, cac and the ftse 100 pointing to the down side. Now crude oil, trading higher