tv Power Lunch CNBC August 21, 2015 1:00pm-3:01pm EDT
pretty clear about that. >> jim, it's been great to have you here. thanks for coming. really good to have your insight as we try to figure out, not only why we've gotten here but where we may be going. we hope to have you back. jim chanos. have a great weekend. "power lunch" begins right now. >> indeed it does, scott. thank you very much. another selloff. you probably knew that already. welcome ever boyd. the numbers are the story. the dow down almost 2%, down 1,000 points in august. nasdaq down more than 2%, russell down more than 1%. >> as you can see there on the screen, the psq is the inverse of the qs and that is the leader, up nearly 3%. the vixx is up huge today, almost 26%. vxx, an an etf that tracks
volatility is up 10% alone. the ten-year is sitting at 2.036%. we're seeing if it gets to that key 2% or even below. that's a very key level. as for wti, crude is down by 3%, currently hitting shy of $40 even. gold is a winner. a little bit of a safe haven, currently sitting at 1159. we'll bring you more on the gains we've been seeing recently in gold and the dollar is lower today. that is also helping gold. >> who would have thunk that the ten-year note would have been right there at 2% and crude might dip into the 30s this summer? i'm tyler math sin. mandy drury here as well. let's get right to the nyse and bob pisani. >> we had a very modest attempt at a rally mid morning and it's basically failed. we're sitting at the lows pour the day. the s&p 500, a bit of aa surprise at the open. we got down about ten points.
suddenly we were much weaker. heavy selling at the open. many people thought this was probably european sellers that were unhappy with what was going on over there as well. we attempt add brief rally and now we or back toward the lows of the day. take a look at the highlights. i mentioned the surprise gap at the open. this is options expiration day, everything around the 2,000 mark at the s&p. there's a flurry of activity. we saw tech sell off today. take a look at some of the -- look at retailers, a number of these retailers have had great quarters, ross, under armour, starbucks, o'reilly. the others are wins selling off. same with financials going into august, financials were market leaders. they've been down for a while. the last several days have been tough as we've seen the interest in higher rates go away here. the vix, very strange here, up 10% three days in a row.
haven't seen that in a long, long time. let me show you, vix up 10% three days in a row, very rare october kens, only twice. march 1994, up a week after, october 2014, up a week after and the month after that as well. very extreme readers on the vix for a short period of time and one of the few things this has ever happened, tyler, we have seen bounces in the market. >> bob, thank you very much. let's go up town to nasdaq. bertha coombs following it all. >> the nasdaq 100 and nasdaq o composite still in positive territory but having a miserable week. the nasdaq 100 sitting below the two-day moving average, just near correction territory. ground zero for that is apple. apple this week technically has gone from bad to ugly. now down nearly 19.5% from its april high, putting it very close to correction territory on
very big volume and negative for the year. back to you. >> thank you very much. let's go to brian sullivan. as oil has west texas has cracked the $40 number. what's going on? >> we're below $40. $39.92, the last trade on the october contract for crude oil. here is why. the baker hughes rig count showing another gain in drilling rigs, only up two for the week, but the fifth straight week where we've seen the number of drilling rigs go up, not down. we're still down 890 from one year ago. eventually the producing wells will slow down. right now for five weeks in a row, we've seen an increase in drilling rigs, we've talked about it extensively on "power lunch." a lot of these firms need the cash flow. saudi arabia has record number of production doming out. crude oil at $39.95, nearing a seven-year low for a barrel of crude oil. when i was in mid land, texas and houston earlier this year, i
had a number of people say on our air, we're fine as long as we don't go below $40. we're below $40. it's only been a couple of minutes. this is a danger zone for a lot of oil companies. this is a big one. >> a lot of pain being felt in the energy patch. in fact, the eighth consecutive week of falls, isn't it, brian, which i do believe is the longest losing streak since all the way back in 1986. in '85 we were at $10 a barrel or so. nonetheless, longest losing streak in 29 years. thank you very much, brian, for the update there. gold is one of the safety trades we are seeing in the global market selloff. precious metal up 4% this week alone and up 5% this month. fears about china and demand there sending copper lower. it is also low for the week, down about 2% over the week. china, you might know, is the top copper consumer in the world. certainly any problems in the economy there are going to have a knock-on effect in this industrial metal.
ty? >> sara eisen at the new york stock exchange. look at the impact on the global selloff on the emerging market. >> we're looking at the carnage in emerging markets through stunning charts and graphics. here is one-month moves in currencies of some of the biggest and most important economies in the world. you see resource-based economies like brazil and russia taking huge currency hits this month. it's highly unusual to see a 20% move in currency in five years let alone one month alone. for all the hand ringing about china's dee valuation of the yuan and china down 3%, but it is still partially managed. how is it playing out in global markets? stephen englander from citigroup shows that if you look at global stocks, the top line in dollars, not too far off from recent highs. if you look at stocks of local currencies, that's the middle line or even worse in emerging market currencies on the bottom,
it tells a whole different story. world stocks as you see from that red-orange line are making new post recession lows, worst than the hype of the great crisis. there's a look at some of the damage and destruction including what i'm calling the donald trump chart which i'll unveil on "closing bell." >> thank you very much. a lot of great charts out there that tell a good story. let's bring in chief market strategist, what chart in particular are you watching to tell the best story of where we're going from here? are you watching the vix, the transports? is there something else out there? >> mandy, thanks so much for coming back from vacation and getting this market to do some action here. we've got a chart that you probably want to look at. that's going to be crude oil. i think we'll get stabilization in the marketplace when the commodity complex finds equilibrium. i think the correlation between wpi and s&p 500 over the last
month and a half has been higher than we've seen, almost ever in history. if you want to key on one thing, key on where we find stabilization and commodities and oil in particular. that's not happening today, and we're not seeing any stabilization in the market. >> without oversimplifying it, are you saying the broader market cannot recover until oil recovers? >> or the broader market is not going to stabilize until we get some stabilization in the commodity complex. they shouldn't be correlated this closely, but they certainly are and they have been over the last five weeks. historically it's not something that's as correlated as we've seen. people are using the sell-off in commodities as a barometer for the global economy. that's probably wrong. there's a supply and demand imbalance for sure. additional rigs shouldn't move the market as much as it does. think about the rig count down 60% on a year-over-year basis and we're adding two rigs a week over the last five weeks and we're making a big noise. we have to see that production is coming down significantly.
redetermination season is coming in the fall. there will be a lot of energy companies that are in trouble when that rolls around, i think saudi arabia will wake up and take notice and probably say they've done enough damage and pull back. until that happens, a lot of daylight between now and then. we need stabilization. >> we absolutely do. thank you for that. by the way, we're currently very close to hitting correction territory for the dow, sitting at 16,626. 16,516 will be officially correction territory. ty, over to you. >> this massive selloff on wall street and around the world, as mandy mentioned, 16,516, we're about a hundred points or thereabouts, 110 above that. at that point the dow hits correction territory. one sector that has been hit hard, technology. the sector headed for its second worst week of the year. 35% of the tech stocks in the s&p 500 in bear market
every sector in the s&p 500 is lower. consumer discretionary one of the leaders in terms of decline. the sector is on track for its worst month since january of 2014. that month it lost 6%. in total 59% for 50 of the 85 stocks in this index are in correction mode or worse. some of those names include viacom, michael kors, wynn. so retail stocks, the ones getting hit perhaps hardest especially in today's trade, mandy. back over to you. >> thank you for that. the worst week of 2015 for the major averages. where the dow the closest to correction territory, down over 9% from its may all-time high sitting at 16,640 as we speak. the s&p also falling pe below that 2000 mark. 2004 with supporters crashed through that. the next stock is possibly 1980 according to technicians.
the nasdaq have its worst week since 2011. the russell small cap already in correction territory. oil dropping below $40 a barrel. now slightly above. as for individual stocks, sketchers down after a three for one stock split. the shares are up more than 140% in the past year. and deere tumble after reporting a 40% cut in its profit. you can see what people are feeling about that. it is currently down by over 8%. ty? >> let's take a look at the tech wreck, the sector tracking for its second worst week of the year. 35% of the tech stocks now in bear market territory, off 10% or more from their recent highs. bear market will be 20%. josh lipton live in san francisco. josh, fill us in. >> tyler, it's a sea of red today in tech, but some names
really standing out in this selloff, one would be apple. you heard bertha mention it earlier. the tech giant now negative for the year, twin concerns for apple, slowing growth in china and whether apple can grow iphone shipments in the december quarter and 2016. also take a look at netflix. when a crowded momentum stock like netflix slips, it tends to slide very hard, very quickly. mark noon of gray wolf says he sees more near-term down size. watching 97 bucks, the next big area of support. he would be a buyer at that level. still, there are some tech stocks moving higher today. sales force positive after reporting better-than-expected earnings and raising its full year guidance. hewlett packard also finding buyers with the stock enjoying a nice pop. bernstein's tony sack nagy says with the split fast approaching, it's time to build. >> the noted short seller jim
chanos speaking with scott wapner about the growing fears of china. scott is here with more from his exclusive interview. >> so much consternation, tyler, about what's taking place in china, whether that's the real catalyst or at least one of the major catalysts for the reason why stocks are pulling back as sharply as they are. don't know of anybody more vocal, more bearish over the last many years as jim chanos, the president and founder of kin koes investments. so how bad is china? >> it's worse than you think. whatever you might think, it's worse. i can pretty confidently say that. we've been saying it for five years. i think the biggest lesson over the last three months for me anyway is people are beginning to finally realize that the chinese government is not
omnipotent and only nisht. i think the way they've handled the run-up to the stock market, the panic responses, the dee valuati valuation, not valuation, the mixed signals coming out of the various different ministries i think has given investors pause. like many of us, sometimes they don't have a clue. >> that's been the sentiment, jim chnos saying it's as much political as it is economic in china. we talked about the energy patch as well. oil remains a considerable story day in and day out. we ended up getting to solar where mr. chain knows revealed publicly anyway for the very first time that he is short elon musk's company solar city. >> the problem with solar city relative to some of the plays like sun edison that are industrial and commercial plays, is there a residential model? the residential model -- solar city is a subprime financing
company in effect. you basically lease the panels from solar city. they put them on your house and collect the lease payments. in effect, if you're putting on the panels, you a second mortgage on your home. you hope it's an asset. in many cases it turns into a liability. >> you see, ty, the reaction in shares of scty when chnos revealed publicly he was short that name. josh lipton was managing in the back of earnings that hp today is the best performer in the s&p 500, up about 4% or so on and other wise decidedly down day. jim chanos saying he is short that name, not buying any of the positives that meg whitman was saying today. if you're not growing, you're in effect dieing. >> he also said he was still short caterpillar. >> if you remember, he revealed that short for the very first time a couple years back.
>> scott, thank you very much. what were the chances that we would find a four-star fund manager who went to the same high school as mandy in australia? we did. four star fund manager, four star anchor. despite the selloff. she will tell us where she's putting her money to work in this market next. defiance is in our bones. new citracal pearls. delicious berries and cream. soft, chewable, calcium plus vitamin d. only from citracal.
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i'm jane wells in los angeles, taking a look at a defense sector north of shares down. the only one down much more than the broader market, almost 3%, does come back a little bit. northrop is the one stock in the sector who has outperformed over the last year. even now it's up 30% over the last year. over the last month all these defense names have out performed the broader market. even with what's going on, stern age gee upgraded lockheed martin to a buy with a price target of $252, about $50 more than it is now. says given everything going on lockheed martin stock could be on a path of $300 a share in 2018. back the you. let's take a look at where gold is sitting right now as the prices close for the day. there you see it. again, the safety trade in place
there, up $6.00, about one-half of one% at 1159.30. gold up 5.5% so far this month. mind you, gold was only recently at 5 1/2 year lows. silver, copper, seventh consecutive weekly loss on track here, palladium and platinum both lower. look at palladium, down about 3%, platinum down a little under 1%. let's go to dominic chu. >> as the selloff continues, a brighter spot happening right now, that's the gold miners, gdx may be off for the day but up 8% for the week, ten percent for the month. it's up just mod evidently wavering between gains an losses. the stock is leading the gains for the s&p 500 so far. this week the best fer forming stock, tyler, in the s&p 500
this week amit the route is newmont mining. >> rick santelli is on holiday, but we do still have a bond report. the price is moving higher. the farther out the curve you go, the greater the price gains, the more the yields are falling. look at the ten-year at 2.04%. earlier it was 2.03, and on the 30 at 2.73, almost 2.74%. money moving in to the relative safety of the bond market. mandy? >> okay. thank you. european stock markets plunging on more china fears. the stoxx nearing correction territory down nearly 3% and on course for the biggest weekly loss since december of last year. the dax, ftse all in the red in overnight trade. in fact, the french craac is al
down. the european fund is up 27% since 2013. katrina, welcome to "power lunch," thank you for joining us on a very interesting market day. are you seeing this as an opportunity for an example to accumulate or buy or kind of like catching a falling knife? >> a lot of different concerns. we have growth concern in united states. in europe we've got a bit of a different situation. we have a market that hasn't grown, an economy that's been very slow growth. as we look at the earnings of european companies, they're still 30% below their peak earnings level. we see a lot of wrong way despite the scares you're seeing in the u.s. >> you talk about a lot of runway. a lot of the upside people believe will come in europe is based on ecb, quantitative easing and the euro. is it something you see to continue.
will it be something that is a problem for european company there is? >> it's a very, very small head went. the massive decline you've seen in the euro is what we're focusing on. you have various markets where you're going to see that being a big beneficiary. we look at the german market, for example. i think germany, people don't realize, the 3 million privately mid-sized companies that are big drivers. they'll be the big beneficiaries of this. fairly significant decline in the euro. yes a two-month high, but we're down almost 20%. >> we have to leave it there. you have two particular names, adrs, and deutsche post. that was katrina dudley of the franklin mutual european fund. tyler, over to you. >> the dow near correction territory, 15% of the s&p 500 companies are actually in correction territory. should you buy on this drop or is it a value trap?
plus 1997 all over again or fears about emerging market currencies signaling another asian financial crisis. we'll explore that one when we return on "power lunch." 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 thousanimages to find one tiny abnormality in shape, contrast or movement. because it's 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.
i'm sue herera, here is your cnbc news update. treasury secretary jack lew speaking by phone with china's vice premier telling him the u.s. is closely monitoring china's foreign exchange policy changes. the obama administration urging china to shift its economy away from a dependence on exports an towards a dependence on consumption. during friday prayers iran's defense ministry says its country is building ballistic missiles. he says no resolution will stop iran from strengthening its military. the wildfires across washington continue to rage. residents were ordered to evacuate the town of okinawan this morning. winds are complicating the
firefighting efforts. three advocacy groups suing new jersey governor chris christie for using taxpayer dollars to pay for security detail travel expenses. they want him to reimburse the money. he says the troopers go where he goes whether he wants them or not. that's the cnbc news update this hourment back to you guys. >> stocks tumbling for the fourth straight day in the worst week of the year for the major averages. the dow is down more than 3000 points, down 9% from the may all-time high. so getting closer and closer to correction territory which the small caps are already in. dara richards, chief investment officer at akt world advisers and john wilson ceo of sprot asset management. do you think, darren, this is just a correction we're seeing in the markets or could it potentially be a bear market? >> it feels to me like it's a correction.
we see these things fairly frequently. it's been a couple years. i think the market is particularly nervous. in 1980, 14% declines in the s&p are pretty common. yet at the same time, 75% of the time the market is up. this feels like a correction. we're holding pat and not selling anything. >> not selling anything at this point, but are you buying? >> we're not buying but we entered the year a little heavier on equities because we preferred equities over bonds. if i had dry powder, i would use it. it's a great opportunity for people to use cash. >> what's your reading on the state of the market, john. do you believe the bull market is alive and well and are you buying? >> well, i agree with darin in that it's not -- i don't see the catalyst here for a bear market at this point. it does feel i think a lot worse for people than it actually is simply because of the low volatility and the lack of declines we've had for the last number of years. we're buying for this.
we came into this increased volatility in this decline with quite a bit of cash. the way our strategy works, we typically always have index put options. so those are helping a lot in this decline. it allows us to get longer on the equity side of the books. >> what are you scooping up with that cash, john? >> well, we actually -- in this kind of environment what we like to do is sell it out of the money put. so pick stocks we really like, go a little below where we are in price and sell a put there and get a nice juicy premium. we're seeing premiums on large cap stocks we like annual yulizing. >> we have put up a few of your specific names on the board as well. thank you john and darin. guys, do you remember 1997? it was called the asian contagion with recent pressure in emerging market currencies, could we be facing another asian financial crisis? what are the similarities and
what is due today? steve leisman, you can take a look back then and what we're seeing now as well. looking specifically at a stock market. so what do you think is similar? what's different? >> first of all, let's set the table here, mandy. china is slowing, devalued its currency. there's some concern that we could experience another asian financial crisis. peter fisher is the senior investor of blackrock investment institute. he says there's some reason for concern. >> i think the devaluation by the chinese authorities has smoked out what i'll call the china slowdown deniers, the people that have been in denial that china could meaningfully slow down. they've been smoked out, but mostly the spillover over what's the second largest economy. i put a lot on that. i hope it doesn't turn out as badly as '97, but the game is not over yet. >> let's talk about what
happened in '97. east asian currencies, i believe mandy was in east asia at the time, falling 35% to 80%. stocks by dom is going to tell you about in a second, plunging 40 to 60%. imf gives loans of $35 billion to indonesia, korea and thailand. the fed, something it can't do now but it's important, cut rates three times in '98. to be sure, lessons were learned. many asian countries now have flexible exchange rates before they were fixed. the biggest, china, still keeps a lid on its currency movements. china has capital controls in place which was frowned on in '97, but thought to be helpful, bringing a country to its knees. take a look at this. right over here i want 20 show you first, this is the '08-'09 recession. the asian contagion, the '97 crash, much, much worse for those asian economies. that's what we have, mandy. i want to show you one thing.
i want to look at what we have today. look at this. this is the increase we've had. you can see it is depreciating as the dollar. let me put it into some context. let me show you what a real contagion looks like. guys, to the next screen. boom. that's what happened. this is something to keep your eye on, but it ain't this by a long shot. >> it doesn't feel like panic at this time. we saw disorderly decline, even governments were toppled, companies went bankrupt. we're not seeing that level. >> i was in russia and they defaulted on their debt, they devalued their currency. this wauz back in '98. you had an interesting anecdote. you saw the cranes disappear from the sky. >> in 2001 when i moved to southeast asia, i was driving along the malaysian coast and you saw these ghost towns, massive developments, resorts being built during the boom time. overnight, boom, they were
abandoned because the money ran out. >> here is the interesting part. what i want to bring up, you talk about malaysia. the reason you're showing what happened with thailand is because that was the epicenter. >> absolutely. >> take a look at this, though. why the thai bot may not be as bad as it was, check out the malaysian ring get. now we're talking about, dollar strength, malaysian ringgit weakness. if you expand it over the last 20 years, you'll see something else. we're now at the same levels as we were during the asian financial crisis. that's something to keep in mind, maybe shades of perhaps '97. again, no easy apples to apples comparison here. take a look at the ways you measure volatility or trading ranges. the vix, here is where we are right now. we have seen a very wide move, up about 22 on that level here. but go back to 1997.
we saw much wilder swings in our stock market on the vix. we will end here on the ten-year note yield. we saw some wild swings back then. not as much today, although we've got to figure here that central bank intervention and quantitative easing by us and other banks around the world really plays a part. it's hard to make an apples to apples comparison. >> i want to give one quick anecdo anecdote. we asked fisher this morning, did you see it coming. he said no. i think that may be the reason we'll having the selloff extend. people don't want to be long into the weekend. while they're long on the beach on sunday, china is open already. >> that's right. don't go to the beach on sunday. >> thank you very much to both of you. over to you, ty. >> cnbc contributor ron insana and sue herera both remember the crisis. what the historical parallels
you've seen? >> i think we have two running at the same time. i think china is japan in 1989. i think they're going into real recession and their markets are going lower for a long time to come. the chinese are out of bullets with which to handle this crisis. when you look at these repeating currency crises, it's not just asia. if you look at kazakhstan, turkey, mexico, they're coming down as well. they're resource related countries. there are some very important similarities. we are catching down to them which we're probably going to fair better. there are real issues in that. >> as ron points out, sue, we tend to focus on the euro, the chinese yuan, the japanese currency and less so on those ones that are not as central to the global economy. >> a lot of times it's those that are not central to the global economy that trigger the event. i would push back on the thought that things are orderly right now. they're orderly here in the united states, but if you look at the periphery, if you look at
some of the other global markets and the volatility that is contained within them and the selloff that we've seen in overnight session, it's not orderly. it's very disorderly. we are orderly here. but i would say global markets right now -- >> it's not looking terribly orderly today. >> as in 1997. the difference between now and 1997 on the currency front which ron knows so well is we had -- now we have free floating currencies. then we had pegged currencies. you have central banks around the world that are in the most accommodative stance they've been in some time. those are the differences between what happened in '97 and what's happening now. >> final quick thought and then we'll bring in larry kudlow. >> the tie bot was on the periphery in -- the one thing i would say here and i've got a piece on cnbc.com coming out, this will not be over until the
fed lady sings. i think the fed will have to cap pit late and say, nothing is happening yet, deflation is a global risk. oil is cracking, copper is cracking. every raw material price is at multiyear lows. you the risk of a global recession. the u.s. looks better. >> on that thought let me toss it over to mandy. >> you mentioned raw materials, ron. remember indonesia, malaysia, big commodity exporters. that is killing them on the commodity front as well. let's bring in cnbc contributor larry kudlow. is this the start of a global crisis? >> no. i don't really think so. i agree with ron insana, there's a lot of deflation. the biggest is china. china is weaker than we thought. in 1997, the american economy was fundamentally healthy and sound. that's a big difference from today. today the u.s. economy is really weak and very mediocre, and just
in a word, what this country needs and will help the whole world economy because when america leads, we do well. we need positive optimistic economic growth policies. in particular we need to slash or abolish the american corporate tax rate. it's the single best pro growth thing that we could do. and if you do that, it will help the whole rest of the world because the usa is the center of the world economy. >> you're just getting warmed up. we want to hear more. we're back in two minutes. as we head out, here is a look at what the markets are doing. major averages down almost 2% but off the lows of the day. we're back in two.
ron made. he said it ain't going to be over until the fed lady sings. you made the point that it seems more and more likely that maybe the song she's going to sing is no interest rate hike in september. do you agree with that? do you think that is the recommendation if you were there advising? >> that's what i'd say. i agree with ron. i think whether it's commodity markets or bond spreads or inflation break-evens or gold or the dollar. we've had deflationary pressures, not inflationary. traditionally the fed should not raise rates in the face of deflation. my view is you can't have a zero rate forever. i get that. but the fed should not do its manhood thing or its womanhood thing at least for a while. let's let this thing play out. my biggest problem -- can i just raise this. i think this is so important. the health of the american economy is vital to the rest of the world, and we're not doing very well. okay? you have this thing called the political campaign. i want to mix politics and the
stock market for just a second. i've got one democratic candidate that wants to double the capital gains tax. i have a second democratic candidate that wants a second tax. i have a republican candidate that wants a trade war with japan, china, mexico and he wants to devalue the dollar and deport 11 million illegal immigrants. now, these are not pro growth policies, not a one of them. >> that seems safe to say. >> if anybody is invested in the markets who pays any attention to the political pages, it doesn't look very good. that's my point. >> i would go about this a little differently with respect to the fed. it's not just about raising rates. maybe quantitative easing would not work nearly as well this time around because interest rates are heading back towards 2% on the ten-year. maybe we need, rather than a corporate tax cut, massive infrastructure buildout to put people back to work. >> ah!
>> i know you hate that, larry. you could put a 6% hundred year bond out there and put people back to work. >> hang on. let me respond to that. ron insana stumbled into something very good. >> i've been thinking about it for a little while. >> good for you. >> the intrastructure should be bonded, you're exactly right. it should be run privately or through toll roads. that's right. you're great. that by itself is not an kmiek growth measure. a corporate tax rate, slash the thing from 40 to 20, quit double taxtion foreign profits, go to immediate cash dispensing. within five years, it will not only pay for itself, it will increase american economic growth by at least 1% to 1.5% per annum. that's what's missing from the equation. we obsess about the fed. the fed can't do anything.
qe hasn't worked, zero interest rates hasn't worked. let's move toward supply side policies that do work. >> a lot of this discussion about this fed -- in fact, a lot of what's happening in the market right now is prospective. it's a bit on the come of fear right now, that somehow what's happening in china will end up being worst. i'll lean against my league a little bit. larry, the u.s. economy certainly relative to the rest of the world and relative to itself in the first quarter. we're north of 3% of growth in the second quarter. going to do 2.5 in the third quarter. if i would layer in better growth on top of that, i could maybe get a half point on top of that. if we think about maybe the worst outcome doesn't happen, maybe they're able to employ their $3 trillion in reserves to keep a lid on their financial problems, maybe they do go ahead and september and raise that quarter point. >> i'm not in a catastrophic
mode. i want to make that clear. china is weaker than we thought. their retail sales, their car sales are lousy, manufacturing is lousy. that's new information at the margin. hire in the u.s., you may be right, steve. but the third quarter, the gdp now thing coming out of the atlanta fed is about 1.3%. >> can i just address that, first of all? >> that's important. they're out there with a huge drag from export that nobody else has and maybe our cnbc rapid update, larry, running 2 1/2. you want to fight about that, give me a call. >> anything you do is a good thing in my opinion. you're a great american. >> thank you. >> i just want to say it's very doubtful to me, very doubtful to me that the american economy on a trend basis, four-quarter change does better that than 2% to 2.5%. >> that's better than the rest of the world. >> i know, but don't you understand -- you're missing the point. it's not that we're better than the rest of the world.
when the united states grows rapidly and when we have sound policies, then the rest of the world benefits. we are the center. i don't care about the thai bot, the kazakhstan, whatever it is, i don't care about any of that stuff. what i care about is what the united states does. i'm saying, i want to come back to the campaign trail. we're not hearing a positive economic growth message. i think that's a big problem. >> i will still, however, stick with my fortress america concept, lower energy prices, energy self sufficiency, mrg renaissance, technological innovation, in the long run still benefit the u.s. relative to the rest of the world. >> yes, i agree ask. >> having said that, i think this is fortress interruptus. we've had other periods in the past where we could see an unsettling period that knocks us for a while until we regain our footing relative to everyone else. >> what's the risk of deflation? >> i think it's high.
>> the fracking revolution, and we're moving towards fracking 2.0, could bring oil prices down to $25, $30 a barrel. that's not good if you're producing energy, but it's good for everybody else. it's good for manufacturing, it's really terrific -- all i'm saying is go further out. go to your technology, go to your biotech, go to your retailers, they need some income tax relief so they can get more money at the margin and they need to bring home all of the $2 trillion they parked overseas. we could put that money to work. >> it's tied up. >> we can be competitive. let's do intelligent things and can we please get some political candidates who know how to talk growth? >> steve, do you think these low energy prices, net positive or net negative? >> i think they're net positive. i think people forget that. i think there's a lot of immediate pain in the oil patch, and i don't want to diminish what's happening to some of the companies that went out there.
they made investments, they pioneered certain new technologies in area. it's palpable pain there. overall net, it's better for the united states. chinese devaluation is better for the u.s. what happens is, if you think about it, there's one loser in the oil story, but multiple and very wide and spread out, and minimal gains. but they are for the greater majority here, i don't think there's a huge deflation risk, tyler, because ultimately the service sector which is the bigger part of the economy has stronger economy. >> financial risk in china. >> larry you're a great american, mandy is a great australian. >> you have to get your citizenship or you may get thrown out after next year. >> can you imagine? >> i'm working on my accent. let's look at the volatility index one more time. the largest monthly gain ever, up 100% in august. how to trade that fear?
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almost everything else is being sold off. take a look at shares of jetb e jetblue, delta, unit. for the week most of these stocks are down anywhere between 5 and 8.5 or 9% that's this week, today being the biggest drop for all those stocks. as you take a look at crude oil, it did briefly drop below $40 a barrel. you would think that would be good for the airline stocks. but today, almost anything that is out there is being sold including the airlines. more "power lunch" coming up far from campus? the one who works the night shift? the one with new responsibilities? one thing can't tell you, but the right combination can. universities are using ibm analytics to understand pressures in and out of the classroom- some expect to cut dropout rates by twenty-five percent. ibm analytics is working to make education smarter every day.
welcome back. bob pisani on the floor of the new york stock exchange. modest rally, big down move at the open caught a lot of people by surprise. may have been options related. take a look at the options midday. no improvement from yesterday. heavy volume, extreme volatility. retail winners are selling off. this may have been part of the problem. we had tony sakanagi on earlier this morning. meggive comments. the stock went from 110 to 108, took a lot of internet leaders down with it, google, apg amazon, netflix. all done well recently. down today. are we at a bottom? i don't know. i'm seeing weird stuff out
there. the vix has been up more than 10% three days in a row. we've hardly ever seen that. the put call ratio was over 2 today. that's almost 1 to 1.2. those have very extreme ratings right now. i don't know, tyler and mandy, if we're at a bottom. there's a lot of fear out there. usually that's an indication of some kind of attempt at a bottom. back to you. >> that, folks, will do it for the first hour. >> indeed it will. brian, we'll hand it over to you. >> mandy and tyler, thank you very much. 2:00 on wall street where the selloff continues. i'm brian sullivan. melissa lee is at the nasdaq. a huge market day, a big market week. the sellers are out in force. the dow is down more than 300 points right now. we're also staying all over the oil story. crude cracking below 40 bucks a barrel early in the session. the number of drilling rigs up again for the fifth straight week. crude on track to post its eighth straight weekly loss. folks, that has not happened in 29 years.
wow. we're also seeing a massive move in the dollar. one thing that is in the green right now is the fear gauge to bob's point, that is the vix, the volatility index, the biggest monthly gain since 1990. volatility has more than doubled this month in the month of august. so much more in this selloff all hour. let's begin by putting this in a bit of context for you to round out your week. that is your number of the day. that number is ugly for everybody i suppose except the short sellers, 143 is the number of s&p 500 stocks now down at least 20% from their recent highs. that puts them in bear market territory. another way to put it, nearly 30% of the broader market is in a bear market. this is truly a global route because while the entire s&p 500 is not yet in a bear market, these nation's main stock markets already are. china, all three major indices, russia, greece, saudi arabia, indonesia, egypt, nigeria just
to name a few. these commodities are in a bear market. oil, you know that. nat gas, even lean hogs down 20% from their one-year highs. here is a big question that many of you are no doubt asking heading into the weekend. is this an opportunity to pick up stocks from the long run at rather discounted prices. mat miley joining us now. any bids out there today? >> well, there are some in certain areas, but we've all heard about how thin the markets are right now because everybody is off on vacation. but we also have an expiration today which is probably having -- exacerbating the move. however, when you broke the key support levels we did yesterday and the day before in the markets, it's got people stepping away. nobody wants to catch the falling knife. however, to be honest with you, i think reare due for a short-term bounce, it may happen
before the end of the day and lead into next week. to be honest, i think it's something we want to sell on strength rather than something that will last. >> you might be on to something. i saw your note earlier, that's why we had you on. we are 100 points off our low for the dow. the market inched its way higher in the last couple hours of trading. are there any signs that you see something like that that could happen again today? >> yes, a couple things. first of all, as bob just talked about with the put call ratio, you rarely see it at this kind of a level. that shows too much fear in the market on a short-term basis. obviously the put call ratio is a very short term indicator, but it can be a very good one. on top of that, we have markets that are washed out. i don't think the s andp -- we're not even down 10%. the emerging market is down 20%. oil has been crushed. china has been crushed. china is testing its july lows, and a lot of people saying that
the government is going to step back in again at these levels. when you finally get -- if we can get some bounce in the emerging markets and these other commodity markets, that should ease off things a little bit in our domestic market. but again going back to some of the problems we've had, whether it be technically and fundamentally recently, it may not be something that lasts for very long. >> i know there's a variable cornucopia of reasons why stocks are down. matt, if you had to pick one as the main reason, what is it? >> well, if i had to narrow it to one, i'd just have to say it's credit issues. we have -- i would also say earnings. you kept me to one, so i'll say that. we have -- first we had greece, then we had puerto rico. everybody knows that greece is not the only country in europe that's having problems servicing their debtor that can even pay back their debt. we have the same thing with puerto rico. all you have to do is look at illinois. they'll have problems down the road at some point. of course, we have china. nowhere near the situation where
greece or puerto rico is, but their total debt is 260% of their gdp which is more than double what it was at the crisis. so this whole thing of debt, too much debt and the inability to service it seems to be coming to a head. that's weighing on -- it's deflationary and weighs on all risk assets. >> you snuck in a second reason. credit, we'll hold you to one. matt, have a great weekend. >> thanks, guys. of course, we continue to ask the question should you buy right now. we'll point out one weak area in the market, the semi conductor index. this could be an opportunity. we should point out the philadelphia semi conductor index is in bear territory. let's bring in david. he likes one name in particular and that would be qualcomm. david, this seems like a special situation semi stock. you like it because of the turn-around prospects? >> because of the valuation, turn-around prospects, doing a
lot of smart things. we think qualcomm has a great long-term franchise and you're getting it for under 11 or 12 times earnings and they're buying a boatload of stock back along the way. >> at the same time, when you take a look at the broader markets and you see the action not just today but yesterday, we saw the market in nasdaq that closed on session lows. do you think now is an attempt to step in or should you step aside and see where the stuff settles? >> we think it's a very good time. last year the market had four or five pulled back to 4% or 5%, the market recovered quickly. the sentiment at the time of the pullbacks was similar to the negativity you're getting today. if you're listening to what a lot of forecasters are talking about on air,t's all bad news. the reality is it's not all bad news out there. the u.s. economy is good, the global economy is okay. $40 oil very bad for oil companies, very good for consumers.
all is not lost. you're able to buy great businesses at 12 or 13 times earnings. you have to turn the noise down over the short-term. >> hewlett packard is higher today on the back of earnings, david. you look this one. if you're forced to choose, i don't know what you're doing if they split in november. which would you own? >> happily we think they're taking care of both pieces. a lot of times when you have a spin ashoff, the parent company loads up the company with a lot of debt. in the hewlett packard they're leaving both companies in pretty good shape from everything we see. we think we'll be holding both of them. one will be a little more growth oriented, the other a bit more cash flow oriented. we think the hewlett packard assets are worth $40 to $44 a share. you're getting it for $28 a share. it's the cheapest in the s&p 500 and probably in the top ten s&p 500 cheap stocks. >> david cass, mat tricks asset
advisers, thank you. here are other stocks we're following on the nasdaq. we pointed these out yesterday, the fanning stocks were leading the index lower. they're seeing severe pressure as well. facebook is down by more than 2.5%, amazon down 2%, ned flicks down 5%. google down 2.6%. brian, if you add apple to that, this group has lost about $97 billion in the past two days. >> big numbers all around, melissa. thank you very much. let's get to phil lebeau. he has a sector chip on the automobiles. >> like everybody else, they are under pressure today. take a look at general motors now trading under $30 a share, down 3% on the day. ford has generally been holding up relatively well relating to general motors and the other stocks over the last couple weeks. even it is down 2% today. tesla, a pure momentum stock in many ways, down 9% in the last two days, down almost 3% today z
it trades at $236. the one stock up is fiat chrysler. this stock has defied conventional wisdom, down on up days, up on down days. that's the case today. fiat chrysler up a little more than 1%. >> the dow is still down 270 points. but i want you folks to watch the russell 2000. that is a big index of mostly small cap and nearly entirely domestic u.s. stocks. it is down but only .3%. the dow is down 1.7%. if you're talking about a global route and currency concerns, many investors may be looking to those companies which sell and buy only right here in the good old usa. the res sell 3,000 or 2,000, it's only down .1%. could it tick higher? anything could happen. right now the dow is down 280 points. let's take a look at the s&p sectors as we go to break. it's a sea of red, but there is
a little bit of a feeling of a comeback here as well. all in all it has been a heck of a week. after the break we'll try to look forward. where are some opportunities for you? is there anything out there worth your money? we'll call it our market crystal ball. it's coming up. it'sneed to hire fast? go to ziprecruiter.com and post your job to over one hundred of the web's leading job boards with a single click. then simply select the best candidates from one easy to review list. and now you can use zip recruiter for free. go to ziprecruiter.com.
james bowie saying he was advocating a september rate hike. saying the fed still needs to hike rates in september. in fact, he says he thinks the markets have it wrong when it comes to global growth. he's more sanguin or upbeat. >> interesting comments on a day like today. >> people want to know about that. >> absolutely. >> as we are continuing to monitor the sell-off, take a check on sales of disney. a lager yesterday, a lead tore day. just turned positive in the past hour. higher by .3%. >> this s&p 500 holding on to 2002. take a look, though, at what happened in china overnight. that's a big source of the pain we're seeing in the u.s. session today. a reading of chinese
manufacturing coming in at the weakest level since march of 2009. that will be the depths of the financial crisis. that took down the shanghai composite. it is down by more than 11% this week. the other asian markets feeling the pain off china's pain, the nikkei 225 down, korea kospi down by 2%. china is the biggest trading partner there. take a look at the ets. all of them no surprise in the red right now, brian. >> ben kirby manages the thornburg developing world fund. a five-star rating from morning store starr and five-year return of more than 30%. ben, welcome to "power lunch." about 22.5% of your sfund is invested in china. are v you tripled that or have you been buying more chinese equities? >> thanks, brian. we're always transacting and buying and selling. i would say overall, although we
see a lot of the global risks emanating from china, we're seeing a lot of really good companies in china. in the thornburg developing would fund, we tend to skew higher quality and many of the companies we own we think will be there for the next 10, 20, 30, 40 years. they're going to be important companies. now they're trading at really attractive valuations. i would say on balance we've been reducing our loer quality china exposure and rotating into the higher quality. >> would ali ba ba be considered a higher quality sector grower? >> i think it would. al by back ba is dominant in their markets. we think it's been punished maybe a bit unfairly, some slowing in the economy, some slowing in gross merchandise value and thirdly slowing in
their monetization rates. the mobile take rates, the amount of profit they make on every transaction is increasing rapidly and will overtake their pc take rate. once that happens, we think that drives the revenue acceleration and we have a stock closer to 100 than the current 69. >> when i look at the breakdown of your fund, you've got china number one in terms of weight. you've got india and then mexico. where in the world do you believe is the single best country opportunity? >> i think the best macroeconomic conditions are probably in india. so india has an improving account, reasonable fiscal balance and structural reforms that are driving growth in the indian market. the downside is the indian stocks are expensive. >> on a valuation basis china
looks extremely cheap. on a price to book chinese stocks are back to crisis levels and we think that's probably not justified, ultimately the chinese government has stimulus measures they can introduce, whether monetary or physical stimulus to stimulate those economy and help those stocks. >> at the same time, ben, the chinese government has stepped into the markets and they have not stepped in more. what's your take on what is going on? we had jim chanos saying he thinks things are worse on the ground than people expect. whether the stocks will be there 10, 20, 30 years down the line, they're being held hostage by what is the perception at least of what is going on in china. how do you separate that? right now you're in a tough area in terms of exposure to china. >> i think that's right. i think the septemberment on
china can worsen from here. we see international investors in particular selling their chinese stocks. they read the headlines and don't want to touch china in the potential devaluation case. for our fund, we believe the chinese government has a lot of policy tools, leverage they can pull, they can stabilize the system. even p the currency does start to appreciate a bit more, at some level that would be a good thing for the chinese economy. that's one of the levers that they haven't pulled recently that they can pull in the future. we think it probably puts a floor under stocks, maybe at a lower level. but it does prevent the sort of catastrophic banking crisis in china some people are concerned about. >> ben kirby, thornburg developing world fund. we appreciate you joining us on a busy friday. >> thank you. we're always looking for opportunity for you, especially on down days. why not? street talk is on deck. keeping a close eye on oil, the final trades at the week set to
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scotch tape and an mated mice. those are the two gainers today. melissa talked about disney. disney and 3m are the only two dow names higher, an overall dow down 307 points, we are headed for our worst week on the dow since all the way back in 2011. remember that august in 201? i do. we were having specials almost every single night because stocks were tanking. turns out that was a great long-term buying opportunity, melissa. the bull market has been going on for five years. every time we've dropped we've had a rebound. one of these times we're not. >> that's true. the problem, if we can call it a problem, is that investors have been conditioned to believe that every pullback has been a balance that's proven out true, in terms of the biggest point declines this year even has been a winning strategy. >> when you have a couple trillion dollars of freshly printed money behind you, it's hard to bet against it. >> exactly. take a look at what's going on with the nasdaq, well off the session lows.
in terms of the winners, we're seeing nice gains, jd.com is up by 1.9%. a number of semi con doctor names doing well. take a look at viacom. we mentioned disney. those two getting crushed. viacom down 30% today, today higher by 1%. a little reversal there in the media space. >> time now for street talk. even on big down days there's time to find opportunities. let's run through some of the analyst calls out there that you need to know about. first up is sales .com. we talked about it yesterday. you talked about it on "fast money" last night. pivotal research upgrading from a buy to a hold. mostly a valuation call, raised a little bit last night. since the stock has fallen recently, the analyst sees more upside potential. that is what drove the analyst brian weezer to upgrade it. also incorporating a follow-through effect of higher revenues and long-term higher margins. >> i don't know if you were able to catch the interview with
cramer last night. he was so bullish. that's the reason why the stock is higher today. we also have to give props a credit squeeze. in yesterday's "straight talk" we highlighted this call. they nailed it. our next stock, the fresh market massive decline in the shares. another disappointing quarter for them, down 23%. there was decline in traffic. the analyst said in effect promotions were in place, and the company cut 2015 eps guidance by 15%. a lot of analysts doing that today. this goes to 22 from 30. 22 is basically where the stock is right now, brian. >> i'm looking at my screen. stock down 37% this quarter? everybody is talking about local bore, the move to organic, whatever the fresh market is. >> not out there. >> definitely. the stock has been crushed. international flavors and fragrances, iff, morgan stanley
upgrading it to an overweight to equal baft, boosed from 130 to 114. they see about 15% upside. >> take a look from june, brian. it's a low with the market route. it will be interesting to see how it pans out. noble, global hunter, a lot of the analysts from global hunter on a lot, upgrading it, cutting the price to 14 from 16. the analyst believes noble has strong liquidity even p the market stretches into 2017 and says a retracement to 55 or $60 a barrel could result in that side. we have both seen a lot of analysts coming on to say you treat the balance sheet as number one when it comes to investing these things. that has not worked as an investment thesis so far. >> no. i'm looking down here to number the bonds from a bunch of different companies. stocks are sexier and easier to look at. some of these first tier securitized bonds, melissa, are
down 30%. the bonds, not the equities here. i admire the analysts for coming out and trying to defend these stocks. we've had many of them on, none have worked out. at one point i suppose they will. today's under the radar name is another food company, united natural foods. big food distributor, slammed again, down 37% year to date. but defended today, calling it the new best idea, recent numbers better-than-expected. pretty fat $72 target on united natural foods, about 45% upside. another disappointing food related day. >> we've seen a lot between the fresh market and whole foods, troubled sector. we did see this taken to the positive, just as you were talking about it. >> there you go. >> melissa, thank you very much. the final oil trades are crossing for the week. will oil close the week below $40 a barrel for the first time
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a fire at the delaware city, delaware gasoline refinery. we'll try to bring you live pictures momentarily. a fire on the premises. we don't know how severe it is. we know there's a fire and the fire crews are indeed there. you can see rbob, the funny name for the gasoline trade, higher at .2%. it's owned by pbf, the owner of that refinery. they have one in toledo, a couple other refineries. we'll try to get them on the horn and show you video. delaware city, delaware, bibi the way, many of you have asked us, why are gasoline prices going up in my area, wherever that may be as oil falls,
refinery issues. a huge exxon fire in chicago, a chicago area refinery issue here. now one on the east coast, new jersey gasoline prices among the lowest in the nation. that might not continue if production does come off-line at this. let's go down to the oil close speaking of. oil prices on track for their eighth straight consecutive down week. crude oil down 91 cents a barrel to 40.41. earlier below 40 buck as barrel. eight straight weeks, the longest losing streak for oil since 1986. if you remember '86 from an oil perspective, it was ugly. by the way, the oil rig count went up again, just two oil rigs up. fifth straight week where drilling rigs went up a little bit. there are a couple of these companies trading higher. you've got ensco, plc, diamond offshore and transocean offshore trading higher. sue her regard rah, trying to
find some green. >> look forward to the pictures when they do come in. here is the other news of the day and at this hour, riot police in macedonia firing teargas at thousands of migrants and refugees to push them back from the border. thousands of those high grants from the sub-saharan africa area gathered on the border trying to make it through to other european countries. republican presidential hopeful ted cruz campaigning at the iowa state fair meeting and greeting potential voters. he stepped up to the political soap box and told the crowd if elected president, he would repeal obamacare and rescind all of president obama's executive orders. walmart and walmart foundation announcing a $25 million commitment to support organizations involved in recovery efforts. the donation includes $500,000 to non-profits in the gulf region preparing to mark the
10th anniversary of hurricane katrina. britain's newest attraction is called dismaland, a vicious satire of theme parks, the creation of graffiti artist banksy who says it's not a swipe at disney but bears a striking resemblance to disney land. that's the cnbc update. back to you. >> i want to go to dismaland. >> we can right lightning mountain and perhaps the mater born. >> matta horn. >> it's friday. the russell 2000 down as much as 1.7% today. now it is hovering around the break-even line. so something might go green. our small caps may be signaling an end to selling at least among small caps. let's ask the trading nation team. straight off the bus from dismalland, andrew burkely and
stacy, small caps leading. is this because as we talk about this global route we'll see more capital go to those purely domestic companies? >> i think that's the way you want to think about it. if you look at what's been leading on the downside, it's been more small cap. that's more because it's more of a risk-off proxy. volatility picks up, small caps don't do as well on that. it's really not a matter of going to mega caps. you want to look at it as more mid cap names. that's where the domestic trade comes in. that's going to bring you to some of your retailers, your smarl airlines, regional banks. those are the ones that get mao of the revenues domestically. they've been holding up better in here. i don't think it's a matter of going to mega caps or small caps. the mid caps tend to be the sweet spot. >> stacy, between the russell etf and s&p 500 etf, what's the
better bet? >> it depends what you're looking for. >> not losing money is what i'm assuming a lot of our viewers will be looking for. >> here is what i would say to it. the downside in the s&p 500 of roughly a 10% pullback is 20% by year. it's very similar what we're seeing in the russell. both have a similar downside probability. the upside is slightly different in the s&p 500 versus the ris sl. the s&p around 11% or 12% probability to be up 10%. the russell is closer to an 18% probability. the upside is being priced in more likely in the russell where the downsides are more similar. the other thing i would highlight, it depends why you think we're selling off. is it strong r dollar, weaker dollar, those are all going to be very different in how these indices perform. to andrew's earlier point, i would say in general, mid cap week, continue to see etf lows into mid cap. i do think that's an area we've seen investors moving this year
and we continue to see them moving. what are you looking for? what do you think the broader story is here. all these have higher implied volatility because the risk is considered higher in all of these than it was last week. >> stacey and andrew, thank you very much. for more trading nation, head to tradingnation.cnbc.com. the worst week since june 1st, 2012. let's bring in liz from talmadge advisers. we've got a mixed bag when it comes to earnings season. what's the headline when it comes to the state of the consumer right now? >> i think it's very mixed according to retail metrics, 57% reported earnings below expectations. it's really choppy out there. a later back-to-school happening, shift in tax-free dates. it seems like a lot of excuses. retail inventories are high. it seems like the consumer is still a little sluggish.
>> you like some winners here, foot locker and aeo. it's reflected in their share price over the past 12 months or so, up 33%, 22% or so respectively. is it worth paying that sort of money for these stocks in this sort of market? in this sort of market, it seems the winners are also under pressure. >> i think that's the opportunity. this correction is giving you an opportunity in names like foot locker which reported tremendous comps. they both gave somewhat conservative guidance. so i think the stocks have reacted a little bit to that and the market overall. i think there are opportunities for buying stocks like that that are getting punished with everything else. >> in terms of opportunities with the pullback, should we also be thinking about seasonality when it comes to the retail trade? >> typically the third quarter is a little bit of a lull in terms of retail stocks and then they start to outperform again in the fourth quarter. that trend seems to be playing out with what's happened most
recently. >> liz, we'll leave it there. liz dunn, talmadge advisers. some people use taro cards, tea leaves, a smart dog or crystal ball to predict the future. in the business world, there are ways to foresee the hands of fate. three top analysts and investors predictions on a variety of markets, stocks, golds and bonds. before the break, we've got the first video of firefighters putting out the flames at a refinery at delaware city, delaware. it looks like the fire is out. that's good news. gasoline futures spiked on that news, pbf stock down 3% more than it was before we first reported the fire. there's your chart. there's the video. we'll take a break. we're back right after this.
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shares of solar city down by almost 11.5%. jim chanos unveiling it as one of miss shorts. he said it's basically a subprime financing company. we did see that stock take a dive. we should note we have the ceo of solar city next week on "power lunch" on tuesday. you won't want to miss that. we'll take a look at s&p 500 winners in today's session. consol energy is up by 3.5%. teradata up 3.3. >> we are rounding out the worst week pour the dow since 2011. let us not look backward. let us look forward. time to take out our market crystal ball. we want to take a look at this market through three different lenses, stocks, gold and bonds. invest es with us now, dan fitzpatrick from stock market
mentor.com. j.j. kin nan with t.d. ameritrade and john brynn hofs man from armored wolf. dan, when you look at your charts of the s&p 500, are you seeing any support anywhere? >> well, we're seeing support today at 2000. that's not really the purpose of this segment. i can see it clear down at 1910 as far as n excursion. i hate to use that term. it sounds so technical. but just really a drop below this 200-day moving average. we've been flirting with this for month. there's been a lot of complacency in the market. people talking about a wall of worry. there's been no wall. it's been drifting sideways. at this point i'd like for a little bounce next week, but longer term that prior support line at the 200 day moving average, that's now resistance. you're going to get selling on the way up, on the way down. so i think we've already hit our top for the year. i think it's going to get kind of ugly. >> that's interesting.
a lot of people knock it and say it's always about what to buy, what to buy. there's a reason. the last five years every time we've had a drop, ultimately it has proved to be a buying opportunity. we've made higher and higher and higher highs. eventually, to my point earlier, dan, that will end. is now this, that time? >> yes, it is, frankly. there's a common saying the trend is your friend. sometimes friends betray you and ultimately, yes. i've seen this dogmatic technical analysis here where people just say, oh, by the dip, buy the dip, buy the dip. that's fine. but then the one time it doesn't work, all of a sudden everything changes. that's really where we are right now. i would say, don't get so upset, so scared that you just sell everything. it would have been nice to do that last week. now you kind of have to look at levels, make sure you're not getting in too early. don't panic right at the bottom
which most people tend to do, just manage your risk. but yes, things have changed. we're not dip buyers anymore. now we're rally sellers. it's a really important thing for viewers to understand. you don't want to be just jumping in here. the market has changed. >> well said. it sounds like we made the high for the year according to your analysis. let's move to gold. j.j. people are buying gold. people are nervous so they buy gold. not up much lately. what's your takeaway? >> we went through the 50-day moving average on wednesday, just cut right through it like a hot knife through butter. the next level will be in the 1180-ish area. to be honest with you, people come there as you know for safety. you mentioned before with bonds, and i also think that, as you look at how the stock market relates to gold, we're not seeing the incredible demand that you may think people are coming to for just that. a lot of this is i think on technical analysis.
i think the real test for gold is going to be up near 1200. the primary reason being we spent a lot of the year and part of last year up there. so if you look to the options market, one of the interesting things is there's about a 44% probability we'll be up near 1200 and about a 30% probability we'll be down near 1100. even though a lot of the options trading has been buying puts near the 1100 level for protection if we continue to go down there. the other thing that's really interesting, brian, the highest open interest we've seen on gold all year. a lot of people have turned back who may have been ignoring the product. that's one sign people are very nervous and looking for a place to put their money. >> j.j., thank you very much. let's move to the third part of our try fek tar, we'll go to bonds. john, we pointed out ot the top of the show that pretty much every major commodity is down more than 20, even 30 or 40%, global deflationary environment. what does that mean for the bond market?
>> well, what it means is that the talk of fed tightening is really a background issue. what's more the focus of the bond market is the low inflation, dis inflation or many cases as you alluded to, deflation. as long as there's deflation in the air, any talk of fed tightening is kind of small talk. it could be a 25 basis point tightening. the probabilities have come down through september. if they don't tighten in september, maybe they would tighten in december. then again, with inflation this low and with commodities falling and with most materials prices falling, the market is leaning more on the bullish side for bonds, lower yields, higher prices, and that's what we've been seeing, especially when you combine that with a risk-off environment. >> the dow is at session lows. quickly, john, is that why we or seeing stocks collapse this week? is it what you just talked
about? deflationary fear? >> i think it's partly the economic fundamentals when you've got china slowing and europe having troubles internally, brazil in trouble and turkey in trouble and russia struggling and all of these currency war type effects, currency wars is another word for money printing. so you've got central banks buying bonds and pumping liquidity into the system. all these things point towards lower bond yields. >> john, a pleasure to have you on. j.j. and dan, we appreciate it. the dow at session lows once again. looked like the buyers tried to come in, maybe some bids in the market thachlt ear not there now. seeing the down down 390 points. we are headed for our worse week for the dow in four years exactly, since 2011, it has not been this bad. we are seeing a number of big name companies melissa in bear market territory. to be clear, if you missed the
top of the show, i want to highlight what a global route this is. china, russia, greece, saudi arabia, brazil, nigeria, turkey and kenya all in bear markets. >> negative for the year on the s&p 500. we quickly gave up that 2,000 level that the s&p was so fiercely trying to hold on to. now at session lows on that index, 1988 is the last trade there. the nasdaq also matching that, session lows as well. we're taking a look at a level of 4755 with apple at its session lows as well. much more on this market selloff right after the break. stay tuned. thank you. uh, next. watch me make your interest rate... disappear. there's gotta be a better way to find the right card. whatever kind you're searching for, creditcards.com lets you compare hundreds of cards to find the one that's right for you. just search, compare, and apply at creditcards.com. ♪a one, a two, a three percent cash back♪
welcome back. we have a dow jones industrial average down with the four handle. dow down 407 points at this moment. we are headed for our worst week since 2011. the dow lost more than 1,000 points this week. you can reach onto a bag and take out a list of reasons, china, deflationary concerns, maybe the u.s. federal reserve, concerns over oil's big price collapse. or all those things together are bringing out the sellers in force today. we are down 399 points right now on the dow jones industrial average. there were many people this morning hoping we would get a bounce off yesterday's routh. the exact opposite happened. volumes have risen. there are more aggressive sellers in the market. we are down 402 points on the dow right now. let's bring in jerry casselini.
i gave our viewers and listeners a reason why stocks are doing so poorly this week. what is happening in the stock market right now? >> yeah. first of all, it's august. it's really hard as a professional investor to give a lot of credence to behavior in august. this is a classic example of that. china is no worse today than two months ago. the deflation story is the same story it's been forever. the u.s. economy is doing just fine. no one cares. we are almost looking for new headlines to be nervous or to be upset or give us more reasons to sell. those things haven't changed. we are in a thin market and the market is now following momentum on the down side. don't get too caught up in that. this is not the market you sell your core holdings in. you wouldn't be surprised to see a nice snap back the next few weeks. important things are number one. this market is still being held up by the solid underlying earnings in the overall economy.
>> aren't you worried that perhaps investors are getting too complacent? the 500 point losses have been followed by a month of gains. have we been too conditioned to buy the dips? maybe it's time to switch gears and actually sell the riffs. >> but under those conditions, we still need catalyst. we need some part of the financial system that was under stress. that's just not there. there's fewer things today than there was when you take greece out and you look at the fact that china is still doing a growth thing that a lot of people just want to ignore. it's not that it's in recession. it's just not growing as fast. you layer in some of the qe efforts of all the central banks around the world and ask where could financial stress come from? the best argument is probably commodities and you shouldn't ignore that. that's a potential.
>> the concern is higher quality names are being sold. it's not just momentum names. one of those is apple. i want to let our viewers know that as the selling has accelerated, so has the selling in apple. apple down $5.406789 nearly 5%. with that move down, apple is now officially in a bear market. apping is 2.1% from its high. apple in a bear market. i can understand lower quality, high beta, high pe names being sold off. raise money where you can. what do you make when a company like apple is getting whacked? >> sure. the nature of corrective phases like this is you sell your high beta stuff first, low quality stuff first. as you get through a pullback, you are finally left to the core
holdings in a portfolio. surprise. the bigger losses are coming from the best names. home depot, apple, facebook. schwab. these are names you want to see come in here as kind of the last names to go on the down side. and now you're done. >> i'm assuming based on your comments, you are going to be buying stocks. this is a multiyear thing and things are just discounted now four. >> it really is. give this time. it's going to take several weeks to work out. we think the fed is completely out for september. >> are you buying? >> yes. the names i've given you. >> a volatile few days for
social media stocks. twitter shares rebounding today. up fractionally after losing about 9% yesterday to close below the ipo price of $26 for the first time. facebook also very volatile. down over 4% today. it's now down more than 10% from its all-time high which was last month. now down 4%. linkedin hovering around the flat line after falling 3% yesterday. yelp shares falling another 3% after falling almost 8% yesterday. back to you. >> thank you, julia boorstin. i want to bring in larry mcdonald for his thoughts on this market sell-off. you actually say that if you take a look at the vix, that's an indicator that perhaps now would be a good time to get in? >> what we've seen the last 18 months, when you have that front
month vix future trading more expensive than the outer months, we've had near-term bottoms. i think six times over the last 18 months. now we're there. the front month is being bid up. nobody was buying volatility three weeks ago. today, everybody wants in. that is a sign of true capitulation. >> we are seeing the vix up 30%. it is the year-to-date high on the vix. you are not just a technical guy. things are different this time, aren't they? you are a fundamental guy, as well. do things start to concern you, whether it be the meltdown we are seeing in emerging markets, possible exposure to emerging market bonds that various funds have? the meltdown in china? the list goes on and on. >> what you want, two things you want to look for. number one is what we've seen since lehman is stress in the markets brings action from central banks over and over again. the probability of action coming from real stimulus from china is
increasing. the probability of the fed potentially pushing that rate hike out to next year, that's increasing. that could be a real trigger to the up side. overall, when you have that true capitulation, but the key when you get the bounce, investors want to know when you get that bounce, you need to seek credit in emerging markets, high yield and investment grade bonds. if that credit doesn't improve versus equities, that's a bad sign. that will tell you if the rally has legs. >> jerry, thank you for your patience and hanging around. the fed is bandied about as a reason for stock selling. in 1994, the fed raised rates aggressively.
the dow in 1995 rose 33%, its second best gain in 40 years. why do we seem to be so afraid of the fed? >> boy. that is a simple one. we are so conditioned after 2008 and 2009 to fear any involvement in a catastrophic way from a federal reserve that we think the sign of them entering the market is a bad one. that is a sign the economy is breaking out on the up side. we have plenty of evidence with jobs and housing data to suggest that. let's have that happen. watch the markets explode, i believe, on the up side. because there is so much pent-up earnings power that hasn't been properly valued. >> a more optimistic view. larry, thank you very much, as well. i know our show is wrapping up. you've got "fast money." tonight we have kelly and bill
ready to go here. i looked at some of these numbers. 24 s&p 500 names are going to finish the week higher. 24 out of 500. netflix down 15%. it's a damn good thing you don't have anything to talk about in your show today. >> and let's not forget, this is an expiration day. that adds to the fun. maybe more volatility. certainly more volume, as well. we'll see which way the market is leaning as we go onto that final hour. we are heading lower again. >> thank you both. we'll take over here. dow falling nearly 400 points. we are now down more than 1,000 points in the month of august. you are watching the "closing bell." i'm kelly evans at the new york stock exchange. >> i'm bill griffeth. this is the final hour trading for what has been a wild week for the stock market. a lot of red on the screen today. global slowdown. fears weighing on stocks. price of oil. the fed. more than