tv Closing Bell CNBC January 7, 2016 3:00pm-5:01pm EST
but they are incredibly important right now. >> especially the yuan in today's market. thanks for watching everybody. >> the "closing bell" will start with a big market hour. final hour of trading right now. welcome to the "closing bell," everybody, i'm kelly evans here at the new york stock exchange. >> and i'm bill griffeth. here we go again. buckle up. another ugly day of selling for of the bulls today, the dow did look like it was headed for a come back midday, but it turned south again. we are off the lows right now, but we will see whether we can turn things around into the close. the last three trading days the imbalance has been to the buy side. we will see if that happens again today. >> if this time is different. u.s. stocks are selling off after china devalued its currency once again sending its shanghai market down 7% and triggering a circuit breaker less than 30 minutes after the opening last night.
>> also the nasdaq has entered correction territory intraday today. we will take you live to that market, plus another wall street firm delivers a blow to apple this morning. we've got that analyst who just cut his price target on the company and apple is trading well below $100 a share today, we are in the ain 98 range right now. >> tech one of the worst performers sector wise. and the flight to safety is on with gold prices up again today, up 5%. tom mcclellan says we are in a bear market for stocks and it isn't done yet. we will talk gold, and treasuries coming up. less dig deeper into this selloff today and why u.s. investors are paying so much attention to china. bob pisani is on the floor of the new york stock ex schang, michelle caruso-cabrera joins us here at post 9 today as does the "wall street journal's" hong kong bureau chief ken brown.
let's get some hits, runs and errors. >> the important thing is a lot of 'tis appointment. we started off down but moved up after we had news china was eliminating its circuit breakers. we have moved down in the middle of the day and a lot of expansion of new lows, more than 3 hub here at the new york stock exchange, including, for example, morgan stanley which is now about 4%, that's a new 52-week low, a lot of the big financial names down about 4%. one source that's giving some people hope here is exxonmobil, only down 1.7%. that's far outperforming its peers down 4, 5, 6% some of the other ones for the week. one thing you want to watch for tomorrow, good indicator, ashr, this is a china etf, these are market makers trying to guess how the market might open tomorrow. down about 5%, but it was down 8% earlier on. we will keep a close eye on that one going into the close. >> thank you, bob. michelle is here with more on what is happening in china's economy. >> the big selloff which has driven things here, traders over
in china blame their currency, once again the central bank of china allowed it to fall in value by half a percent. largest since the move in august. it's down eight days in a row, weakened by more than 1% this week. in china investors are concerned we will continue to see declines. economists wonder if the central bank is doing this to make the chinese economy more competitive. could it signal the economy is weaker than they're letting on. there's also speculation that the chinese central bank could be doing this to catch up with the offshore rate of the juan, this is are a few small markets where they can trade with few constraints, it's dee appreciating faster than the krensing in the country. that suggests that external investors believe that economy is weakening and the currency will have to do so as well. a report from reuters that some are encouraging the central bank
to do even more with the currency, another 10 to 15% which would be a very big move. of course, there are competing interests there, you are an exporter in china you would love the central bank to do this. you owe money in dollars, oh, boy, you hate it if the chinese central bank does this. >> that's an excellent point. on that note let's bring in ken brown from the "wall street journal" to talk more about this phenomen phenomenon. it is interesting that the heart of these moves seems to be what china is doing with its currency. now apparently some officials are pushing for them to let it go, to just let it slide another 10 or another 15%. why is this so destabilizing? >> it's destabilizing because of credibility. people don't know what they're going to do. it's a big economy and so it has a big ripple effect on the world and comes through the currency. the stock market is pretty close but it's the currency. they let it devalue 2% over the summer but then they held it steady and wanted to get the imf reserve basket. now it's been down ever since.
5, 10% it could happen. the currency moves a lot with the dollar because it was loosely pegged to the dollar. last year they changed the peg and it became a currency. what everyone is looking at is the dollar and it's going down against the dollar. >> they are making it up as they go along, the regulators there. is that what's causing a lot of this volatility because of this lack of credibility that you were pointing out or would we have this anyway as they devalue? >> we have had crises here and the regulators haven't done a great job but it's interesting, the chinese like the idea of a market but they don't like the idea of a fully free market. they want a market they can kind of control. you saw that with these circuit breakers. 7% down you shut the market. that's a volatile market, it goes up and down 5% a lot. here it's 20% and they shut the market down. that really backfired on them. so they have this love/hate relationship with the market and
that keeps tripping them up. >> michelle, it's the larger question this is a communist country trying to allow this capitalist system exist within it. as we've watched them giving up on those controls that ken mentioned what does that indicate? are they trying to still maintain control or realize they have to give it up? >> it depends on who you ask and what member of the party you're talking to. on paper when you look at the five-year plan it's all about increasing the role of the market in the economy and yet when it happens, you know, we are used to it over time, like the market can be very, very painful sometimes and it feels like they don't want to absorb that pain or they don't realize just how painful it can be. i think the answer to your question is we will see over time how they actually wrap their head around this massive transition that is still ongoing. >> bob, as you were pointing out we will find out tonight whether taking off those circuit breakers will make things worse or better for the chinese market. >> right now the market is suggesting that the chinese
market will open down about 5%. i wonder if we shouldn't be giving the chinese authority a little bit of a break here. they are learning -- remember, the chinese stock market is essentially only 25 years old. we have had 200 years to make our mistakes, including our own circuit breakers. we changed our circuit breakers when we discovered that the bands were too small some time ago. the chinese authorities to your credit have immediately recognized they made a mistake on the certification and maukd it back. they also realized they made a mistake by telling people who are large shareholders they will be able to sell soon enough, that created a panic and they have essentially walked that back. don't you think we should give them a little credit, michelle, they are certainly on a steep learning curve right now. >> for sure. chinese stock market didn't exist 25 years ago. that's an amazing statement to make, right? what i really wonder is what's the true value of the yuan? where it trades freely and it's not completely free, what is the true value? if they really want to allow it
to exchange freely like the imf wants them to do should they let it happen now or should they just -- because you can complain you're letting the currency be unstable but the fact is if you're going to have a free floating currency -- >> sometimes it's unstable. ken. >> you have distortions in the economy and distortions in the market because of all this control. if you let it go, let it go free right now, bang, it goes down. if you had a free float, you know, you would go a slow decline and it wouldn't be destabilizing. the chinese government is all about stability, they want to keep things stable, they don't want any uprising or problems. this is this conundrum they're in. you control the currency, if you let it go it goes bang but you want the stability. >> you know, i agree with you on that, but name me a world leader who wants in their heart of hearts a true free market without any con strants and stability. >> i'm with bob. i give these guys credit. a lot of them are very sophisticated and they are trying to do the right thing and
there's a million things pulling them in different direction. it's a difficult transition and they're struggling with it. >> ultimately, bob, you have to have -- if you are the leadership -- faith in the free market, faith in your economy, faith in the future of why you are people, in the system that you're overseeing. if they don't fundamentally have that, then it suggests actually perhaps quite deep significant doubts about the direction of the chinese economy. >> bob. >> i'm sorry, was that directed to me? >> that's you. >> well, yes, i think there is some real issues about the direction of the chinese economy. way wanted to get in here, my whole point about this, is do you think there is anything to this story this afternoon from reuters that chinese officials are being heavily pressured by economic interests to devalue the yuan by 10 to 15%? it wouldn't surprise me that there's pressure but would they react in such a dramatic fashion? >> who do you think, ken? who would that be? >> who knows. the chinese economy is not as dependent on exports as you think it is. really the issue they need to
deal with is internally they have these big old industries that are inefficient, that are burning through cash. they have to reform all that. the lower currency will help the exporters but the pressure on the country is not coming from the exporters who benefit the most. i would say they would want to devalue it more to get the economy going but there wouldn't be a pressure group like that. >> it felt like a squishy story. didn't have a lot of oomph behind it. appreciate your thoughts as we start off another wild day this thursday. let's get to what this means for investors in this market. joining us "closing bell" exchange peter anderson, jonathan corpina and rick santelli checking in from chicago as well. john, i will start with you. you know, lately we've pointed out the u.s. market has seen some buying coming into the close. it's kind of -- you know, goes against the tide of selling it
has faced from asia and market. do you think that will happen today? >> i don't think it's going to happen today. the buying we have seen towards the end of the day is really just some investors that have been coming and waiting on the sidelines and trying to pick points to get into this market. as you have seen some of these stocks are down 10, 15, 25%. so if this is a stock that you've been watching for time, why not get in now. i don't think we're starting to see any real significant buying as the continual selling in this market we're going to continue to see for the next couple days here. the pattern is clearly here. i think coming into this week we were hoping that a pretty robust economical der would add support into this market and all along now it just seems like those have been blitz headlines that investors have passed over ahead of the jobs number tomorrow we sometimes see selling and this is all exacerbated now with all the headlines we have seen out of china, out of north korea, out of washington. i don't think any buying is going to help much today. >> let's take a look at that ten year for a second. the yield on it which continues to drift lower, got as low as about 2.11% today, rick.
you wouldn't necessarily have expected that in a vacuum after the federal reserve's first rate hike, right? >> oh, i do. i fully expect it. i think the long end is way sharper than the f 1 c committee. here we are at 215, we settle at 216, 217 at the end of '14. i have said that a lot. what was the high yield for all of last year? 248. long end has been very contained. and i think it will be remain contained because in an era with subgrowth you will have subpricing pressures and all these variables will last a long time. i'm just amazed that we're debating things like, you know, circuit breakers, do you let them trade, don't let them trade. the basement is full of water, it doesn't matter if you empty it in the front yard, backyard, they all know the way it will end. they will stabilize the markets but their economy isn't going to be stabilized. when you have an economy whose underpinnings don't support the
notion of the debt ladened society of which it's part of there's going to be issues like this. just consider since the crisis global debt has expanded by $60 trillion and a good chunk of that's in china. now, with regard to the u.s., we've had how many months in a row of good job growth? we have had how many months in a row of lower unemployment rates? and look at how we get dragged into this. there are big issues here, i don't see them going away. does that mean the stock market has to go down 20%? i don't think so. it means we will have a lot of volatility but in the end we're still better off. i still say if i was a u.s. investor i'd worry more about things like manufacturing and the direction of the service sector, the issues that give us diversity to stand above these other economies and with regard to foreign exchange, all these rumors out there, fast or slow, recalibration, this is all new stuff, i don't care how old or young their market is the computer trading changed all of it. we are all about at the same
place. >> remember, that guy with the flooded basement, he will get it bailed out but he has to hope there is no more rain coming his way in the meantime. >> exactly. >> peter anderson, i've been asking money managers all week as this market continues to move lower whether they're finding opportunities or whether you just stand back and wait for this market to find a bottom. what are you doing right now with your clients' money? >> well, you know, we are finding opportunities, but you have to be very, very careful given all the risks that you people have been talking about for the past 15 minutes, right? but what you can do is look -- put blinders on, i don't usually advocate that, but put blinders on, look at u.s. stock, companies that are questionnaire owely focused on an industry and a country. if you can it find ones that have an industry focus like cybersecurity or terrorist threat detection, domestic protection, those are stocks
that are down some of them almost 50% interest their 52-week high. i would say that is a buying opportunity regardless of what's going on with circuit breakers and china's currency valuation, but it takes a lot of courage and it takes a lot of self-discipline to just stick with that plan for now. otherwise i would stay on the sidelines. nobody knows what's going to be happening with china. i don't think it's a good idea frankly that they've taken off the circuit breakers, i think they should reengineer them so that they are a lot more intelligent so what they have proposed. as you said earlier, bill, i think they're kind of making it up as they go along and that is really a disturbing thought to the rest of us as investors. >> finally, jonathan, just give us some levels to watch here. we notice, again, the vix is above 25 today, the transports at one point were below 7,000, their worst level i think since 2013. what are you watching? >> i think every level that we've been watching for the last seven or eight sessions has
gotten blown out of the water. i think the next psychological one will be 1950 in the s&p. if we continue to see this market moving the way it is that's going to get blown right through. >> you're below it now, john, 1946 right now. >> it's going to continue to move down there. there's not much support below here. >> all right, guys, thank you very much. we'll see what happens this final 45 minutes today. appreciate your thoughts. and, again, the s&p 500 down about 43 points at the moment, the dow down 370, the nasdaq giving up another 126. what an all frankly start to the year it has been with the fourth trading session in the row a major decline. >> speaking of the nasdaq it did enter correction territory at one point today. apple shares are well below $100 a share right now. we have the apple analyst who cut his price target on that stock today. we will talk to him coming up. and speaking of levels to watch, a leading oil trader tells us the next key level of support for crude prices. that's coming up on the "closing bell." get beautyrest, posturepedic,
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john corp. in a, the triggers have pretty much thrown up their hands trying to identify a support level. they're watching this market continue to trade lower. those are the ten sectors in the s&p 500 and they are all very much in the red right now. >> earlier we were saying, oh, geez, financials are the worst performer, then it was tech, it's materials now, down 3%. you have a bunch at the bottom of the barrel and frankly some of those dividend plays, the ports in the storm, telekwom, utilities, consumer staples are leading the way today. >> shares of some of the exchanges themselves, cboe, ice which owns the new york stock exchange, the nasdaq is trading higher. >> speaking of ports in a storm. >> that's a lot of business for them. >> we watched that vix up above 25, that's as good an indication for any people increasing their trading activity. >> nasdaq on pace for a sixth session losing streak. >> let's get to bertha coombs with more details. >> so the nasdaq market site
owners, their stocks trading higher, the nasdaq composite now in correction territory. it's really a case of mega caps and small cap. take a look at biotechs, they are the worst performers once again today, biotechs back in bear market territory, off more than 20%. chips are also back off more than 20% with this decline that we've seen over the last couple of days. biotechs and chips down six days in a row. the big cap tech stocks, earlier this morning we saw netflix actually sort of rise, one of the fang stocks moving higher, defying the plunge, but it has rolled over. microsoft also a big weight as well, was a big mover, momentum mover to the upside at the end of the year, it's really getting crushed over the last couple of days. then there is the mega caps and apple. rbc cutting its price target from 140 to $130 along with ubs today also cutting its estimates on iphone sales.
now season below consensus of 45 million. three numbers on apple, right now the first close below $100 since october of 2014, 30% below its all time high for the stock and on pace for yet the worst week we have seen since last august. back to you. >> bertha, thank you very much. before we talk more about apple let's just quickly look at the dow. this is a different feel to today than we had monday, tuesday and wednesday as we pointed out. the imbalance had been to the buy side. we're hearing unofficially that there is a sell imbalance going toward this close today and the dow is now around the lows of the session, down 410 points right now. >> and we saw in the last couple trading sessions sometimes when europe closed we would get a little bit of a bounce. again things have softened in the last couple hours. >> apple has been one of the big decliners lately. let's talk to the analyst who cut his price target on the company today.
thank you for joining us. >> thanks for having me. >> obviously we've heard those stories about them having to cut production of the iphone, lack of demand but i haven't heard much talk about why they are having to do this. what's going on with their most popular product? >> yeah, you know, incremental is we think there was a second round of production apple did across the supply chain which is what's reflected in our 45 million iphone number for the march quarter. in terms of why they're doing it, candidly i think there is a little too much inventory, they're trying to manage that out a little better. part of this is, again, it's difficult, what i would call the iphone 6 super cycle, that makes it more difficult to go up against right now. i think it dots the issue, it's a compare issue. i don't think the debate and the concern should be is the ios unit in decline, i think secular the story is great, i think you're going up against tough super cycle compares and that's why of the cuts today.
>> just kind of tie together what's happening. we're seeing the dow down 405 points, ton of concerns about china and what its growth may be there for the moment, people even worried about prospects here in the u.s. these two things are they more connected than we think? should we be talk being apple in isolation from this fundamental concern about the health of some key growth markets? >> i think your concern is spot on accurate. last quarter, right, over 60% of apple's incremental revenues came out of the china market. a lot of their profits over the last six months are coming out of china incrementally. it is tremendously important for them and so the concern you see in china the fear will be does this go into the consumer economy over there and impact iphone sales? we haven't seen it so far ie the september issues we saw but that is a concern given how important china's numbers. >> what's their next top product when you consider the iphone
market has matured, the tablet market has stalled here, the pc market is dead according to tim cook. we've seen declining sales there for years. is it the apple watch or is there something else that can revive this company and bring it back as a momentum stock again? >> you know, apple has always been a company where you are getting a free call on innovation. two things, one is i think apple tv, not the physical hockey puck that you have, but the ability to get content on an a la carte menu the way itunes did it for your music purchases back in the day. the second thing that's talked about is the apple car. those are two big products that we think potentially would come out of apple that would be very exciting. >> interesting. apple car. >> we could use some excitement right now. not of this kind. >> thank you for joining us today. appreciate it. >> thanks a lot, guys.
referring of course to the fact the dow is down 419 points, i believe we are at the lows of the session. remember, this is the kind of trading action we thought we might see last night after the chaos that happened in china, the futures were significantly lower, but we came well back. in fact, at the highs of the session the dow was only down 18 points today so it's been a round trip and a selloff late day that we haven't seen in the last couple of sessions >> waiting for the chinese market today, we have the job numbers e oh, by the way tomorrow. >> oh, by the way. >> and coming up why the dow transports are leading today. >> up next we will discuss the other wild card in the markets here, oil and how low it might go should prices fall below the key $30 support level. that's still to come. forks and can you explain why you recommend synthetic over cedar?
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. welcome back. as has been the case pretty much all day walmart is the sole component of the dow jones industrial average in the green. >> it's had a good week. >> it has. >> i was looking at a five-day chart, it's had a good week. >> the traditional boxes that everyone has been leaving behind, walmart, even macy's, we will hear from bed, bath and beyond after the close, we will see if it's unique to this particular retailer who has had quite a few troubles i mean with walmart or somewhere more broadly where people are looking to put their money. >> oil has been a huge catalyst in all of this, part of this swirl of today's china infused selloff, oil bounced back a bit from those new 12-year lows but
there are plenty of people who feel this market still heading lower, anthony grisandi joins us from chicago. do you think we're going much lower on wti? >> i was on the show a couple weeks ago and i said i wasn't in the camp of $30 oil. i'm still not in that camp, $30 oil or below $30 oil. it's a crowded trade right now, a lot of shorts are in the market. i don't see a lot of new shorts being added to this -- to the prices where we are right now. so traders are letting it ride a little bit. what we did see this morning, once it broke through that key level of $32.40 and traded down to 10, but then immediately bounced from that, we saw some short covering coming in the markets. we still had tensions in the middle east going on, so it's very difficult for me to sell this right now. i was short and i covered it. >> what is the sort of relationship here, anthony, between what's happening with the chinese markets, what's happening with oil and what's happening with the u.s. stock market? >> you know, let's look at today -- today's action.
oil as you noted was down a lot, so was the stock market. the stock market started to come back and oil went positive on the day, which was pretty amazing, but then when equities started their downward turn from then and where we are right now then that was all over with. we ended up closing in oil 70 cents lower. when you talk about the chinese and oil, you know, a couple years ago everybody was like, well, that's what's bringing o oil at $120, the chinese economy is so freight, so great. if you are not getting demand and this doesn't help my case at all or oil not hitting $30 but if you're not getting the demand from china and everybody else has slowed down in the efficiency of energy and in cars and things like that, where is this new demand going to come from? if it's not coming from china i don't see it coming from a lot of other places. so, you know, that could be the nail in the coffin of oil as far as bringing it into the 20s. >> let's look at the supply side of the equation. you know, name me any big supplier who is willing to cut
production right now. they need the money. when you consider that saudi arabia is willing to engage in a price war to undercut iran in the european market, what is the catalyst that's going to bring this market back here? >> yeah, that's it. i call it as far as money goes the need and the greed. the greed is the frackers in texas just trying to squeeze anything they can out of this and sell it wherever they can and the need is saudi arabia, iraq and the rest of the opec nations that need to sell oil. it's an ugly game for them. as their revenues drop from oil sales because the price is going lower they have to actually sell more and produce more. so it's an ugly cycle that they are in right now. bill, in another month we're going to get some refineries will start taking crude oil and using it to make gasoline. we had a 5 million draw this week in crude oil, they were only expecting 2 million because imports were way down but that didn't support the market at all. if we get a few more weeks of that before february 1st that could be the catalyst that actually at least stabilizes the market. >> all right. we'll see.
anthony, always good to see you. thanks. >> thank you. >> time for a cnbc news update as this market selloff intensifies, let's get over to sue herrera. >> here is what's happening at this hour. south korea says it will resume cross board propaganda broadcasts that north korea considers an act of war. seoul beginning talks with washington that could see the arrival of nuclear powered submarines and war planes to the korean peninsula. paul ryan says the house will vote on legislation to broaden sakss against north yeah. he did not provide a timetable but a congressional source telling reuters it's expected as soon as monday. governor governor jerry brown proposing a state budget for next fiscal year. it's an increase of 2% over this year. the budget includes increases in for education, healthcare, infrastructure and the state's rainy day fund. and with no jackpot winner for last night's power ball drawing the estimated prize for saturday's drawing moves to $675
million which would make it the largest jackpot of any lottery game in u.s. history, but the odds are winning are about 300 million to 1, give or take a couple million. that's the news update this hour. in this kind of a market couldn't hurt to buy a lottery ticket, right? >> as i told our production staff on "closing bell" if they are going to pool their money together i'll wait and if they win then i will put a dollar in and take a piece of that. >> you will get a dollar back. >> yeah. >> how did that go over, bill? >> just as well as you thought it might. >> yeah. back to you guys. >> thanks a lot, sue. 25 minutes to go here. just a moment ago the dow was down 420 points, right now it's just under that threshold. a lot of key things to watch, one being the dow transports down 25% from their peak, the vix is over 25 and just again the relentless selling that we're seeing the fourth trading session of the year. we have a leading trader coming our way to tell us what
one of the safe havens in today's selloff has been consolation brands, the dow may be down 370 brands but consolation is up 4%, that at one point hit an intraday record high today. company's earnings beat street estimates on the top and bottom line thanks to u.s. drinkers consuming more of its wine and especially it's imported beer. consolation brands include corona. he will be talking with kelly and the gang next hour on "closing bell." kelly. >> bill, that might be a port in the storm but a couple other names that have people concerned we will talk about. gordon joins me on the door. kb homes, joy global down 8%, there is a lot of stuff to worry about as we keep an eye on on these markets. >> overall you try to look at the trend, what is it like, what
can you say this is reminiscent of. to me, kelly, it reminds me a little bit around 20 years ago or so the time of bill's first retirement, when we had the russian debt crisis. there was currency issues, oil was a factor and i think the lack of transparency from the market is similar in the sense that people don't have a real good sense of what is actually happening in china at the moment and then of course you had the news that they are not going to be using the circuit breakers that they used today which were too restrictive and now they're going entirely the other way. >> the market will open in a couple hours' time. will you be watching that? it's usually around 9:00. >> i'm usually on my third nightmare by 9:00. >> suddenly it's the china story again that's driving these markets. >> no question. >> why is that? >> it's that and it's also it's curious the timing of it. right here out of the gate the
first trading session we fell right into it, you know, so it's -- and we had some important employment numbers coming out here tomorrow. so i think, you know, obviously people will be focused on what's going on in china overnight and then into europe. then also what the health of this economy is and when people are going to start getting involved. you have to think we are in a short term oversold condition, i think some of the traders got aggressive in the opening, but again we are starting to slow down to the down side and now we will look at the closing print, last few minutes of trading, and see if there is, you know, some real powerful close in terms of the volume. obviously the vix is up, but we don't see a conviction on the volume side just yet. interesting sort of a wait and see market at the moment, still a lot looking over at the moment. >> we will see if things are oversold, we will talk to tom mcclen land about just that. gordon. >> nice new tie there, too, if i'm not mace taken on charles. major averages do continue to
bleed, the nasdaq hitting correction territory earlier today with the s&p down more than 4% since the start of this year. our next guest says this is a bear market, folks. yeah, and it's not done yet. joining us with his analysis tom mik clen land of the mik clen land market report. >> thanks, bill. good to be with you. >> when did this bear market in your view start? >> last summer. it started on schedule when it was supposed to start for the small caps it started a little earlier and it's not due to end all the way until about october of 2016 we should get a preliminary bottom around april, but you should understand that when you are in a bear market you can still make money as long as you're either trading with the trend or trading against the trend and knowing which one to do it at which time. >> tom, also you made some points about where gold is headed here, had some great calls on that last year in particular and the ten year which the yield has continued to
move lower. just kind of what's the constellation of things as you see it here? >> well, we are oversold right now. i made a mistake by covering my shorts yesterday, figuring we were oversold enough, but i knew we could get even more oversold. we are due to a brief pause but we are not done even with the january decline, which should arrive later this month. what we're doing is a near perfect replica of early 2008. the fundamental factors that people think should matter are wholly different, the big selloff in january 2008 was sparked by -- actually by the ceo of at&t who made some vague comments about consumer spending and that got everybody panicked and selling off. now we have a whole different input with china and europe and oil and saber rattling among different countries but the patterns show up looking the same. the fundamental factors are different but the pattern looks the same but the fundamental factors don't matter. we are going into an election year, it's the second term for the current president and second
term election years are much more iffy because we're guaranteed to get something unknown so we're repeating the pattern from the last time we had one of those. >> i want to ask you if you have any levels that you could see the s&p getting to or the russell or where would you see the bottom occurring? >> well, i brought up 2008 and i want to lessen the severity of what people might be thinking. i'm not looking for anything as severe of a decline as that. just that the pattern looks -- the dance steps are the same. >> right. >> our long-term forecasting models are saying it should be about half the severity of the 2001 or 2008 bear markets. that's still a bear market, it's still a long decline for stocks, you are not still not going to start a new uptrend until probably after october or really after the election, but it's still a long decline. we tend to think more in terms of time targets. if i can get the direction right the magnitude will take care of itself. >> on gold it was up another 1% today, how much further do you
have it has to run? >> to the end of this month and then i would be -- it does have further to go up and i can say that because we haven't seen the number of shares outstanding in gld start to rise yet. when the gold bugs all start piling into gld and thinking they're guarantee of going higher then the rally is about to end. we saw the break out, especially above 1,000 euros. when we saw that happen gld shares were still declining. that mean the gold bugs are still not believing in it. we have another couple weeks for gold to move higher, it's a nice move so far, but don't think this is another bull market for gold. >> always good to see you, tom. >> thanks, bill and kelly. we are heading to the close, a little less than 15 minutes left right now, we have come back a bit, the dow down 375 points, we were down about 410, five, ten minutes ago. >> an area of watch, the transports, they have been
struggling for months, this goes back to the beginning of last year. up next we will look at the biggest losers and winners and what the street expects for this sector for the rest of 2016 as it goes below 7,000 once again. those dow transports. there's a lot of places you never want to see "$7.95." [ beep ] but you'll be glad to see it here. fidelity -- where smarter investors will always be. if only the signs were as obvious when you trade. fidelity's active trader pro can help you find smarter entry and exit points and can help protect your potential profits. fidelity -- where smarter investors will always be.
welcome back. dow jones industrial average down 360 points with just 12 minutes left to go in the session as the s&p is down 42, the nasdaq 130. not a lot of place toss hide in this market, especially considering who is doing the work, it's financials, it's materials, energy not doing well again, but also anything china-related of course the china large cap etf under pressure and alibaba, there are some china names all trading down between 5 and 6%. >> art cashin says less than $400 million to sell. so the bias is to the sell side this time for the first time this week, other days we have seen buying, but we will see what that impact will be as we head toward the close. meantime watch out, the dow transport index typically a leading indicator, it's very sensitive to the economy is posting the biggest decline among the major averages today. morgan brennan motoring in with that story. what's going on? >> that's right. the transportation average
tanking again, down about 3%, the lows of the day. it's hitting levels we haven't seen since november 2013. we have fallen below 7,000 today. why is this happening? it's a story of falling volumes and falling rates. take railroads, total u.s. volume fell 2.5% last year, that is the biggest drop since 2009, that's why union pa ifk scsx, kansas city southern, all of those names are trading at multi-year lows right now. the initial expectation had been that volumes would recover in request. 4 but that did not happen, we saw them get worse. trucking has softened, truck tonnage is up 1.2% for the three months ending in november. that's a slow down in growth and it comes at that crucial peak season time so that's weighing on westerner enterprises, swift transportation, knight transportation, jb hunt. on the shipping side container traffic at global ports in 2015 likely grew at its slowest price since 2015. the same things that are driving
the slump in all of these industries it's slowly global growth, it's the strong dollar and collapse in commodity prices. one relative bright spot, names like ups and fedex but even those guys we are seeing them take a beating as well. >> especially fedex is down more than 4%. morgan, thank you. we will send it over to seema mody for a market flash. >> i want to draw your attention to shares of sunedison down 35%. this on heavy volume. the stock was halted earlier on a single stock circuit breaker. among the reasons for the fall in shares is the company has agreed to offer equity to its bondholders as part of a transaction to pay down debt. keep in mind it has been a tough year for the stock, shares down 80% over the past 12 months. >> thank you, seema. turning our attention back here, ten minutes to go, dow is down 355, s&p down 42, those transports morgan just mentioned are literally at 7009, a little
all right. we have got about seven minutes left in the trading session here with the dow down 364 points. joining us on the floor of the big board right now is chris heisey from bank of america wealth management. so here we go. we've got a pretty tenuous market to begin 2016. i know you've been bullish on this market. what do you do right here? >> well, we're clearly taking body blow. and a quite tough one. someone characterized it to me this afternoon as a skunk that went through the neighborhood and stayed to start the year. when i think about this type of market and you look at the average stock that's in a bear market across the board and you look at the headline indices two are in correction territory. it's the kind of market you pick your spots, you build your names, five, ten names, 20 names that you look at and go to and go back nine months and look and see have they held up well, have they started to do something
that has stopped the selling pressure and a little bit of buying that comes in they tend to lead the market. that's what we're doing across the board, looking for good name, high quality across the board. diversification does work. terrible year last year as it relates to a 78-year trend or at least 78 years where it was the toughest market to make money in, but a zero line over all with what we've seen versus prior cycles when we had that much volunteering tilt not that bad. >> there is also a lot here that you say need to happen to repair investor psychology. no escalation in geopolitical risk, more coordinated china currency devalls and less frequent intervention, the u.s. fed needs to signal two or fewer hikes. >> it's a big tall order, it's a lot of ifs. that's the market we're in. every one is so polarized with all that's going on in china's market type of dynamic, what that has, does it have
debilitating effects or not going forward. you have to ask yourself and step back what's the checklist that needs to happen to be right and that's the checklist and it's a tall order. >> what's your alternative? are bonds an alternative? >> certainly it's a hedge. bonds should be the hedge in your portfolio right now. if you are looking for cash flow unfortunately you either search for yield which is the wrong thing it do or you've got into the dividend growth. i think that's a better way to do it. >> just real quick we have the jobs report tomorrow morning that's going to come out as well. what's really interesting is people comparing what we're seeing in the market to 2008 is the u.s. was very different at this juncture. do you expect that to continue and what happens if for some reason it's a miss in the morning? >> a lot of bulls will not call this justifiable concern. they are. we have to deal with them. this is the reality of investing. however, you're right, kelly, when you look back and step back it's slow growth, 2% growth here, low inflation, deflationary consequences with
commodities, the structural change to how growth is produced in the world and it's hard to come to grips with. you have to own high quality across the board. >> you have to go. >> i do. >> a lot more to come here. >> yeah. much, much more. keep a close on it as the dow is down 351. >> we will bring bob pisani in here in just a moment as he comes in but we want to look, chris, at what got us here. the shanghai market, the shenzhen which has had a very tough time we will be watching carefully to see what it does tonight when they open without any circuit breakers. our own market today with lots of volatility, for the first time this week we haven't had any buy imbalance, it's been a sell imbalance going into this close, but we are still down just 358 points. oil hits a 12-year low in today's trade and the question is does it go down to $30 a barrel and if it does and breaks that then what? and then finally gold which has
had an actually pretty good week here. >> i wonder if we could put up asa chart, you were asking about the china market, there are etfs to trade here and they are active bets on how the market might trade the next day at china. this is the one that represents mainland china stocks. that's been down about 5% in the middle of the afternoon. these are market makers. they don't know where the stocks underlying here are going to open tomorrow, they're making guess he is based on futures markets over in asia right now. if you can put up ashr that's been down 5% suggesting we will have a down open in china, it was down 8 or 9% at the open, it's come off of that. we got our heartbroken here today. we removed the bands that they had -- removed the changes in the circuit breakers that they had initiated, the market rose on that, oil rose, you saw the oil charts, we were all thinking, we're going to be all right, then in the middle of the day there was a reuters story protecting the market psychology that there is a lot of pressure on policymakers in china to do a
fast devaluation. i think that was what caused the market to fade late in the day. by the way, nobody officially said that from the government there has been no statement at all from the government. that's one of thieves tricky stories is that it's unchartered territory. if you are moving large amounts of capital you are not doing it right now. you're staying, watching, looking at the vol, doing what bob talked about which is building your bridges between what happens overseas to here and there is tradable activity around that. when you have these type of episodes you step back and when you start to see things on sale, that's when you come in. and you don't do it once. >> rand the important thing about tomorrow, thank goodness we are concerned about the u.s. economy and jobs market. if you look at the job market put up new lows on financials, morgan stanley, goldman and some of the brokerages, the leg mason's of the world, black rock, the market is betting there is going to be fewer rate hikes rather than more rate hikes. >> we will get a piece of data tomorrow that will help with
that debate. chris hyzy good to see you. the dow finishing down about 386 points, medifast is ranging the closing bell, at the nasdaq it's chop salad company. we're getting data overnight from china and our own jobs number. let's talk about it in the second hour of the "closing bell" with kelly evans. see you tomorrow, kell. chop, how apt, welcome tomt "closing bell," i'm kelly evans. a rough day of selling coming to a close as all three major indexes sharply lower again. the nasdaq entering correction territory today, that means it was down more than 10% from its highs, at one point it looked like we could see a come back from the dow, it was only down 18 points on the session, the market gave all of that back and then come sending near session lows. the dow settling down about 391 points that's a decline of 2.3% and it's fourth negative or difficult trading session in a row to start off this year.
all this selling sparked by china's move to devalue its currency again sending the shanghai market down 7% and triggering a circuit breaker less than ten minutes after the open. joining today's panel to put more context around what we're wincing we have our own mike santoli along with cnbc contributor stephanie link and for more on today's market action we have "fast money" trader dan nathan and bob pisani joins us off the floor. michael, it was a little different in today's market, you could argue it was an energy session in the last couple sessions today it was squarely about china and a huge selloff given what happened. >> about china and the relentlessness of the declines around the world. yesterday we talked about in our market three days in a row we got a late day rally, if i saw it everyone saw it, therefore, we opened in a more milder day. i feel like there was negative reinforcement to that trade enough times. we have a day when china says we're taking the circuit
breakers off, they're telling you something dramatic is going to happen, maybe it's good, maybe it's bad but why would you want to anticipate what it's going to be. >> stephanie, you have to assume since they like a stock market that only goes up they're trying to engineer an upward move or perhaps some sort of plush flush out. what do you make of this move to get rid of the circuit breakers? >> it seems like they have no idea what they're doing and that lack of confidence is feeding over and spilling over into our markets. i don't think the volatility is done until china stabilizes but also until oil stabilizes. i think yesterday's secondary by pioneer when they announced the secondary, that actually psychologically really depressed the whole space and the sentiment took another leg down from an investor point of view. no one wanted to bottom fish. so i think that really -- that was a big concern. so we have earnings next week, hopefully earnings starts to get more a central stage, if you will, and will drive the markets, but we need stability in both of these two key --
>> we will hear from alcoa next week and after the bell within minutes we could hear from bed, bath and beyond, those aren't the kind of companies that can shore up this kind of market. >> no. i would give the chinese authority a little kudos for this week. they saw the mistake they made with the circuit breakers, they immediately cut their losses, they stopped big shareholders from selling on friday essentially, they saw that was a mistake. this is a learning curve. we talked about this in the last hour, 25 years old, that's as old as the chinese stock market is and they obviously are learning as they're going along. at least they turned around quickly. >> from a portfolio manager's point of view i don't want to leave it into their hands. i want to bring my money here to the united states. i don't even want to be in europe because europe is so tied to europe. >> we want to have a controlled market but then when we lose control of it it's going to crash on our terms. get rid of the circuit breakers and really the central bank in trying to manage the currency in the same fashion. we have our band for the on shore currency rate, offshore
they say, no, no, that's not the right price and they -- >> we had to change our circuit breakers a number of years ago when we discovered the bands were wrong. we did exactly the same thing but we didn't eliminate them, we simply adopted wider trading bands. >> dan nathan, what are you doing with all this volatility? >> listen, i think to start the year off i think it's the worst start ever for u.s. stocks and i think that's really important to kind of put into some context here that, you know, we have had a very sideways price action in u.s. stocks for more than a year right now. aside from a few dozen stocks that have outperformed pretty dramatically most stocks are really -- have already been in correction mode before we got this 5% selloff in the s&p. to me i think you want to remain defensive, i think what steph said is important. you don't want to take a shot at china, they don't have their arms around what's going on. when you look at the shanghai composite that's down almost 12% on the year, they're going to widen out their circuit breakers bands. when these thing breaks 3,000 to the down side, it's already down
40% from the highs that it made last spring it's going to 25 o 00. at some point the s&p 500 is not going to trade off of that. we didn't trade up with the hang high composite last spring and i suspect at some point when things get overdone to the down side the s&p is going to actually see a lot of money coming in here as sort of a flight to fall. >> mike. >> the market is so oversold on many measures right now, it's not going to need a specific all clear signal to bounce and to bounce hard, but we just don't know from that level and when that might happen. i don't know if the jobs number tomorrow is in play for that or not but it's one of those deals where as michael who are ton at merrill lynch says the most bullish thing is that there's not a good bull case, it's just that we've been for sale for so long. to dan's point about how long this has been going on, the meeting down 18 or 20%, most stocks have had a 20% drop from their all time highs, it's not as if it's news to the market that things haven't been good. >> let me raise the point about
stanley fischer, chair of the federal reserve came out with comments and has for months that are a little perplexing and i think it gets more perplexing and not less so the more we listen to him. citi group suggested maybe what he's trying to do in saying four rate hikes this year sounds about right, he has been hawkish, stephanie, do you think the fed wants this kind of market, one that's churning, one that's not just a straight line up? i mean, is there any world in which, you know, look at the dollar today, is he trying to kind of almost auger for a pause in asset markets? >> no, i don't think so at all, but i do think the fed is not doing anything in the near term based on all of this chaos that's happening and that's one of the reasons why you saw the financial selloff so hard today because everyone had thought it was the 4 point move. there is no way. there is just no way given what's happening. basically janet yellen told us this. >> why would he say that, then? >> it is amazing the market is taking the other side of stanley fischer's bet. don't fight the fed and yet the
market is going right against the fed. >> but the minutes also yesterday said that they really weren't that convinced that they should have raised to begin with. >> exactly. >> now you have this chaos happening in china, who knows what's going on in europe and by the way we're going 1.5%, 2% gdpish, there is a lot of reason for them not to do anything. >> are we back to good news is bad news tomorrow? if we get 260, 280,000 on the jobs, 210,000 is the consensus, let's pick a big number, 300,000, are they going to say we're wrong on two and maybe fisher is right. >> you have been making the point ever since they ended the most recent quantitative easing that's been the problem. >> look at the taper tantrum we had in the summer of 2013, the equity volatility we had there. then at october 2014 the end of qe and now we just had the end of zerp. everything that these guys are saying about the fed a lot of market participants expected that normal glags of interest rates or a move closer to that was going to give more certainty
around central bank policy. we are massively die verbaling with the rest of the world, the other equity markets that went up last year were that of japan, the ecb, dax up 10% and china. aside from the nasdaq which is made up of a couple dozen bizarre row stocks everything else was down. the point i would make is if the fed pack he had pedals from the rate increase that is cause for concern about global growth. if they do it too fast they are in a tough spot here and i think that uncertainty, you know, was not lifted by that rate increase last month. >> phil, let's go back to china for just a moment. the question on the minds of many investors today is whether or not the country has lost control of its market. seema mody has more. >> chinese policymakers and regulators have been widely criticized by investors to for their actions this week. introducing circuit breakers, then suspending them, imposing new rules on large shareholders on stock selling while continuing to weaken its currency against the dollar.
reuters reporting that we could see a 10 to 15% drop, the concern is china's growing tolerance to manage its currency and intervene in the market when it has been trying to transition to a financial system that is market-based. this week's moves suggest china did not learn its levin from last summer and will likely continue to intervene as much as needed to limit panic selling. but the concern is whether these actions are actually good for the stock market and the economy. one could argue that the proactive approach taken by the pboc has been unpredictable and hard to follow and the china team doesn't see this changing anytime soon saying it will continue to struggle delivering a coherent policy and that investors should expect this trial and error approach to be used to solve short-term market events which potentially means further volatility ahead. >> sure. that's why it makes tonight so interesting and makes the decision, bob, that we have been discussing about the chinese -- i understand they are trying some different things, but are
they really about to go, do you know what, these controls didn't work and so, hey, we will just let it do whatever it wants. >> it's one thing to say the controls don't work, it's another to talk about a 10, 15% devaluation, i found that story rather surprising and a bit unlikely. it is no surprise that there are people pressuring the chinese for their own self-interest to devalue, they would be an economic advantage, any reporter can write that story and find people. whether you can actually get a consensus in the chinese government to do something that radical, i think that would be quite a stretch. that's part of the problem with these kinds of stories. how do you interpret them? finding people who will say that, they are pressuring people is not a surprise, getting to that step is a very, very big step. loretta lynch it's amazing how much these currency issues now really are the mover of the market. ultimately it's about slowing china, people moving money out of the country but that currency devaluation, anytime this comes up the market -- >> here is what i can't wrap my head around. if you were to just say to the world, okay, the chinese currency is going down to the
tune of 10 to 15% fwr here, is that itself a big deal? is that reason for the selloff or is it the fact that it seems to be happening the way it is. >> how sudden and steep that decline would be a jarring to capital markets but it's also the message about how bad things are economicy in china. we know china needed to dee lev, but if you remove that peels of potential growth out there for the next year that's what probably concerns us. all this stuff wouldn't matter that much if u.s. corporate earnings were on a track to increase at double digits, if all the other things were falling into line you would probably absorb it a lot better. >> do you agree, stephanie? >> i do. i think if you just get it done with then actually maybe you can start to see the results of what they're going to do in terms of deval ewing which means they are seeing a little bit better growth or at least stabilization. are they going 4 pr%, 5%. i think you want to get it over and done with and then we can
stabilize, once we stabilize we can reassess what's going on here and where the valuations are attractive here. >> those earnings from the container store are out. let's see what's happening with our courtney reagan. >> that's right. so the container store reporting their quarterly results, a loss of earnings of 4 cents per share, analysts were looking for 5 cents of gain. that's a big miss, revenues coming in at $197 million versus $200 million for the estimates. so just slightly lower there. same store sales did increase by a half a percent, again, also shy slightly of expectations. ceo skip tin nel says they are very disappointed with the bottom line results. we also have getting holiday sales numbers from urban outfitters. that number for november and december comparable sales down 2%, for the company, the ceo actually points out that the gains were offset by weaker store sales so gains online, strong sales online, weaker
sales in store, which is much of the narrative that we heard from many retailers this season, including macy's at about this time yesterday. kelly. >> that's a point, but look at the difference here, container score down almost 11%. stephanie, i mean, what do you do now? >> this company has not delivered since they went public, period. and they are so subject to the competition online. so this is not one you want to own. there certainly are names you want to own, one name that you want to own that was done today, costco they had a 5% core same store sales number, they are not impacted by online. the other one that is interesting, beaten down, walmart. the last couple of days that stock has outperformed but it's down 30% from a year ago. so i think the valuation, the risk reward setup is interesting. you want to be careful, pick and choose. i was encouraged today that overall discretionary did well, that's because they have been so beaten down. you still want to be very, very particular. >> they're trying the domestic
consumer trade again. they're cheapened. >> oil prices falling as much as they have they've got -- >> finally. dan nathan, where are you seeing opportunity? >> listen, i think you want to say u.s. domestic in defensive and you want to go for yield. this would be a difficult equity return environment. i think you can stick with utilities, they have a fat yield, i think you could also stake a shot a verizon with a 5% dividend yield. there are obviously some secular issues with both of those industries here but i think that, you know, it's not going to be like last year where you can just pick any four-letter stock that is doing things and disrupting like a netflix and amazon and you will have 30, 40, 50, 100% gains. i know that the strong dollar has become a consensus trade, i just don't understand with the diverging central bank policy that we see all over the world with the rate of growth we have how the dollar doesn't at least maintain a good bit of these gains. i think you want to avoid a lot
of u.s. multi-nationals. >> up 25% in the past 18 months it's been on quite a run. dan, thanks for joining us. there is much more of dan and the "fast money" crew at 5:00 p.m. talking to the man who called the dollar surge, raoul paul says we are now in a recession and he has the key global indicator to prove it. much more on this market selloff ahead. up next we will break down which stocks could see a boom or bust. plus we will speak to a currency strategist on why you should care about the ongoing devaluation of the currency. tonight on cnbc carl kint knee a and becky quick are hosting a special report, markets in turmoil as we have the worst four-day start in modern history for the stock market. more "closing bell" after this. you're watching cnbc first in business worldwide.
welcome back. take a look at markets, again, going out, the dow with a decline of 392 points. we are now seeing for the dow more than a 5% decline during the first four trading sessions of this year with data going back to 1928. that has never happened. the last largest drop was 4.2% and that was in the first four
trading sessions of 1991. now, today here is the s&p which was down itself about 47 points. least negative sector, utilities you heard dan nathan exhorting those. technology down more than 3% on this session today. now, china concerns sending plenty of shock waves across u.s. markets, many investors wondering which stocks will be impacted most, names like apple, starbucks, tiffany, caterpillar all having big stakes in the country. joining us to weigh in on who is safe and who is not, paul hickey. welcome to you. let's start with who is most exposed to china. >> i think on the exposure side you have a lot of tech companies, qualcomm, micron, broadcom, these chip related companies have a lot of exposure here. they are some of the most exposed to china in the s&p 500. then from there you have industrial, energy and material
sector companies which are either indirectly or directly tied to the country. you know, there you are going to see the weakness there. >> sure. just one moment. i'm just looking, mike, again, tech was down more than 3% today. is that consistent with what paul is saying and does that mean one of the most loved sectors and trades is now over. >> it's consistent with what paul is saying about the china exposure and what you said about it being a loved sector. of course, because of the outperformance in a lot of the very large cap techs last year you had that natural give back trade in january. i think all those things combining, you sell that you can and if you happen to have any profits in it. >> is apple a bellwether for the larger problems with this market right now? >> it is for the stocks that were just mentioned, a lot of them have exposure to apple. you have this double triple whammie, you have china, you have overowned and then you have apple. i don't think the apple news of the last couple of days is new news. numbers have been coming down
for a long time and a lot of that is difficult comparisons to the 6 s from the 6 a year ago, let's get through that, get through the negative guidance and then i think these stocks have a shot because these are high quality companies, great balance sheets, lots of cash. a lot of them are doing m&a. you will want to make your shopping list close to when apple reports. >> if it he can is among those most exposed to china's continuing weakness who seems to be the least exposed? where might be the place toss hide frankly? >> versus companies that have exposure to china and that are cited, you see apple cited, nike and tiffany and starbucks as companies that have exposure, 10% off their sales or maybe 15%. while there are fears china is going to ruin these companies when you look at what the companies are saying about what's going on in china, apple seeing triple digit revenue growth in china, tim cook in the last conference call which included the august period said the headlines and what apple sees on the ground is completely different. you see nike's 28% growth in
orders, future orders up 34% and you see starbucks triple digit revenue growth. as their consumer facing companies you have dichotomy, manufacturing industrial versus nonmanufacturing and services. in china the services pmi is a smaller share of the economy than it is here hit its highest level since august 2014 in december. so there is a little bit -- there is a disconnect there in what companies -- what investors are feeling and what companies are seeing on the ground but i think what you have to be -- look at with these companies is the valuation. it all comes back to the valuation. >> let me just -- before we let you go, paul, you put apple -- in this case you would say it's one of the companies better positioned relatively speaking you would almost say despite that exposure to china? >> well, i think fears on china says are a little overblown for apple because just what you saw following the august selloff and apple's most recent quarter was
that sales continue to be consistently strong triple digit revenue growth. but the fact is with apple overall you're seeing slower growth in its products around the world and the revenue growth rates we have seen in private quarters investors are not confident we will see that growth going forward. >> paul, thanks for joining us. >> thanks, kelly. >> paul hickey. we have an earnings alert on bed, bath and beyond. let's get back to courtney reagan. >> bed, bath and beyond putting out its full earnings. we did get a warning from them two weeks ago. so they are reporting earnings per share of $1.09, that's in line with estimates which is not entirely surprising. revenues slightly below at $2.95 billion. the same score sales down 0.4%. i believe this is the first time the company has reported a downward same store sales number since the financial crisis. now, the fourth quarter guidance is also below street consensus and that's probably where the
pressure is going to be coming from today. then we also got gap, kelly, gap putting out their monthly same store sales, down 5% for the total company. if you look at the divisions, gap global down 2% for december comps, banana republic down 9% for december comps and old navy which has been strong down 7% for december comps. back to you. >> thank you, courtney. that's a disappoint i thinkly large move for a lot of gap investors hoping the worst had been in. what do you make of it? >> there are the haves and have notes in retail, these two clearly are in the have notes. gap is interesting, though, because it's been hovering in trading in a range. it goes down but then it recovers and that's because they are going through a restructuring. that wouldn't be one i would immediately sell because i want to hear what the company has to say about their strategic initiatives. >> both those companies activism or just people think they should be in private hands potentially. they both have a large block of founder investors and you don't
know if the real estate can be monetized, but they are on every single lbo screen. bed, bath and beyond did take on a lot of debt to buy stock at higher levels. >> not a great formula at the moment. >> the u.s. has imported bear markets before, but are we on the verge of importing a recession for the first time we will talk about that next. later, one stock that closed in the green today and it's not walmart, it's constellation brands, the ceo rob sands will join us to break down the beer and wine makers strong earnings and guidance.
welcome back. chinese markets took a nose dive upon opening last night and in half an hour trading was halted, that sent global markets into a tailspin, you see the effect there. the dow, nasdaq in correction territory and china's major exports seems to be bad news these days. could that include a recession? for more on what may be on the horizon joining us is greg ipp of the "wall street journal." great to have you, but tough reasons for it. >> yes. >> the largest question that we're asking, the point that mike was making earlier about we don't import revisions, that's not what we do. is this time different? >> well, mike is right. if you look at history i can't think of a single recession
since 1945 that was cause bid a recession overseas. everyone of our recessions was caused by the federal reserve tightening or a combination of the fed tightening and some external shock like the opec price increases in the 1970s, 9/11 in 2001 or the housing market collapse in 2008. that said, that's not a reason to be sang win because if you have preexisting fridge ilts in the economy, an even like what's going on in china can aggravate that and push you closer to the edge. you have an expansion that's already the fourth longest in postwar history at 6.5 years, you have the unemployment rate down to 5% and the fed tightening and probably a lot of hidden leverage thanks to seven years of zero rates. there is a handful of risk factors for a recession and china might be adding to that dangerous mixture. >> this is a great point because in a way we have not experienced a period of growth like this, that's only about 2% for as long as it has now, maybe that's what could be different if such a thing were to happen, that we
imported china's interest you believe so. >> the few times during this expansion we have been at stall speed, we have got back towards the zero line in terms of growth. also it's also low nominal growth, inflation is so low that there just isn't that cushion, the top line of the economy has not been growing fast. that is is the argument for these small adjustments or the weight of weak global growth dragging us lower but the question might be what's the difference. if we did have a statistical recession or one quarter, another quarter of negative growth will that change the overall picture of how the economy behaves and feels. >> i think that the fact that we are only growing 1.5 to 2% and the fed is doing what they're doing and tightening and talking like they are going to tighten that is really upsetting investors giving us lack of confidence. then you have this stuff going on with china, it doesn't take much. remember when the fed did raise it was so hotly debated, should they, shouldn't they. now we are stuck with this kind
of difficult challenging environment international alley and the combination is just that much more exacerbated. >> we got stanley fischer's comments today wherewithal of this quite plainly going on he basically said, yeah, four times in year. is it possible that this recession if it happens could be like the last and caused by the fed? >> the second part, yes, if there is a recession the fed will have its fingers on the trigger. there are a lot of people standing around with smoking guns. there is a high yield credit market, china, what's happening in oil. but to go to a point that mike and stephanie were making, we have trend growth between 1 be 5, 2%, thea lower than the 2 to 2.5 that we have been used to, when you are cruising so low to the ground you crash more easily. japan has had three technical recessions since 2008. the other thing that matters is the fed believes that essentially the kind of interest rate they would have at a healthy economy these days is 3 to 3.5%. that's very little ammunition to
deal with the next recession. i know one thing they worry about is that when the next recession comes along whatever the trigger, whether china or something else they don't have a lot of tools to deal with it. >> mike, one thing we have done as you pointed out in past is import bear markets. >> yes. >> i guess if that's what we're doing the question becomes is that a buying opportunity? if the u.s. is fundamentally sound, we don't import the full recession, how would you say the markets look at this point? >> nonrecession bear markets do happen, they are not terribly common, they usually are pretty brief, 20, 25% high to low. yeah, but if you could say in advance this is going to be a bear market that does not result in a u.s. recession or coincide with one you would say yes it's a buying opportunity but that's never really clear before you are in the thick of it. >> you never want utilities and staples to be leading the rally or leading the market and that's exactly what will happen if we see this bear market. >> greg, thanks for joining us. >> thank you. >> really appreciate it. greg ip. time for a cnbc news update. let's get out to sue herrera.
>> here is what's happening in hour. senior white house officials and u.s. intelligence and law enforcement officials will meet with silicon valley executives tomorrow. the topic the use of social media by militant groups and terrorists. some of the companies participating include twitter, facebook, apple and youtube. the defense department releasing video showing a january 1st air strike on a bridge in syria. the u.s. led collision had 19 strikes targeting isis in iraq and one in syria on that day. secretary of state john kerry holding a foreign policy briefing in washington. he addressed all the breakthroughs in the u.s. made in the 2015 year, including the trans-pacific trade deal and reopening the embassy in cuba, but he also appealed to the senate who he said blocked several vital nomination toss u.s. ambassadors. gop presidential candidate marco rubio campaigning in new hampshire. he held a pair of town hall meetings addressing everything from gun violence and immigration to increasing mid east participation in the war
against isis. you are up to date, kelly. that's the news update this hour. back to you. >> our sue herrera. up next, we will crunch the numbers to tell you who exactly is investing in china right now. how is that going to effect the market open today and what impact will it have on the u.s.? >>. plus we will show you the wild play to play of china's last trading day. stay tuned.
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welcome back. let's take a look at how we finished the day on wall street. it's not just today that's so significant, the dow is down 392 points, declines of 2.3% for the dow and s&p, more than 3% for the nasdaq and again the dow has now dropped more than 5% in the first four trading sessions of the year since the day it began in 1928 that has never happened. now, we have a news alert on time warn err to get to with sue herrera. >> time warner announcing today that it has given its chairman and chief executive officer jeff buchas an extended term of employment. another three years has been given. they say, quote, since becoming ceo jeff has transformed the company to focus on video content and capitalized on the combined strength of turner, hbo and warner brothers. this new agreement does not change his compensation, which
consists of base salary, annual bonus and long-term equity incentiv incentives, so another three years for mr. bewkes at time warner. >> you flagged that this stock had been drifting higher. >> i don't think it's a matter of whether jeff bewkes was going to get another contract although it's probably good he is going to be there another three years but i do think people think there's something that could happen here restructuring wise, spin off, something with hbo. i do think the fact that this company was the subject of a hostile takeover a year and a half ago at a higher value will get people talking if the stock doesn't perform well. >> i think they're handling ott better than most. the fact they were able to reiterate guidance at the conference today is positive when you have quite the opposite things happening with their competitors like disney, for example. the stock traded at a substantial discount to disney and it's been hit just as hard.
it's an attractive investment here. >> jeff bewkes getting three more years. china's markets dropping today causing regulators to halt within minutes of the session. who exactly is investing in china right now? what do we need to watch for when those markets reopen? eric chemi has been crunching the numbers and he has the numbers. >> the one thing to remember about the chinese stock market is that it operates so differently from u.s. and european markets. first off its dominate bid retail investors who treat the market very much like a casino. look at this chart. there are over 200 million trading accounts in china. that's the same size as america's adult population. that's one of the main reasons we are seeing so much volatility. even though we've seen huge drops in the last week let's not forget who how massive the speaks have been in the last ten years. this china volatility makes the s&p 500 look almost like a flat line. the difference between is a small and large caps of course
we know small caps anywhere tend to move more than large caps but in china that difference is even more exaggerated especially in the past months. remember, many of these large caps are state owned so retail traders are generally looking at the small examination to make their quick bucks. some veterans take it so far as to say comparing chinese markets to a casino is unfair to the casinos because at least they have stronger rules and don't have price manipulation. that's why even when bad news in the economy happens a spooked and scared set of retail traders are quicker to bail out versus a professionally dominated u.s. market where they have institutional and they can weather the storm better without going nuts. >> or at least they like to think. eric, thank you so much. our eric chemi. china's central bank has been manipulating its foreign currency reserves in an attempt to control the value of the yuan. here to explain why this matters so much to u.s. investors, elsa,
good to have you here. we have traded significantly lower every time this word comes out of china the currency is moving lower. why is that such a big deal? >> two things. first is that a lot of people feel the chinese data are not very reliable and to some degree the currency is seen as a approximaty for the state of the underlying chinese economy. china has a stockpile of reserves and when they use those reserves, we had data showing they used up over 100 billion in december alone that has implications for the other classes, highest invested in u.s. treasuries n pound and yen, so all these things have strong implications for global markets. >> you had made the point about growth earlier. i wonder again, you know, china when it was growing so quickly had a huge impact on the u.s., mike, is the same true now that that growth is decelerating. >> for the industrial part of our economy, all those areas we are looking for that expansion opportunity outside of a slow
growth domestic economy, where he yes, it does. the question, too, is this idea of capital flight of china something we have to be concerned with? is this a measured ratcheting of the currency, is that where it's going to end? you heard these reports today of people advocating for a more sudden devaluation of the chinese currency. >> right. for some time we have had a focus of 695 against the u.s. dollar. part of the reason is for a long time by pegging themselves to the u.s. dollar they allowed their currency, the chinese allowed their currency to really strengthen and trade weighted terms. if you look at it it's followed the dollar up against everything else in the rest of the world, it's not something they can sustain. now they're trying to bring it back to more reasonable levels but that's a difficult process. you can either do it in a one off shock, do it all the way and then let people deal the aftermath or you can do what they're doing at the moment which is this gradual death by a thousand cuts. >> we are almost out of time but just to that point would it be better or worse or is it just
hard to tell if they did it all at once versus the steady drip drip? >> well, the drip drip has the problem that people expect further depreciation so it becomes somewhat of a self-fulfilling prophecy. >> maybe just rip off the band-aid. elsa, thank you. we continue to keep an eye on what's happening over in china for our markets. let's send it out to seema mody for an earnings alert. >> we have two apple suppliers pre announcing negative results, serous logic reporting $347 million which is well below analyst consensus, the company citing weaker than expected demand and this weakness escalated over the last few weeks of december. switch over to core vo which specializes in radiofrequency chips can you get it's q 1 outlook and you can see shares have reopened lower by about 9.6% in after hours trade. for now back to you. >> seema, thank you. again, just the point we were making shear a moment ago
talking about these apple suppliers, guys, they have already been under pressure and further moves 6 to 9%. >> pretty surprising. sirus we know they have 70% exposure. you have to find the exposure that have 5, 10% ex poesh tour to apple. >> tonight on cnbc carl quint knee a and becky quick are posting a special report it begins 7:00 p.m. eastern as we a paint for china's markets to reopen without the circuit breakers. coming up as we said less than four hours before that shanghai market opens in china. will things go any smoother no you that regulators have suspended those circuit breakers. plus constellation brands one of the few stars on the market today.
welcome back. another major selloff on wall street today, but take a look at constellation brands, bucking the trend. the company reported better than expected third quarter earnings, increased its 2016 outlook and shares were up 4.5%. joining us now on a cnbc exclusive is rob sands, he is ceo of constellation brands. welcome to you, rob. you are a welcome break in the sea of red out there today. so tell us, you know, what is it that continues to drive the consumer towards buying more beer, more wine? are they paying up for it?
what trends are you seeing here? >> we just had an unbelievably great quarter. i think that, you know, the consumer today is definitely premiumizing, buying better beers and therefore our portfolio of products like corona and madella and our wines like mondavi and kim crawford fit perfectly into that trend. >> have you told donald trump you want to build a new brewery in mexico? >> yeah, well, he's probably aware of that fact that we're actually building several breweries in mexico as we speak. >> why is that? how do the economics work? >> well, you know, in our particular case it's really all about the fact that we -- our business at least the majority of it in beer is mexican beer, so mexican beer has to be produced in mexico. so it's not -- >> staying authentic. >> exactly. it's very important that the product is authentic and of course corona and modella are
leading brands in mexico and they will always be mexican. >> why you are rights to that go back to the original sab merger. i wonder what that's going to mean for your company, how do you guys position yourselves in this now increasingly concentrated market environment? >> yeah, it's not really going to have much effect on us because our business is priefl aerl u.s., dominic, and the sab, miller, abi merger won't have much effect on the u.s. domestic market because they will have to divest their interest in miller coarse. so that's going to remain a separate company. the landscape isn't really going to change very much in that regard. >> what about distribution? we have heard craft brewers express some concern they will have more controlled to improve their own distribution at the expense of others. >> yeah, we have incredibly strong distribution and we call our distribution network the
gold network because our brands are growing so fast and our brands are so valuable to the distributors that, you know, they absolutely love us and we don't happy any issues whatsoever issues whatsoever with distribution. >> net beer sales up 8%. wine and spirits up 3%. rob, thanks for joining us today. >> thanks, kelly. >> ceo of constellation brands. we are less than four hours from the start of the trading day in china. will this go more smoothly now that circuit breakers have been suspended? that's next. carl quintanilla and becky quick are hosting a special report "markets in turmoil." you pay your car insurance
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china stock market is a couple hours away from reopening. regulators have suspended the circuit breakers that were triggered after less than 30 minutes of trading in the overnight session. >> this is crazy. i don't know whether they did this on purpose or trying to show us up on a day by day basis. once we went over 6.5, they went
651, then 653, now 656. >> it's disconcerting for the markets. they're learning by doing this. >> there's your open there. even the hang seng is off by 200 points. >> what started off is a calm soft session. now turned into -- i don't know, it's picking up steam there. hit what they call circuit breaker. >> number one. >> down more than 5%. 3,349. that's frozen now. shenzhen down 6.7%.
>> any minute now, 55 or 56 should be coming back into action. we are at 6.3% now. >> there goes shanghai. they heard. >> it might happen before 10:00. look how it's going. >> there we go. >> it's so difficult for them to get information on what's happening. they are shut out looking at the glass like the rest of us. >> without a doubt. it's the velocity of it. it's that information vacuum you see in there on one level, it's remarkable. it's no surprise china has been in bad slowdown mode for a long time. caterpillar trading at a six-year low. you wonder what incremental bit of information we are getting from the panic out of shanghai. >> good point. >> i wonder if -- we know the industrial part of china has
been slow quite some time. wonder if it's starting to bleed over to the consumer. we heard good numbers from nike and apple and coach and tiffany, et cetera. i wonder if that's starting to roll. if that starts to roll, your numbers of 4%, 5% gdp, that's not going to happen. >> it's the key to their whole economic future. a lot rides on what happens with these markets. will investors pay more attention to china? what about that u.s. jobs number in the morning? watch "markets in turmoil" 7:00 p.m. eastern. we'll see what happens. it's a fact. kind of like ordering wine equals pretending to know wine. pinot noir, which means peanut of the night. 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.
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welcome back. closing thought. what's more important to investors tomorrow, china open without the circuit breakers or the u.s. jobs report? >> short term, definitely china. i think the jobs report, there's a lot of slack in terms of how that gets interpreted. the fed can brush it away and say market conditions preclude us moving on a strong number. china will set the tone. the worse the market's been onto any jobs number, the better afterwards. >> china certainly. if we can follow up with a very good jobs number, then i think we can rally. then people will say the u.s. is on the right path in terms of
job creation. the big number mike and i were talking at the break was wages. >> going to sleep tonight watching that china market? >> absolutely. >> thank you for joining me. that's it for us on "closing bell" we hands things off to "fast money." >> thank you. fast money starts right now live from the nasdaq market site overlooking new york city's times square. i'm melissa lee. the man who correctly called the dollar rally over a year ago and august swoon says the recession is here and things could get worse. plus another day, another low for apple. almost 30% off its may highs. could this be your best chance to buy it? or has apple become a no touch stock? oil hitting a 12-year low today. one of the institutional investors top energy analyst says crude could triple in the next two years. first we start off with