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tv   Closing Bell  CNBC  January 13, 2016 3:00pm-5:01pm EST

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headwind, whether they're upgraded or not. >> yeah, it's going to be a big hour of trading for closing bell. a special 7:00 on the power ball tomorrow night. >> absolutely. we'll all be tuning in. thanks for watching, everybody. >> welcome to "the closing bell", everybody. i'm kelly evans at the new york stock exchange. >> and i'm bill griffeth. this crazy year for stocks continues. another big selloff. and we've got consumer discretionary, health care, and technology. some of the biggest losers right now. the market yet again started in the green on the open this morning. failed to hold those gains yet again. and especially -- this is a late day selloff, as art cashin was pointing out a little while ago, which we had yet to see this time of day. >> and y want to know what makes this session different. on the dow jones industrial average, the worst performers,
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home depot, down more than 4%. goldman sachs. j.p. morgan reports earnings tomorrow of all energy names are weighing down the s&p 500, and in the nasdaq, it's a lot of biotech names, so a lot of different pockets of stress here. >> oil still calling the shots as well. >> speaking of which, brent crude, brent falling below $30 a barrel today. first time for that since april 2004. and we've got vice chair dan jurgen who says there are three key factors hitting oil right now. he'll explain what those are and how long they could further weigh on crude. >> i always looked forward to talking to dan about this market. meanwhile, morgan stanley's chief equity strategist will be here with us. he'll join us with more on that call and we'll ask him where he sees any bright spots in this volatile market right now. >> and hedge fund giant david tepper suing sun edison. the latest on these moves coming up. >> meanwhile, bob pisani joining
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us. and bertha coombs, of course, tracking action at the nasdaq stock market as well. bob, this late day selloff, rather unusual. >> yeah. this is another one of those days where they're taking down overall exposure. we've seen this a number of times. the whole market is down about 2%. it really doesn't matter. overall market exposure being taken down. what's point is we're seeing a little more activity in high beta names. stocks that have a little more pluckuation on a daily basis. so look, transports having a very ugly day.fluctuation on a . so look, transports having a very ugly day. everything down about 4%. another high beta sector that we're seeing a lot of activity, come on over here, is rhrhe reg banks. about 4% in the regional bank area. another sector. another high beta sector is the oil names. i'm just bringing up one. anadarko. and it's not unusual now to see 4%, 5%, 6% declines.
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these high beta names, as we call them, have had a really tough time this year. i want to show you some of the declines we've seen. low volatility names. mostly these are consumer stocks. not down nearly as much as the overall market. and high beta names, like the names i had just shown you, they're down much more. so they're taking down some of these high beta names. these are the ones they often play for momentum and try to make money off of. finally, just want to note, the vix, the volatility index remains elevated. we're in this very unusual situation where the cash contract, the one that we show all the time is much higher than futures contracts further out. this is a very unusual situation. and it's been going on for days now. this normally indicates a short-term market top, but beginning on four, five, six days now, we haven't seen that in quite a while. i'll keep an eye on that. back to you. >> we will, bob. thank you. let's send it to bertha coombs now. she's at the nasdaq watching especially those biotechs today. what's happening, bertha? >> yeah, it's been a selloff in biotech since the beginning of the year.
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today, they too saw a big reversal. while you're seeing the big caps overall, take a look at the climbs here. big tech biocaps. down 5%. the nasdaq biotechs here are down about 4.5%. and it's really unusual this time of the year to see it, because normally you see a sector get a boost from the jp morgan health care conference in january, but it's been opposite this year. the biotech etf, which is the way a lot of people play the sector, breaking below the august flash crash low today on above average volume, down about 16%, just since the start of the year. 30% its all-time high last july. and some of the biggest losers inside. shares plunging over concerns about its developing cancer deal with merck. both down about 30% since the start of the year. biomarin and vertex. did you notice a little bit of
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green here. after boosting its outlook, but a tough day for the health care sector, bill. >> only one out of 100 in the green. >> yeah. >> that's pretty shocking. thank you, bertha. >> all right, hang on to your hats here. we told you yesterday about a couple of bearish calls from two of the world's biggest banks. today we have another bearish call on wall street. this time from albert edwards, the analyst at sock jen. here's what he said. he said when an economy is hurtling toward recession, it's almost always the manufacturing sector that takes the less volatile services sector by the hand and leads it into a recessionary underworld. he writes, if i'm right, the s&p would fall to 550, that would be a 75% decline, from the recent peak of 2,100. >> albert edwards should be a relatively well-known name to our viewers. he's been quite bearish on
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assets for some time. and has made calls like this before. not sure that listening to him has been the soundest strategy over the last couple of years. so that context, i only say so that people know, you know, as we get calls of this magnitude with names -- banner names on wall street, just a little bit of context there. >> what's interesting, though, is he's not alone this time. with these kinds of calls. >> he's not. >> i get what you're saying. >> he's probably the only one calling for 560. >> he's been on the extreme end. more and more of these pretty pessimistic calls. >> rbs got quite a bit of attention for its call. it was only seeing a decline of 10% to 20% in stocks. again, for professionals, that would be a nightmare. >> let's talk about it. our "closing bell" exchange today, joe duran joins us from united financial advisers. and we welcome back rick santel santelli, who joins us from chicago. i was telling you about this extreme call earlier.
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we have seen a number of support levels come and go in this market so far in 2016. what do you make of that and what are you doing right now? >> you know, albert edwards made an extremely call. and his targets are extreme. but he's right about one thing. when the rail stopped running, when the ships start sailing, when manufacturing and energy collapse together, when small caps underperform in a strong dollar environment, there's a good chance you're going into recession. so he's not crazy. and arthur cashin, when he says zero before positive one. how about negative one before positive one. we're in a tough environment here. >> you talking about rates there? >> yes, i am. talking about the fed funds rate. we're in a pretty tough environment here, and the only safe place seems to be place where is you can get a dividend, at least as far as stocks are concerned. there's nothing to like about this. i thought i smelled fear today. i didn't smell fear at any point yet today. at one point i thought i smelled it. >> we did see the dow down almost 400 points a little bit earlier.
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what are you saying to investors? >> what we're telling them is we are much higher likelihood of going into recession. 2/3 of our recessions in our history have come when the fed is increasing rates. and there's a lot of unusual signs that you're seeing. a flattening yield curve, the china situation that's occurring, but more importantly, what's happening with credit rates, transportations pummelling down with energy also dropping. that situation kind of suggests that we're pricing for a recession. what we tell everyone is we typically have a 15% decline every 300 days. we've not had one for well over 1,500 days. so we are in a rising interest rate. even if we don't have a recession. going back to normal volatility. you need to have a portfolio that's built to withstand the more normal volatility that we're going to now experience. because the rates are going to be going back to something that is more customary, which is the fed is not simply supporting the
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market under all conditions. >> rick, you've come back to a pretty gloomy mood for the equity markets today. yields have come down, no surprise. depending on the maturity. you're look at lows we haven't seen since last summer or last fall. you had a pretty good ten-year note auction today. what do you make of what's going on right now? >> i think the ten-year note pretty much summarizes it up. there's a lot of global anxieties. and even though yields for ten years could easily close at levels we haven't seen since the third week of october last year, they were piling in. they were piling in like they were giving away free iphones along with every million of ten-year notes you buy. listen, i think when the training wheels came off, this is exactly the type of behavior i'd expect. i think the treasury market has been remiss to go into a free fall of yields because i think the treasury markets for the most part have been correct. let's not -- you know, on that call of that gentleman from sock gen -- >> albert edwards.
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>> i'm not going to talk about his levels, but i will say there's a lot of people, including myself, who think along with copper being a sentinel commodity in manufacturing is a sentinel sector. so in that regard, i completely agree with him. the fed has nowhere to hide. and that's the funniest part of this. the fed is not going to affect the outcome, meaning they're not going to pull a rabbit out of the hat. they don't have any more bullets. we're still creating good jobs. so how that affected gdp in the economy s tenuous at best. and i heard one gentleman, one of our guests say negative one before one. i'm sorry. i still don't think that the u.s. federal reserve is going to do what europe did and push these rates negative. i really do think if you're looking for the fed to fix this, that's the whole point of recalibration. i don't think they can. >> that was steven gill fouilfo. they're coming from the stock market guys. i remember in late 2007 when a
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lot of the economists were saying hey, the business cycle is turning and the stock market guys still had normal 10% higher price targets. this time, why is it that the stock market guys are calling for recession when most of the economists are relatively more sanguine? >> i think maybe we're feeling the heat a little more right this minute. maybe we're the guys that are resorting to that panicky labeling of what's going on right now. but, you know, two things. rick santelli just called me a gentleman. i've never been called a gentleman before. and secondly, you asked me what i was doing right now in this environment. if you recall, two weeks ago, when i put on my new year's eve note, i allocated 35% to cash. that's my best position right now. >> what about corporate bonds, though? in the meantime, we've got anheuser-busch for its merger deal selling what could be 100 billion dollars worth of corporate bonds. and apparently the buyers are there. what does that tell you about how fragile really the environment is? >> well, the environment is not
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fragile for super high quality names, and that's really where you're safest. but you don't want to go out too far on maturity. we've had a really good recovery in rates. but you do not want to stretch for yield. not in quality, and not in duration. >> joe, let me put it this way -- joe, do you think this kind of deal -- this is one of the biggest bond offerings of all time. would this deal be going off today with the kind of interest it has if the financial markets were effectively on the brink of a recession, of the kinds of collapses that you and others were just talking about? >> yes, because of -- it's booze. and booze works even in tough times. maybe even better. so you have a really strong balance sheet. you have an asset class that is relatively recession-proof. and that makes it a fairly interesting investment. an environment where you can't get yield anywhere. so i do think it goes through. in almost all conditions because
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of what is being offered. >> albert edwards aside, one of the more extreme numbers i keep hearing are the august lows around 1867. peter costa famously has said if we get back down there, he will actually get back into this market again. is that a number you're keeping an eye on? what levels are you watching right now? >> it certainly is. when 1915 and 1901 broke today, 1901 was extremely significant. so now we all look at that. it would be the third time we tested that level. i think 1867 was the low in august, and 1870 was the low about a month later. so if we test that level a third time, then i wouldn't be so quick to buy there, but i would be quick to pay attention there. maybe i want to go into that level flat if we get there. >> finally, rick, to you. we've talked about the difference in this environment versus 2007. is it significant to you that it is a lot of the stock market guys who seem to be much more concerned about the economy than the economists themselves? >> well, i think the stock market benefited the most and
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most directly from the liquidity provided by central banks and central planners, so it's not surprising to me at all that when the gps is saying you are here gets to the spot we really are, that's going to be the sector that sweats the most. >> all right. guys, thank you. appreciate your thoughts today. >> thank you. >> see you later. >> 45 minutes to go here. look at the dow, down 335 points. and the biggest decliners in that index include jp morgan. the s&p 500 down to 1895. the nasdaq the hardest hit today for a lot of different reasons. >> i don't know if it's changed or not, but who was positive in the dow today? exxon. on a day when brent falls below $30 a barrel, which is crazy. the plot continues to thicken. coming up, morgan stanley chief at u.s. equity strategist adam parker will join us, tell us where he is finding opportunities in this beaten up market. plus, find out if we may be finally nearing a bottom to this oil market.
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dan jurgen is coming up. you're watching cnbc. first in business worldwide.
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if you're just tuning in, you're making another wild one.
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sit down and get comfortable. the dow is down 314 points right now, near the lows of the session after an early rally. does that sound familiar? and wouldn't you know, chipotle mexican grill is higher today. it's up 5%, even before the company began addressing investors at a conference in orlando, florida. shares fell below $400 yesterday for the first time since august to 2013. they have lost about 40% of their values since october when the burrito chain came under fire over the outbreaks of foodborne illnesses linked to its restaurants. but today, a $20 gain to 4:25. >> take a look at shares of sun edison. appaloosa management is suing sun ed. it's the world's largest clean engineer developer. he revealed he had taken the stake in teraform. he sent a letter to the board
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expressing frustration with the relationship to its parent company sun edison, and tempers now trying to block a deal between sun edison that would include teraform buying assets. apple l i spoke with tepper in october when there were first rumors about him being involved in the stock in sunedison. >> it speaks to the authority when just knowing about your appearance, sunedison was up 5%, there was some rumor you were going to come on and talk about it. you say it's a stock picker's market. would you pick a sunedison? >> you know, people probably smoke a lot of marijuana out of your viewing audience and people on twitter. because i don't understand where stuff comes from. i've never talked about stocks in this program. we haven't had any big positions in my book for a year. i mean, really, truly, there must be some really good gonja coming into the country. >> i just spoke with a source close to tepper, who said tepper
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is fighting for what he believes in, in this case, the truth, the american way. he thinks it's b.s. what's going on with this deal. he wants it stopped. now, while tepper's appaloosa does not have a position in sunedison, the vanguard group and asset management have previously disclosed states. sunedison gave us a no comment. >> he's seeing a clear conflict of interest with this deal. an arms distance kind of a situation. >> you remember in the case of terraform, there were board members who resigned in protest. conflicts of interest potentially. you know, a sense maybe that there wasn't enough opportunity given to people to stop this deal, which they didn't like from happening. so now, a lawsuit trying to do just that. >> see what happens there. let's talk about oil. still calling the shots. closing slightly higher today. and while it is down more than 17%, now at around $30 a barrel, since the year began.
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our next guest says it is not likely that we'll see oil drop to $10 a barrel. >> those calls are starting to circulate a little bit more. dan jurgen from ihs joins us now with more. great to have you, dan, after this historic moment. you know, brent crude below $30. it's now trading at a discount to the american barrels. just to begin with, roughly speaking -- or largely speaking, where the price of oil is going, is $10 feasible to you? >> well, $10 is what you had in 1998 and 1986 when you ran out of storage. there's a lot of weakness and momentum. a lot of it is what you were talking about a little while ago, about why there's a recession. the other thing that's hanging over the market is what's going to happen on friday or monday when iran gets certified that it's in accord with the nuclear agreement and iranian oil comes back on the market, and that is a big near-term uncertainty. much more than running out of
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storage. >> yeah, that's all the world needs, is another half million barrels, right? >> and that's the question, is it going to be half a million? they say a million. is it going to be 300,000? at least one thing that will peel back the fog. >> they would love to cut production to prop up prices. but they cannot afford to do it right now. name me an oil producer who could afford to cut back on production right now. you just don't find one, right? >> i think the further question is the big ones who could cut back, of course, are the gulf arab countries. but for them, this goes back to iran, this goes back to geopolitics. the last thing they're going to do is make room in the market for iranian oil. i mean, we've seen the thing where the saudis were selling oil to a polish refine rirk ary. it's a very competitive
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situation. and i think it's all tied up with the nuclear agreement. and when i was in the gulf region, i mean, all you heard about really was about iran and what are iran's objectives in the region. so this is much larger for them. >> you know, could it happen, dan, that wti has bottomed, but brent does not, and ends up trading at a 10 or $20 discount? >> i don't think so. i think now that we removed the barriers to u.s. oil exports, there's beginning to be much more proximity in these prices and much more of a global price. >> for you, it's not just about supply and demand. the price decline we're seeing here is in part also prompted just by sentiment. there's negative sentiment that has pervaded in the market. how much lower do you realistically see us going here, dan? >> well, i think we don't know, it depends upon events. but i think that you can see the greater plume about china has been the confidence that the chinese really can manage their
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economy. and the other factor that's at work, you see this again and again. the dollar is strengthening. what happens when the dollar goes up? commodities go down. all this comes together. so whether it's 32 or $28, we're in this weak period until there's greater clarity, and we start to see demand in the fundamentals, and by the way, see further declines in u.s. production. >> so you mentioned it was the late 90s when oil was basically at $10 a barrel. the intervening event seemed to be china entering the world economy. since it's unlikely we'll have another event like that to experience in the decade ahead of us, what catalyst would there be for higher oil? >> i think that was when we also ran out of storage. what happened was some of the non-opec countries got together, and they cut production. as you said, china, emerging
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markets, the catalyst of the world economy. you're asking a broader question. it's not just about oil. but what is going to be the growth catalyst for the world economy? you saw the other day christine lagarde, the head of the imf expressing much more gloom about the world economy. best news is the united states. >> we're going to be affected by what happens globally, i'm afraid. >> yeah. >> good to see you, dan. thank you. >> thank you. >> dan yergin from ihs. we are headed to the close. 35 minutes left in the trading session. still a 300-point decline for the industrial average. one that we're really keeping an eye on, though, the nasdaq, which is down sharply today with technology really taking the hit. nasdaq down 2.6% right now. >> coming up, why morgan stanley's chief strategist is telling clients to off load tech, too. also, then there's twitter. losing half its values since jack dorsey came back to run the company officially in july. we'll look at why this stock
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just keeps struggling, when we come back.
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welcome back. another tough session for stocks, but this was wasn't, bill. where we were watching china overnight first. i mean, this is one where it's really watching that intraday chart, we're sliding deeper and deeper into the red today and it's got everybody scratching their heads. utility is the only chip in the green there. consumer discretionary getting hit, even though oil prices keep
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falling. i mean, just go ahead and look at the financials. down 2% today. there's a lot of selling here. as so often happens, when nobody knows the single issue, ten to 12 different reasons floating around out there. >> a fascinating day once again. and twitter continues to sing today as analysts raise questions about their growth potential. julia boorstin has been digging into this story for us yet again. julia? >> that's right, bill. two new negative analysts, questioning twitter's ability to add users, sending the stock to new all-time lows. morgan stanley lowering the price target from $22 to $18, saying time spent per user has declined 20%. and rbc's mark ma heeny predicts the twitter monthly active users could decline this year. before jack dorsey returned as permanent ceo, there was speculation that tech giants such as google or microsoft might buy twitter. since dorsey took on the job july 1st, twitter has lost about
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half its value. the stock is down about 28% from its ipo's price, sparking talk that the company could be an acquisition target. twitter, there's no controlling shareholder, which means there's no protection against the hostile acquisition, or activist investor. kelly, certainly one to watch. >> did anything ever happen with that 10,000 character rumor that was going around? >> well, it was effectively confirmed by jack dorsey after their many reports about it. jack dorsey posted a rather long and somewhat confusing tweet basically saying that this is the kind of thing that they're very much interested in doing, and moving away from these restrictions that are potentially restricting. >> his tweet was still 140 characters. >> i was going to say, what would you call a 10,000-word tweet? just wouldn't fit. >> it would be called get rid of it. that's what it would be called. >> a long post. >> a long post. you'd call it a book is what you'd call it. >> our julia boorstin. time now for a cnbc news update.
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let's get over to sue herera. >> here's what's happening at this hour. iran state tv airing footage of the ten released u.s. sailors and boats that were captured near farsi island in the persian gulf. iran says the u.s. apologized for the incident, but the white house says no apology was given. gop presidential candidate marco rubio says the iranian detention was not some innocent thing, and is proof that iran knows it can humiliate america. he spoke to a lunchtime gathering near charleston, south carolina. the state of massachusetts offering general electric $120 million in grants and other financial incentives, succeeding and persuading it to move to boston from fairfield, connecticut. boston kicking in another $25 million in tax relief. and workers pulling out a frozen car encased in ice in buffalo earlier today. the driver parked it outside a restaurant along lake erie on sunday. waves splashed on to the car, instantly froze, covering it with several inches of ice. it really is winter.
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you're up to date. >> somewhere. >> have you been outside? it's 20 degrees. >> i know. i'm so sick of this winter in new york city. >> says the l.a. guy. i grew up in that central new york weather, the lake effect snow. oh, my goodness. >> it's freezing. >> it's also terrifying. thank you, sue. you had it so easy. t-shirts in january. >> didn't know what i had. >> 28 minutes to go here. the dow still down 314 points. the s&p giving up 40. it's below 1,900. and the nasdaq, the worst performer to date. >> we have a leading trader standing by to tell us what he's watching as we head into the last half-hour of this trading day. >> also coming up, morgan stanley's chief u.s. equities strategist explains why he's now advising clients to pullack on investments in energy and tech. stay tuned.
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welcome back. we mentioned this earlier on a day when brent fell below 30 $3 barrel for the first time since 2004. look at the lone gainer. that would be exxon mobil. you've got the like of home depot, which had been a stellar performer lately. that is the biggest decliner.
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the madness continues, kelly evans. >> on that note, let's ask matt chestlock. joins me. maybe you can explain what's going on. >> we've been blaming it on china and oil for so long. today it doesn't feel that way. i think the second leg lower was the u.s. economy. some of the comments. >> i look at netflix down 8%. why is jp morgan, goldman sachs, and home depot the worst performers? >> some of the tech names are the worst. a lot of people are saying i'm going to re-adjust my portfolio and try to get ahead of this instead of chasing returns. i think that's why. if you can sell into this and buy it back at a lower price, you're going to want to do that for the returns later. >> do you smell any fear and panic out here? what do you think happens? >> certainly not fear and panic, but i think we're going to see
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another leg lower. today we'll probably see a selloff. it's not fear and panic, but the selling is different. i think they're pressing it as the market goes lower. >> we'll let you get right back to it. thanks for joining us. appreciate it. >> let's talk about this market. morgan stanley has downgraded the technology sector to under weight from market weight. it also cut its exposure to apple in half. let's talk about that. we're joined in a cnbc exclusive by adam parker, morgan stanley's chief u.s. equities strategist. good to see you again. welcome back. >> hey, bill. thanks. >> i'm going to talk about that technical in a moment. big picture first. what is going on in this market right now in your view? >> i think it's a growth scare. we've had a few of these the last couple of years. i think people are worried about the forward economic data and that's part of it. i agree that china and oil were certainly part of it.
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i think today people are selling winners and they're selling liquid names. i think it's an opportunity. >> on that note, is it a sector you should be in any more? >> the s&p is about 20% technology. i think the challenge is that some of the growth names have gotten pretty expensive. the value names look cheap, but without a catalyst, it's hard to get very excited. hedge funds are pretty crowded in a lot of tech names. so i think that's why you're seeing selling here today. >> what's going on with them? they were the darling of the street for a while.
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now they can't get out of their own way. >> we can't talk about ving securities here, but i think the general premise is you need a catalyst for value stocks. that holds for what you're talking about in the bruder universe. >> what about biotech or health care? >> look, there we had it as our biggest overweight for four years. 2011 through '14. i think in '15, you got crowded. very crowded. you had a huge number of acquisitions. i think 11% of the public health care companies received a tender offer last year. and a lot of biotech, a lot of the values are the terminal values. i'm getting increasingly optimistic about health care. for it not to work in 2016, you're banking on a lot of
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multiples. i think there will be a lot of m&a once the dust settles because there's a quantum of cash on the sidelines. i would say we have market weight there, but we're getting more positive as things sell off. >> you think the u.s. economy is doing okay, but what about a very economically sensitive indicator like the transportation stocks? especially the truckers and the rails, which have just been beaten down. a big part of that, i would imagine, is the commodities sell off as well. all of that put together, where is the strength in the economy if it's not in that very important part of our commerce here? >> i think a lot of that is an anacronism. the oil price is a benefit. the interest expense is down.
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that matters more. it's fueled by massive supply. so i think the debate would be yes, maybe i want to worry about industry and industrials, but maybe they can offset that. >> we can only hope. >> let's send it to julia boorstin for a market flash. >> among the biggest laggers is netflix. shares down dramatically today after the stock more than doubled last year. shares up about 9%. today itp research issued a note trimming subscriber estimates below the company's forecast as well as analyst estimates. the company's going to be reporting its quarterly results after the bell on tuesday. it's those subscribers both in
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the u.s. and overseas that are always the key focus for investors. kelly and bill, back over to you. >> a lot of focus on those names to really help to bolster the market last year. >> 20 minutes left in the trading session. dow down 306 points. i'm watching for art cashen to walk by here. we'll see what the imbalance looks like. >> we went below 1,900 on the s&p. the selling pressure intensifies. so we'll keep an eye on that. up next, dom chu breaks down the biggest winners and losers amid the selloff. >> and later, why you may want to think twice before using the power ball lottery's quick pick. plus some stocks that could reap higher returns for your portfolio. >> i hope we can find a couple. >> and be sure to catch our cnbc special. jackpot. the richest lottery ever. we're counting down to that big
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with the 15 minutes left we have in this trading session, dow is down 342 points. the s&p down 44. and the nasdaq down quite a bit as well. >> and this is how wacky this year is. the national hurricane center has just announced a named storm, a subtropical storm that they're calling alex. so the as are now taken. has formed over the atlantic ocean. this is january. this is not june or august. what is going on here, dom chu? >> it's turmoil, guys. it's turmoil. >> that's the only answer. >> well, i mean, if you take a look at what's happening with the markets, as you can see behind me, we've been showing you this throughout the course of the day. certainly in this mid afternoon as we approach the closing bell. this idea that we're hovering right near the lows of the session for the dow industrials. a rough start to the year. year to date. obviously, we don't need to tell you that. but let's take a look at today's action. because like you guys said, one standout in terms of the dow jones industrial average today, one stock in the green, one of last year's relative losers.
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that's exxon mobil, up by about half a percent right now. and it's curious, because among the outperformers, the top line of our heat map here, procter & gamble, caterpillar, ibm, chevron relative outperformers. they're still down today. but they were among the biggest losers from lastier ieyear's tr. those stocks underperformed the rest of the dow. interesting point there. the worst performer today, just to show you here, home depot down almost 5%. goldman sachs down almost 5% as well. if you take a look at the s&p 500 broader overall, very much a tale of weakness. you can see only that top line here. less than 50 stocks in the green so far today. among some of the interesting ones here, chipotle mexican grill. that's one that's up on the day so far today. the irc. that's going on right now. we've seen some strength there. the stock has been hit pretty big over the course of the last year. if you take a look at the broader market and the sectors within them, another interesting theme developing here.
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we have all ten sectors, as of right now, in the red. although utilities just barely. very fractionally in the red so far today. but utility, telecon, consumer staples. those three sectors very much defensive plays, less economically sensitive. they have higher dividends. they pay you to wait, that sort of thing. they're outperforming. on the bottom side of things, discretionary, health care, technology, and financials. they also happen to be the four biggest sectors in the s&p 500, guys. back over to you. >> well, that won't help. dom, thank you very much for now. 12 minutes to go. dow is down 364. s&p is down 47. the nasdaq the worst performer. >> up next, much more on this market selloff and whether there are any buying opportunities. we'll talk about it coming up.
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welcome back. the dow down 372 points. the imbalance is to the buy side. $300 million to buy. into the close, we'll see if that has an impact. >> we'll see if it can lift this market that's down 385 points. paul dietrich is here. let's begin with some -- this has been a horrible start to the
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year. one of the worst stretches for the market in some time. do you buy it? >> i'm buying. and i'll tell you why. you know, you look at what's causing this, which is china. you know, all the other crazy political stuff. and i think the china story is overdone. we're so unsophisticated when we look at china. we can't make the distinction between all the government-owned enterprises and the banks that are slowing down, and the consumer that's continuing to buy. we saw from general motors today, that they were projecting bigger car sales next year. yum brands with kentucky fried chicken and pizza hut and 1.4% just in december up. and i think you're going to be very, very surprised at apple's sales. i mean, everyone's looking at it -- >> apple, actually, you say is your large cap undervalued stock. >> it is. it's a stock that has a 9.5% --
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9.5 p.e., 46% return on equity. 46% profit margins. and what's going to come out is that people are thinking they're going to have negative growth in china, which only makes up 25%. they may have slowing growth, but it's going to be growth. and now it's selling at a 30% discount to what it was in october. people are crazy if they're not buying this company. >> and just to continue to establish your credentials as a contrarian right now, you have an energy play that you like, too. >> elon usa partners is one of the great stocks. they got hammered because people thought it was the industry district. it's a refiner. >> but the refiners today. they are down more than 10%. >> i know. but it's crazy. because they make money when the price of crude goes down. one, they have refineries. we haven't built a new refinery
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for 30 years. they literal have a monopoly. their margins today are beginning to get bigger. this company has a 3.9% dividend yield. huge return on equity. i mean, if you're not buying this stock, you're nuts. >> we could be heading toward a recession, in part because the fed raised rates and is anticipating doing that even more, and our biggest trading partners themselves. >> in the history of the united states, we have never had a recession, when employment was going up, earnings were expanding. you look at the earnings. we're supposed to have 7.4% for 2016. that's higher than the average of 7%. just a forecast. >> employment peaks before it falls. >> it does. >> but while it's going on, we
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just haven't had a recession. you've got to pay attention to it when you start seeing those things go down. that isn't happening. >> when is the last time you were really bearish? >> in 2008. >> that's pretty well-timed. >> we got out of the market. the market went down 57% peak to trough, we were down 8%. that's better. >> we were just talking to adam parker. transportation stocks down sharply. commodities falling precipitously. that doesn't act like an economy that's doing that well right now. >> you can't look at energy. that's down 63%. and you look at commodities. but most people benefit from low commodity prices, just as we do with low energy prices. >> all right. let's bring in bob pisani here as we head toward the close. are you going to head out -- >> i'll sneak away. >> another hour of television to do. >> we'll try to figure out exactly what is doing here. >> i walk in and you walk out. >> it's nothing personal.
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>> let me just set this up here by looking at a few charts of what has happened so far this year. if you compare the three major averages, the dow, the s&p, and the nasdaq, the small caps have suffered the most so far in 2016. we're down, what, 8% in many cases year to date? the nasdaq down 10%. so we're in correction territory as far as that goes. i mean, that slides south here. let's do the same thing for oil prices. wti and brent. we mentioned today, fell below $30 a barrel for the first time since 2004. there's the slide in oil prices. and while we're at it, the continued decline in yields, and this one for the benchmark ten-year yield. year to date, now down to 2.6%
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today. >> there's a broader issue. i understand your exasperation at this. analysts who look at things on a fundamental basis are exasperated right now because they don't quite understand it. but the oil decline is a symptom of a much larger issue. we are seeing a slowdown in global business activity. that is the broad issue that we're dealing with right now. so look today at just 23 companies that have reported the s&p 500 so far in the fourth quarter. big names. nike, bed, bath & beyond, general mills, big consumer names. 19 of the 23 have missed on revenue expectations that have already been lowered. and these aren't oil companies. these are big global consumer names. their numbers are coming down because the global consumer is slowing a bit. the global economy is slowing a bit. they're also being very hurt by the stronger dollar. and we've seen nike had some very big comments when they -- they reported it a little while ago. they had comments about how the
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strong dollar is hurting them. i think that's the real overall arching concern. >> art cashin made the point that it's not the chinese economy that has the markets worried right now. it's the chinese currency. what regulators are doing to the currency over there right now. >> it's apropos. you saw the currencies there. europe in our markets open up as a result of the currency. so you're right. >> a lot of people think currency ought to go down by 10% to be kind of fair value. the u.s. government has been trying to drive down chinese currency for years. they are now doing it. not all at once. but they are doing it. now, this is a massive benefit. i'm sorry, mr. trump. but this is a massive billions of dollars benefit to the u.s. consumer that the chinese government is giving to us, because five months from now,
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everything you buy at costco and wal-mart is going to be cheaper. this is going to be great for profit margins. for the retailers. >> so you're like adam parker. he's looking at the economy from the consumption side of the ledg ledger, not the production side. and the consumer benefits. >> you were too young to remember. but in 1986, saudi arabia dramatically increased the production, and all of a sudden, the oil price went in -- >> $30. >> yep. the consumer did benefit. consumer spending did move up a little bit later on. i think it's a broader thing going on. we're seeing global commodity deflation on a level we hadn't seen. >> don't you think that's partially because,china no long massive infrastructure projects?
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they were overvalued to keep china out. >> bob, we'll check back with you a little bit later as we go out with a decline of 363 points on the dow. i wou point out today, on rather heavy volume. much more coming your way on the second hour of "the closing bell" with kelly evans. see you tomorrow, kelly. buckle up. thank you, bill, and welcome to "the closing bell", everybody. i'm kelly evans. another brutal session on wall street. here's how we're finishing up the day with the dow down 365 points on the bell. the s&p declining around 48 points. giving up 2.5% for the brud index. and the worst performer by today is the nasdaq. the tech and biotech heavy index giving up 159 points. declining 3.4%. closing just above 4,500. when we were talking about that
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index being well above the level of 4,000. talking about how much worse it could get, we have mike santoli and carol roth. welcome. also "fast money" trader brian kelly. good to have everyone here. mike, what do you make of it? >> obviously, it took on the look of liquidation. these early morning bounces have not held. oil is catching down to what it's been doing for a while. i do think it's also morphed into a general growth scare. too much stuff, chasing too little demand. but that's just the big picture stuff. i think the dynamics on the ground are we've been oversold for a while in the stock market. it doesn't feel like outright panic, but definitely it was a sell what you can.
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>> those markets tumbled, so the impact is coming home to roost here. what do you think is the case today? this is very different. >> i actually think it's been coming together of a couple of different things. now that we have the fed rate hike, which we can all agree was a raging success. i think that investors are more focused on what's going on in the economy with oil, and in china, not as much with the stock market, but really with their economy. and i think that those three things coming together is really -- people are thin't thig about the fed so much anymore. they're actually starting to focus on the fundamentals that many of us have been asking investors to focus on all the time. particularly, as we are starting with earnings season here, and the narrative being oh, we're really not that overvalued in terms of the market. well, that's assuming that the markets hold up. the earnings don't hold up, then we're not so overvalued anymore. and i think that those three things come in together, starting to play out.
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>> and this market playing right into your hands, brian kelly. >> it is, yes. absolutely. from my view, what i think we're looking at is we have china deleveraging. and they're doing a very poor job at it. the pvoc has made a mistake by not allowing the currency to float more freely and defending it. what they're doing is they're slowing down their economy, and that's rippling through the rest of the world. here in the u.s., we're just starting to realize it now. that hey, earnings might not be as good as we thought they were going to be, and that's why we're seeing the selloff. >> i think from a china perspective, i think it's more than just the currency. i think it's the entire narrative around china. i think that we're starting to see the holes in the narrative. we have this overall, overarching narrative that we're going to switch from a manufacturing economy to a couple-driven economy. but we have a communist country that's not all of a sudden going to become capitalist. i think that there are a lot of parts of the story that are at odds and people are starting to
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realize that. >> the dow giving up another 364 points today. bob pisani has more. bob? >> the bottom line is a distressingly familiar pattern. the s&p 500, we start on the upside. this has happened for several days. we simply sold right into it. it doesn't help -- there's a two-day -- that oil can just not behave at all. i think it's a major factor. traders have gotten used to selling into any rallies. a very different mentality than even just a month ago. if you look at the major sectors, traders simply took down their overall exposure. it doesn't matter where you were. consumer discretionary, health care, financials, industrials, technology. everything is down two to 3%. so overall taking down exposure in the market. i particularly noted that those high beta names had particular action and had been having particular action recently, so biotech down 7%. oil and gas exploration down 3.5%. regional banks down almost 4%.
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transports down almost 4%. and the result here is the market overall seems very unstable, because those names keep moving rather dramatically. if you look at low-high volatility stock sectors here, low volatility is mostly consumer names. the high beta names, that's down almost 14% to 15% on the year. this is a huge differential. i watched that differential. this is as big a spread as i can remember in a long time. overall here, if you're trying to figure out should we have small caps or big caps, it doesn't really matter. the s&p 500 is down about 7% on the year. and equal weight index, where every stock has the same weight. it's down to about 8%. so this goes to my basic thesis here, that traders are simply taking down overall exposure. the primary theme here is slow down in global activity overall. you can see this in some of these names that we've seen so far. we've had 23 companies reporting
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fourth quarter earnings. 19 of 23 have missed on revenue so far. big names out there -- >> continuing a theme. >> nike and general mills. not industrials. >> consumer names that are supposed to be holding up. bob, thank you. mike, look at the biggest decliners on the day, which included home depot. goldman sachs was down 4%. we get earnings tomorrow. >> so the banks very flat yield curve. we know what the macro moves are that's driving that. but i do think what you want as a setup for maybe a reprieve is a sense that you can't hide anywhere. so essentially, it's indiscre indiscriminate selling. it's very much growth many years in the future. also, the express scripps announcement, very week. they had a new deal. pricing pressures. you had a conference, a health care conference where there wasn't really a lot of great upside guidance. so you had people say why am i waiting around? >> so are you saying you see action like we did today, kind
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of broad ranging and not really down to one single panelist? maybe more towards the end than the beginning of a move? >> you definitely could make that case. big picture, we just had the second 10% decline in six months. we're down 10% from the november so-called recovery highs after the late summer correction. now, history doesn't have much to say about that. maybe it's all part of one big comeuppance. but it could also mean that we're at the back end of the selloff. >> carol, i remember we were talking about macy's. said listen, you're calling about them. it's actually done quite well. so where else? just to take the big picture concerns that you do have, but also that doesn't mean there are no opportunities in this market. >> i think that's where i come out. normally, i'm of the mindset that if you're a long-term investor, that you just buy the market overall. i think this is a time that you start building up positions in
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certain names that have strong plns she balance sheets, that have strong brands. macy's is still i think a great opportunity here. but i think names like disney, bank of america, trading at a discount. i do have a business relationship with for disclosure. maybe even on the health care side. some of the bigger health care names. i think that those are the opportunities and the places that i wouldn't necessarily put all my money into. but start building a position. i think there's going to be enough of a period of time that you can build up a position over the next couple of weeks. i can't imagine that we're through this. >> let's send it over to seema mody. >> the high yield corporate bond market continues to be a source of concern for investors. the high yield etf hitting its lowest level since july of 2009. already this year, kelly, down
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3%. this as reuters reports that the stc is reviewing potential liquidity risks posed by bond fund managers. that coming after the collapse of third avenue's junk bond fund in december. the s.e.c. has declined to comment on the story, but escalating worries around this part of the market. >> seema, thank you. we'll talk more about this. but it's in stark -- i don't know, mike. what's happening with the junk part of the credit market versus some of the more investment grade parts of the market? are there concerns across the board? >> there's a huge split. they've softened up a little bit. started with energy commodities. and now it's leading to other high yields. that market peaked 18 months ago and it's been weakening ever since. now you're also seeing the low end of investment grade. basically credits that people think might fall down into junk land. also softening up. but there has been a
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bifurcation. >> and when you say bifurcation, you could drive a truck through that spread. >> it's a good point. you've got to see that investment part hold up to make sure it's something specific to industry concerns. >> basically, a general sense of risk. >> fair enough. look at the interest rates today. the ten-year yield continuing to sync. the selloff is hitting all of the americas pretty hard. michelle caruso-cabrera joins us with more. >> we see a lot across the western hemisphere. a lot of the countries i'm going to show you are dependent upon commodities. you look at canada, argentina, brazil, and mexico. all of them heavily reliant. mexico improved just in the last half-hour. but argentina off by more than 3%. toronto up by more than a percent. their currency in toronto fell to a 12-year low.
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the stock and the currency. same story, as year to date, they don't look as bad as the united states when you look year to date at some of these. they had already been selling hard at the end of last year. ditto for argentina, which is off 12%. and it's off year to date off even more if you were to add the last few months of last year. it's a pretty low bar for success. >> tells you what kind of year it's been. what is it, january 13th? >> exactly. >> crazy. thank you so much, michelle. looking at other places investors might be putting their money, gold, for example. treasuries. bitcoin. >> absolutely. so let's talk about treasuries, number one. long end of the curve looks fantastic. the tlt, 2.5% yield.
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you're going to get a flight to safety. flight to quality. if we are in this deflationary deleveraging that i think we're in, then the 2.5% yield is going to look fantastic. we've got a great auction today. gold should do well as china continues to devalue. ultimately, i think china ends up having the same policies we have here, which is quantitative easing. in china, that's going to put gold through the roof. and if the fed backs after it on the interest rate hikes, which are insane, by the way. let's say they back off of them, gold is going to go through the roof. you know i love bitcoin. there's two sides to that. th the safety factor. it's held up fairly well. and it's starting very early to take on that characteristic of the safe haven. but there's a technology behind it that i really love even more. >> well, on your point about the fed, let's just send a moment on that for a second here. albert edwards put out an extremely bearish note. sees the s&p going well below a
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thousand potentially. one of the reasons why is he talks about how this is indirectly a result with the fed's quantitative easing. he said it's certainly inflated asset prices and now it's coming home to roost. actually, i'll hold that thought for a second. let's get to seema mody. >> here's what we understand so far. the shares are halted. the company cutting their guidance. the company also announcing a reduction in its work force by around 7%. we're just digging through the release, but we will get you more as we get the details. for now, back to you. >> all right, seema, thank you, guys. gopro is one of the few names in the groan today. do we have joshua? josh, do you have a little more context around what's going on here? >> well, kelly, just combing through the numbers here as seema is running through them, this is a stock that's been under tremendous pressure. with that release over the
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summer. a camera that was initially mismanaged and mispriced. you saw gopro having to cut that price a couple of times. i would note that xander lori has resigned from his role as senior vp of gopro entertainment. has been appointed to serve on gopro's board of directors. xander well respected in that role. >> looks like amorella is down about 6% on the news. and this comes with a news release, where it looks like they're also gopro reporting their preliminary results. >> it was supposed to be 520 million in revenue. what were we, 445? that's a tremendous miss, but the market's been telling you that this story has been in trouble for a little while now. >> and there's been a fight about this story. is this a product company, or is it a content company?
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and i think that we're kind of seeing that it's a product company. and there are a lot of risks when you have that one product. that being said, if you're thinking about shorting the stock, be very, very careful, because this could end up being an acquisition candidate. >> just as it's gone from 62 to 15 since august. >> i think you have to be really careful about that. you look at it now, it's obviously -- it's potentially a one-trick pony. but i think just be careful. >> and the area of virtual reality, too, you've had analysts and different guests suggest that this is one place where gopro has competitive advantage. and this is supposed to be the year that technology comes more to the fore. >> not soon enough to get to the top or bottom line. that's what people are saying. really, from the very beginning, what's been hanging over the company's head is this notion that perhaps it was just a transitional technology. it's a one narrow product set company and others can do it, if not as well, then good enough. >> the whole augmented reality or virtual reality piece, if you think about this, it's going to
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do much better inside a larger organization than as a standalone stock. so again, be careful on the short side. >> we'll come back to the larger fed discussion later. before we let brian kelly go, gopro? >> i would agree with kelly. don't short it. but i think this thing -- let's put it this way. wouldn't surprise me to see this thing open at 440 at $7. it's going to get crushed. >> okay. as you just mentioned, it's going to be some time before that does. 24 minutes or so until gopro reopens. we'll keep an eye on it. thank you for joining us. be sure to stick around and catch brian and the rest of the "fast money" crew coming up top of next hour. they've got raoul pal. they'll ask him what he thinks of today's plunge in markets. and he'll reveal his two new trades of 2016. biotech one of the big waiters on the nasdaq today. it was down more than 5%. up next, we'll get a top analyst take on whether some of these beaten down names are worth picking up right now. chipotle was one of the
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bright spots today. we'll tell you what the company's ceo said to calm investors' jitters. that's later on "the closing bell." ne ne equals pretending to know wine. pinot noir, which means peanut of the night.
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welcome back. biotech falling more than 5% today. bertha coombs joins us now with so. the biggest movers. >> a lot of folks were very bullish. broader than average volume. but a lot of the folks who are still bullish say if you take a look at the valuations, these stocks have come down so fast and so far, the biotech sector basically has a same p.e. as the overall s&p. take a look at some of the new losers. some of the former big cap winners now are small caps. these stocks are 50, 60, or in the case of arena
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pharmaceuticals, it's off 73% from its high last year. this was a billion-dollar market cap stock. now it's at around 400 million or so. we did have a few stocks bucking the trend. overall, the mood out there from investors is not positive towards health care. >> mike what would you say watching the market action today? is it just indiscriminate selling that happens to hit biotech hard? or is there something specific happening in the sector today? >> sure. so i think with the broader market selloff, you can have a lot of risk reduction away from the high growth biotechs. you've got people taking on
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exposure and fear about technicals on the ivb. people just don't want to step up going into an election year. met with all these management teams. the fundamentals i think six to 12 months. longer term, fundamentals haven't changed regardless. >> some people saying perhaps it just affected sentiment in this group as el well. >> i think if you take a step back, people aren't being indiscrimina indiscriminate.
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if you look back at the last five or ten years, when biotech or fa pharma is hitting the market multiple, it's typically been a buy single. >> i also wonder to what extent people are -- it's a growing moment, right? these are -- a lot of names people are taking a speculation on because they thought hey, there could be a lot of potential here. i'm willing to give my capital to that. but now things are starting to shake out and mature a little bit. so is it just simply that capital is going to flow away from that space? >> well, i think these were trading at 20 times a year ago. guys like gilead trading at 8.5, nine times. a lot of fund managers say these
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things. well appreciated, well understood. a lot of this is priced in. >> even if the economy sputters here a little bit, i would imagine that health care, given our demographic, given where spending seems to be going, seems like a pretty great place to be putting your money. the valuation comes down. which side are you playing? >> i think all of those fundamentals are right in the longer term. with biogen, some stuff people are very focused on. i think if you look at names like gilead, or sell jean, which created 12% growth, you're going to be well positioned. il stuff, the china stuff certainly is not impacting whatever is going on on alzheimer's. >> yeah. well, that's a point. but also not helping out there in the space. thanks a lot for joining us.
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>> absolutely. >> mike there from rbc capital markets. we've got more breaking news on gopro. let's get back to josh lipton. >> well, kelly, so we had this news from gopro preannouncing q4 results that were a disappointment. i now have a letter from gopro's ceo nick woodman to his employees. he's talking about how gopro has also beginning to reduce head count by about 7% across various divisions of the company. saying this was a difficult decision. a deeply emotional one. but necessary, he says, for the greater good of gopro. he also talked about the reasons for that difficult 2015. gopro, remember, announced it was initially mispriced. crippling demand initially. gopro then cut the price of that camera twice by 100 bucks. gopro finishing the letter. he talks about karma. that, of course, is gopro's drone as well as its moves into virtual reality, kelly. he ends the letter by saying
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that he has a lot more to tell us, meaning his family had gopro, it isn't the type of day we're used to at gopro. from the looks of things, he says tomorrow is looking pretty damn good. kelly, back to you. >> well, he did buy a big yacht, so he must feel pretty good about things. notwithstanding the jobs cuts. it was announced shares will reopen for trading at about 4:40. we'll keep an eye on that for you. one of their suppliers is falling in the session after hours. chipotle one of the few bright spots in today's selloff. it will soon be on the road to recovery. details coming up. plus, forget about tonight's record power ball jackpot. up next, we've got the names of four stocks that will give you much better odds of a return than the lottery. 6
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. welcome back. here's how we finished the session. the dow down 364 points. down more than 10% from its recent highs. big declines for the s&p 500 and the nasdaq today, too. power ball mania is sweeping the nation. whatever you do, do not use quick pick to select your numbers. >> i'm here in midtown, manhattan. we're here at this grocery store. we've seen a long line of people buying lots of tickets today. almost everybody, though, has been buying the quick pick. and we know the odds.
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292 million to one. those are the odds of getting all the numbers right. we know that 500 million people bought tickets for saturday's drawing. this is the problem with random chance. youtart repeating numbers. so the more random numbers there are, the more collisions that happen. and the unique number isn't available to you. so that's why i went with my own selections here. i picked out my own numbers. i didn't use a quick pick. i went with the big numbers. the boring numbers. things that can't be birthdays. they're all above 31. they're definitely all above 12. go for the 60s. they're new. power ball only went beyond 59 the last couple of months. that's what's made this a much harder game. so one lottery watchdog in texas has even suggested a conspiracy theory that they're getting a lot of duplicates on the quick picks. >> i can't believe you bought a ticket. you aren't beginning to win, right? don't they have a negative value in economics or something? >> well, if i don't share it, then it's a positive.
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so i'm hoping not to share it. that's why i have my own numbers. >> eric, thank you so much. a lot of people raising office pools. >> i think you can expense the cost of that. >> what happens if he wins, though, right? >> if you're not in the lottery mood, by the way, we've got stocks that might be a better investment than a power ball ticket. one would hope. joining us now with their picks are jamie cox from harris financial group and david sauerby, whose client won the lottery 15 years ago. >> biggest in history at that time. >> just incredible. so i've got a lot of questions about that. we'll just begin with you. what are your picks here for investors when you say forget power ball. >> sure, very briefly. one large, one medium, one small. larger company lows. long-term great wealth creator. dominant in its space along with home depot. we're talking about oil in the near term beneficiary from low
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oil. middle size company. qvc. the pound-for-pound best return on capital retailer. 86% client retention rate. growing internationally. and one common thread with all these companies is superior cash flow and free cash flow generation. qvc with the acquisition of zulily expands its customer base. aceto is a smaller company name. only two analysts follow it. they've transitioned from specialty chemicals to generic pharmaceuticals and nutritional products. and this is an under-the-radar stock. but a high quality kpaep that's mo -- company that's moving in the right direction. >> jamie, your picks here for investors. >> microsoft is the top of my list. i think my theme is going to be if you're going to be a
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billionaire, you should invest like one. microsoft is a serial dividend grower. it's doubled its dividend in the last four years from 18 cents a year to 36. they've finally gotten their act together with their subscription based revenues with office 365. and they entered the market to compete with amazon web services. i also really like coca-cola. an unloved name. doubled its profit margins the last five years. dividend yield 3%. berkshire hathaway hasn't had a negative two-year string in 30 years. i picked that name not because i think the stock will be wildly successful the next two months, but i think if you win the lottery, you can learn a lot from warren buffett on how to act if you're wealthy and how to invest if you're wealthy. >> yeah, maybe everyone should read the investor letters. power ball winner or not. thank you both. great picks there. >> my pleasure. >> by the way, did you guys play the lottery? raise your hand if you bought a ticket. >> i intend to. just for fun. >> jamie did. got to let us know if you win
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there, jamie. be sure to catch jackpot at 7:00 p.m. eastern on cnbc. we are counting down to the drawing of the richest lottery ever. that's tonight at 7:00 p.m. right here on cnbc. time now for a news update. let's get over to sue herera. >> here's what's happening this hour. turkey's prime minister along with germany's interior minister visiting the site of yesterday's suicide bombing attack in istanbul. the two were accompanied by dozens of officials as they laid flowers at the site. it was the first time isis, which claimed responsibility for the attack, targeted that country's vital tourism sector. an avalanche in the french alps hit a group of ten school children, killing at least one and gravely injuring three others. five people have been found as that search continues. the avalanche occurred on a black-rated slope that had been closed after several days of heavy snowfall. 85 cars were involved in a serious multi-vehicle crash on a pennsylvania interstate this morning. 18 people taken to the hospital.
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some in serious condition. crash debris spread about a mile and a half down the highway. and disney's long awaited theme park in china will open on june 16th. the company announcing that the $5.5 billion facility will reflect china's culture. the park broke ground back in 2011. it's going to be in shanghai. that's the news update. kelly, back to you. >> up next, we'll take a look at where investors are selling in this week's volatile market moves. and chipotle's ceo speaking out about the impact the e. coli outbreak is having on sales. netflix, one of the big losers today. down almost 9%. we've got one of the most bullish analysts on the street here to make his case, after this. starts today. all across the state the economy is growing, with creative new business incentives, the lowest taxes in decades, and university partnerships, attracting the talent and companies of tomorrow.
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the dow was down almost 365 points. the nasdaq closed near 4,500 for its part. chipotle shares after plunging more than 45% were positive today. the company's ceo speaking out
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again to try and control the damage. morgan brennan joins us from orlando with more. >> chipotle meeting with the invement company earlier today here in orlando. four top executives in attendance, including co-ceos discussing the mexican chain's plans to boost foot food safety protocols and ramp up marketing to bring in business. it's beginning to be "messy" in terms of margins, earnings, traffic. but that ultimately, they don't see chipotle's growth potential any differently than before. economics will return. also, the company is still planning to open as many as 23 restaurants this year. so chipotle is outlining a pro-pronged marketing strategy to "welcome customers back" into restaurants. that's going to start rolling out in mid february. part one, talking to the press about new food safety measures.
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many of which have already gone into effect. and also, the fact that the company is "extremely confident" that the worst is over. increased advertising. they're also going to reach out to the most loyal customers to give them a detailed story of what exactly happened. all of this sending shares of chipotle up 6% today, bucking the broader market trend. but keep in mind, kelly, the shares of chipotle are still down by a third, about 33% since the first e. coli headlines came out in november. >> all right. and thank you, morgan. again, they rebounded today a little bit, up about 6%. let's get to josh lipton. josh? >> they were certainly a disappointment. the street wanted to see 512. gopro seeing it sees 2015
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revenues of 1.6 billion. you can see the reaction now from investors to this news. even before this news, the stock had been down about 75% in the past 12 months. initially mispriced and you saw soft demand. the ceo saying he sees better times ahead. and pointing to what's on the horizon for gopro, whether it's karma, their drone. hopefully updates to software. that's certainly something a lot of analysts on the street want to see. but ultimately, you have to hope that the rest of the team learn from their mistakes of 2015 and put out a camera this year that's going to get a lot more demand from these consumers. >> thank you very much. gopro shares are down 27% after hours. >> you don't get second and
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third chances to execute after you're a pretty young company, and the ceo sold a lot of stock. a lot of bad feeling around this name. so now it's about a salvage operation. just seeing what the business can become. and, you know, as carol mentioned, it's been constantly talked about as a potential acquisition. i mean, it's real sales. it's not just a concept. >> maybe they can enact a strategy that can partner with chipotle, and if you buy enough burritos, you get a free gopro and it can help out both of the names. >> what's interesting about gopro, it reminds me of what's happening on twitter. these are names that really have a cultural impact. we just saw gopro when they did recapture el chapo. the mexican authorities used twitter. >> totally different. they're under serious pressure for different reasons. i think twitter's management team is very focused on product from their perspective. hasn't been as focused on montization, but just haven't done things that seem pretty obvious to everybody who uses
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twitter. very different from gopro, which people were touting as this story of -- you know, it's not just all about the product, but it's also this content strategy and it's really all about a product and a product that sort of is falling out of favor. >> to your point, kelly, the idea that we see the value of the product initially. it was a sensation on some level. and then it was up to them to actually make -- >> but one was a product and one was a platform. the other one, they said it was a platform and it was a product. >> it's certainly not a platform for investors. their shares are down 22%. here's ambarella. it was not halted. are we going to dom? dominic chu. what more can you tell us? >> let's take a look again, on the heels of what's happening with gopro. it's just the latest in a string since the year began of stocks, industry group sectors that are really taking it on the chin.
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it's just so far this week, we want to highlight a few of the names. a few of the groups that have been taking it the worst here. transportation stocks are taking a real, real beating here. just again, just week to date here, down about 4% here. 3% to 4%. so transportation stocks seen by many as perhaps the leading indicator, taking a real hit here. also small cap stocks. they continue to underperform their large cap cousins. here we can see about 3.5% to the downside for the russell 2000 so far. so small caps, transportation stocks lagging the overall market. here's the momentum side of things. facebook, amazon, netflix, they've taken a big hit as well. up next, we're going to speak to a big bull on netflix on why he says today's round table is creating an opportunity to get back into this name. stay tuned.
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welcome back. one of the biggest losers today on wall street was netflix. it was down about 8.5%. my next guest is still bullish on this stock. joining me is rich greenfield. it's one of your favorite names still. >> i think this is a must-own stock for investors. the reality is consumers are shifting their behavior. we're moving from watching the big cable bundle to watching on demand video. and the best way to express that from an investment standpoint is
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to own netflix. they're giving you exactly what you want at the price you want it. >> i guess the question is how much is netflix worth? right now this is a $50 billion valuation company. so where is it going? to 60? 75? what's a fair value for this? i think everybody agrees with the thesis. i think it's a valuation issue. >> i think you have to think about it as this is a company that can have 65 million subscribers in the u.s. $15 a month, which is what hbo charges. obviously more than where netflix is today. at $15 at hbo's price point, that's a $12 billion revenue business. you think about that, it's the same margin of cable network. that's 40% plus margin business. they can generate 5.5 billion in the u.s. alone. 10 multiple on that. that's $55 billion of value in the u.s. they're now everywhere in the world. so you think about them globally. if you don't buy the global opportunity, people watching this should not own the stock. if you look at the u.s. opportunity and combine it with overseas, this stock could be
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substantially larger, especially when you look at the cable bunding starting to really collapse. >> sit necessary to look at it as a zero-sum game, that netflix has to be drawing away from pay tv subscribers? can it be accomplished? >> absolutely. we looked at a study of 1,500 people and asked them if you could take $8 out of your bundle and remove espn and espn2, would you? 56% of people said they would drop it. 49% of males said they would give up espn to save $8 a month. the bundle has gotten too expensive. consumers can't take the cost because they're using netflix more. they're using amazon prime more. and they're using the video bundle, the traditional comcast bundle less and less. and the price value just isn't there. so i think there are winners and losers. i think if you want to play winners, you go long netflix. you go short disney. and i think it's exactly why companies like time warner are thinking about whether they need to be put up for sale. >> rich? clear with your views as ever. thank you so much for joining us. rich greenfield from btig who
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thinks netflix is a buy after today's session. housing stocks also got hit hard. we're going to have the factors that could bring that market to a halt. an important source of the economy, next.
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♪ light piano today i saw a giant.
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it had no arms, but it welcomed me. (crow cawing) it had no heart, but it was alive. (train wheels on tracks) it had no mouth, but it spoke to me. it said, "rocky mountaineer: all aboard amazing". welcome back. housing stocks got hit hard
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today. and some names down 18%. other names down more than three. one of our next guests sees a rough road ahead. douglas duncan is from fannie mae and joining us with shark tank investor kevin o'leary who still thinks housing is not a good investment, by the way. welcome to you both. doug, what is happening to the market? is it softening? >> our theme for the year is housing, affordable constrains. last year total sales were up 7%. we think between 3% and 4% this year. so still up but at a slower pace. >> but slowing for the right reasons because home prices are going up. >> probably a little over 5%. and real incomes are not going up that fast. and at the lower end which is where the housing market needs to build. builders aren't building to that space so we have a supply problem. >> kevin, what do you think is happening in the market? >> i'm taking a different stab
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at it. if you look at the last cycle, since '08 with a rising out of the bottom, it is the environment with the low interest rate behind us and i think there is concern and some people think the fed will raise two or three times. but the one that knocks me out is i have almost 25 companies with people in their 20s in them and there is two things they don't want and don't own. houses and cars. and so there is a whole new generation of young people that don't give a poo-poo about owning a house. they don't think it means anything. they would rather just rent. and that is on the marginal side of incremental demand. they don't want to buy a 600 shoe box in any economy. and that is what is coming home to roost. there is a new psyche about home ownership and i think it will hurt the builders. >> carol? >> one of the things that we saw over the last several years is that in areas of the country where there was a lot of energy and oil, there was a big run-up in housing. now obviously oil has come down.
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we're going to end up seeing some bankruptcies and some fallouts. what do you expect to happen in those particular regions of the country and what does that mean for housing overall? >> we carry a lot of risk in that space with our portfolio. so we've been looking at that. we put out a study that showed if the past when there was a dramatic move, there was a one to two-year time frame before you saw the dink wednesdayy or the credit quality -- delinquency or credit quality issues. there are places likete s, houston slowing significantly. there is no question you are seeing the affects of the turn-down. >> and you say there is a lack of new supply at the lower end. and the option is rent and now rents are going up a fair bit. at what point does that dynamic break and create more building down? >> that goes to our theme. which is housing affordable constraints, owning and rent, depreciation has been going faster than real income appreciation. the questiois why are the
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builders not building at the low-end of that space. one of the theories is that they have to finance those homes -- starter homes are typically financed. and the regulatory cost in the mortgage origination space has rich and which means the minimum loan size at which could you make a profit has come up. people argue where that is geographically. but that is important. but you see that. [ inaudible ]. >> the psyche weighing on the market and builders taking it on the chin today. thank you both. just before we go, mike, what are people supposed to do with this market come tomorrow? >> we're going to look to see if we get a bounce over the extreme oversold levels. we've seen it every day. what you don't probably want to see is some kind of half-hearted bounce overnight because they
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want to sell it down. >> carol, do you think people should own houses and cars? >> i think that is a personal decision. i think there is an investment thesis and also a quality of life thesis. and you need to balance that out for yourself. >> it should be. one by one. not everyone does one thing or the other. >> thank you so much for joining us here on "closing bell." to recap, the markets down 365 points today for the dow. the s&p gave up 48. the nasdaq had one of the worst sessions, down 3.4%. 159 points. that does it for us on "closing bell." "fast money" starts next
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td ameritrade. . the state of american business, the u.s. chamber of commerce ceo on the challenges and opportunities facing owners and investors. squawk alley tomorrow, on cnbc. "fast money" starts right now. live from the nasdaq market site overlooking times square. i'm melissa lee. your traders on the desk are pete, brian, karen and dan nathan. tonight on "fast," the bid for safety. the tlt rallying and a winning trade this year and the man who called the august rally swoon and tells you where he sees yields going next. and go-pro just opening after being halted. the stock is tanking behind the job cuts and weak guidance plus what the ceo just said to employees. and later jp morgan kicking off bank earnings tomorrow.


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