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tv   Power Lunch  CNBC  May 13, 2019 2:00pm-3:00pm EDT

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i think the outcome is a deal, just a question of how ugly it has to be before that deal occurs. >> thank you very much "power lunch" begins right now. kelly, thank you very much we'll see you in just a moment welcome, everybody i'm tyler mathisen along with melissa lee. new at 2:00 this day, it is a sell-off on the street if you haven't noticed. worst day of the year. so how much more pain may be ahead with the president's battle with china taking an unpredictable turn abcs of the dow. what it means for boeing and caterpillar, all three stocks slammed today in this across the board sell-off worst day in more than a year.
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what's ahead for this group? "power lunch" starts right now welcome to "power lunch. i'm melissa lee. wall street hitting the sell button again as china retaliates with its own trade tariffs having the biggest one day drop since the beginning of the year. s&p 500 lost almost $1.2 trillion in market value and 28.01, about 20 minutes ago and bounced off that by 12 points and much more behind that in a few minutes. tyler mentioned apple, boeing and caterpillar, among the biggest and shaving off 170 points between them. full team coverage of the sell-off and what's fueling it and covering that angle for us
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steve with the fed and economic fall-out. we begin with bob. >> reporter: looking to go back to china a few minutes ago and the trade war to become more real not only higher tariffs on existing goods but the implications of a trade war to last for months or years are very clear now lower global growth potential, potential for lower global earnings and a potential for a lower multiple for the market. a pretty big triple whammy for the markets. companies that sell in china, products in china or import and
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don't necessarily have exposure to chinese imports like kraft heinz and showing these stocks for a week now they don't have any direct revenue exposure necessarily but dropping along with those like retailers and one to watch this week reporting on wednesday 100% china exposure. we'll see what they have to say about how tariffs are impacting their business in china. >> thank you, bob pisani steve mnuchin speaking to cnbc about the trade tensions with china. more in washington kayla? >> reporter: this is the first response from the trump administration to the fallout from the escalating trade tensions caught up with the secretary on his way to a speech addressing insurance commissioners and she asked him what comes next.
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>> reporter: will china continue to buy our debt? >> i assume so it's a great investment. >> reporter: how are you preparing for retaliation? >> i'm not going to make any comments on that right now but thank you. >> reporter: are talks still ongoing? >> yes, still in negotiations. >> reporter: while two sides are still talking as the treasury secretary made clear, actions speak louder than words and the moves by both sides to increase pressure on the other hard to see a path to resolution >> the fed to cut rates sooner steve liesman with a closer look at that. what do you think, steve >> that is certainly the view of the market in the wake of the trump tariffs and chinese retaliation, markets now pricing at a quarter point cut from the fed by october and maybe as soon as september take a look at the fed fund
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probabilities from thompson reuters. 50% from september and 60% for october and 75 for december. for one fed official, it's too soon to make that call >> i hope that cooler heads prevail. increasing tariffs, that could change things have a real effect on u.s. gdp growth but right now not seeing it and for now, a wait and see mode. >> gauging the impact of tariffs is hard but has to weigh the probabilities on the outcome of the negotiations how long tariffs last and markets respond and the effect of this on business confidence and capital spending j.p. morgan writing over the weekend, trade war and amplify easing bias across the globe
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all of this leads morgan stanley to enforce serious fed easing. lasts three to four months and sees more chinese stimulus and 50 basis points of cuts from the fed and questions whether or not fed easing would be enough to really offset these impacts from the tariffs. >> what else could there be? so fiscal. >> monetary measures additional fiscal spending perhaps and the fed would do so much in part because it's reverse relatively quickly >> thank you very much with today's massive drop, the major averages down between 4% and 5% in the past week but still up nicely for the year the dow more than 8% s&p and nasdaq up double digits so far this year as you see there sprinting ahead.
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are investors still being too optimistic about a trade deal? now, hugh johnson, chairman and cio of hugh johnson advisers and silv silvia let me start with you. playing off of what steve just pointed to and the outcomes here the market, i think we can agree, too optimistic that a trade deal was going to get done is the market now too pessimistic about the long-term effects on the u.s. and world economies that these tariffs may have >> not quite you're absolutely right. the market was too optimistic. i crunch the numbers, quite frankly, thought about we were about 7% overvalued. now we got a very sharp decline in prices as we get back to something that would be more realistic, but we're still, tyler, a little bit overvalued about 2% so we need more on the downside
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to give us some possible upside. so you bet the market was too optimistic about a trade deal being done. i might add, just really quickly, is that i think the markets were right in being somewhat optimistic. china has a great deal to lose if a trade deal is not done. the president has a great deal to lose when we talk about the 2020 election. if there's not a trade deal done, he needs that farm vote. so i think eventually, a deal will be done but there's no question the market priced in a little bit too much optimism about a trade deal and i might say, to some extent, earnings, but mostly, the trade deal market had been too optimistic. >> sylvia, the same question to you. is the market reacting appropriately here or overreacting >> i think the market is probably reacting appropriately. and the market certainly reacting a lot of investors are saying,
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yes, we are now pessimistic in the short-term at least. i would agree with some of the comments made that i think a trade deal is in the best interest for the u.s. and in china and i think patience is the key. we have to see what happens now in the next couple of weeks and before g-20 if we get a trade deal or positive sentiment or positive tweets at least, the market could pull back is this a december dip for a couple of weeks or is this a longer term thing that becomes a systemic issue for the markets >> is now the time to sort of assume a defensive posture and go to protection >> i think it's, in the last six months or so, it's been a good time to at least diversify your portfolio. there's all of these factors, global growth is slowing earnings have been positive and surprised the upside this year but slower than they were year over year. probably not going to see the teens and 20% moves with underlying stocks. we see nrz position in defensive
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names and in december and january when we saw the last dip. >> looking at your picks, one defensive name, walmart and two absolutely bombed out because they sort of live at this cross section of the trade wars. got apple as well as nvidia. what do you like about that right now and entry points >> we have the entry points. that's the key not as much give in walmart but some in apple and some quite a bit in nvidia what i'm seeing is that this is sort of the silver lining. the decline is from a level that was very overvalued and nite quite there yet. a little bit more and we will be there, yet an opportunity and it will be an opportunity for stocks of the sort i'm talking about and then a little bit of defense in your portfolio, buy a
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consumer staple like walmart in my judgment, this is all setting up ask yourself the question, is this the end of the current bull market economic interest rate cycle? my answer to that question is no this has to be viewed as a correction and it's setting up an opportunity, an opportunity in companies like nvidia, just like apple and to some extent, walmart. >> all right, hugh, thank you very much. sylvia, thank you very much. we appreciate your time. thank you. coming up, the generic drug makers are getting crushed today as price fixing allegations hit the stocks we'll have more on that story. the excitement over the uber and lyft ipos clearly faded. both companies trading well below their ipo prices but there is one area of relative strength today. those consumer staples companies like clorox, general mills, campbell soup, all hdiolng up. clorox even green. much more on these markets when "power lunch" returns.
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the necessigeneric drug mak worst day in over a year, down 16% and endo down 18%. meg tirrell is here with more on this story and a look at how pharma as a whole is faring today in the sell-off. >> obviously a bad day and generic drug makers got it worse today. down significantly on news on a sweeping lawsuit alleging a price fixing conspiracy in the industry, more than 40 states filed friday and expansion of an
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earlier suit from 2016 which rattled stocks at the time the drug companies deny any wrongdoing meanwhile, large branded drug makers like pfizer, mirk, and eli lilly relatively better in this market. biosector is down more than the broader market, guys. >> meg, thank you, stay with us. dig deeper into this topic, wells fargo david mares. it's possible to assess but it could be material. can these companies handle it when it comes to balance sheets and reserves >> it's much more levered than myelin is. more depth it could be problematic or really problematic there's no scenario in which it's, like, just blow it off i spoke to the attorney's office today and said, historically speaking, these are usually finds and then people just agree to no wrongdoing and they pay the fine and the market moves on and they said, make sure you know two or three things
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in the complaint, we have additional cooperating witnesses that have not been disclosed previously and this covers a lot more than just what the first complaint was. this is really serious it's a 500 page complaint. >> and in this political environment, they might be out for some blood as opposed to saying, let's just walk away, nobody admits wrongdoing, et cetera do you get a sense that politics are playing into this as well? >> this is the environment in which everyone, every consumer is very concerned about health care spending and drug prices and it used to be just the brand. so now the connecticut attorney general and the other attorney generals are bringing up, generics used to be part of the solution and now part of the problem and that sentiment turns very quickly once you are against skewers co and raising prices, you have no political cover. >> is there any part of your coverage universe that you think is not immune but more insulated from political pressure? all of health care no matter where you look, the biggest
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driving factor right now is politics and that overhang whether or not it's a realistic scenario that plays out or not like medicare for all, not realistic but overhang on the entire group. >> we like allergan. they have a big cash pay business they make breast implants and fillers, outside of the typical prescription business. in the generic brand, ampistar, when they get an approval, it means something and haven't had, knock wood, any suits. >> this price fixing fox, when you read through the lawsuit, you hear about, okay, this increased to x amount and this other company to x amount. if you look at some of the largest branded drugs on the market, rheumatoid arthritis, for example, the same lock step increases from multiple companies. do you think that this kind of investigation could then stretch into branded drug companies? >> i don't know the history of
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this, but it seems, and you're hitting it 100% on the head, i think this informed how the attorney generals were looking at the generic price investigation. i think they saw what was going on in the branded area, especially like with insulin prices that you've covered before, and now we're looking at, well, generic companies do this i don't know that to be a factor but seems too similar. this type of tip of the iceberg and now the second tip of an iceberg, this is just building >> not merely alleging that these companies coincidentally increased prices they are alleging there was a conspiracy to do so. how could these drug companies be that stupid >> well, so -- >> are they? >> individuals at drug companies can be that stupid so stepping back, a lot of companies say drug companies are bad. in reality, most of the people are waking up every day trying to find a cure or make a cheap drug in the case of generic and
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increase access but then if your bonus is tied to it, things get mur murky. what this shows is you see phone records of every five minutes, someone calling back from another company and calling competitors and then you see a price increase so while that's not definite evidence and i'm not a judge or jury, but it looks really bad and no reason, if there were, for example, if you were calling your competitors, i'm sure your employer would fire you. that's what happens. >> real quickly before you go, do you think anything in the price action today geared towards broader market sell-off? china trade concerns specifically >> i think sometimes, it's missed, there is some china exposure for all companies and generic more so because the ingredients that go into generic drugs, they're usually a lower percentage of the overall cost that's lower and generic drugs, maybe that's 10% or 20% but almost all of the api or
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pharmaceutical ingredients come from mostly india and china. this could be part of the reason for a big sell-off. >> david, good to see you. david maris. the abcs of the sell-off apple, boeing, caterpillar the worst performing now and the ind index, about 200 points of that nearly 600 point sell-off, all hit on china trade frsea is there more pain ahead for these? that's up next on "power lunch."
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president trump making some comments at the white house. eamon javers has the news. hi, eamon. >> reporter: tyler, reporters are in the oval office with the president now. the president has been talking about china tariffs. he says that china has been taking advantage of the united states for many years. he says we're in a very strong position maybe something that will happen, he does suggest that he will be meeting with xi jinping at the g-20 in osaka, japan, next month, and that's something that's been in doubt not officially confirmed that the president suggesting he will be meeting with the leader of china in japan next month and also saying that i love the position that we're in we, being the united states, in terms of the trade war situation. he says, a small portion of the
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billions that the u.s. treasury is bringing in from people paying the tariffs will go to the farmers. he said they'll take about $15 billion and do, quote, something for farmers to offset some of the damage they've seen from retaliatory chinese tariffs. the president also saying we do much less business with china than they do with us reiterating the points as before, china, he believes, has more to lose in this trade war than the united states does. this is a president who feels confident in his position saying he loves the position that the united states is in right now and seeing a way here politically where he can take some of the tariff revenue that's being paid by importers and pass that on to farmers. not sure exactly what the mechanism will be for that but the president seeming to think that he can deal with some of the political problems that the tariffs will create in some of the red states that deal with a lot of agricultural exports, targeted by the chinese. >> thank you very much, eamon javers, at the white house
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markets bouncing around off the session lows but then heading back towards them. tech has been trounced in particular bertha coombs has more at the nasdaq bertha >> reporter: tech can't seem to get much of a bounce here, even on those semi-positive headlines. apple, the biggest drag today. apple seeing the low consider this, it was up better than 4% to start the month of may. so we've seen a huge drag coming from apple because of these concerns about chinese tariffs let's wait on tech overall, particularly chips but also a little bit of collateral damage to the fang names, like amazon, facebook, and netflix don't have much exposure in terms of revenues to china. they are all trading lower as well and hitting a new 52 week low ahead of its earnings this
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week and streaming service ahead of a low it's not just tech >> good point, bertha. michael santoli now for "trading nation." mi mike >> cancelkelly, more on the trar fallout. abcs are tanking, knocked down double digits from recent highs. so does this mean they have more misery to come or maybe buying opportunity? miller, michael of graded investments are your "trading nation" team abc in the cross hairs of the china trade friction any of those look like they can work from here >> well, they all are going to be challenged right now because of this issue. i thought to myself, of the three, which would bounce back the best if we suddenly heard that donald trump announce he was going to hit this ceremonial opening tee shot along with president xi at the pga this
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week and of course, the market would bounce back and the one that i looked at was apple i mean, it's funny because it's seeing a golden cross. that's when a rising 50 day average, and i'm usually not a big fan of that indicator but a compelling one for apple the last three times, we've seen a golden cross, it's rallied over 500%, 110% and 125% each of the last three times and we just saw one late last week this stock can turn back up, that indicator would tell you, it might be it would see a good run. >> all right and michael, i have a feeling you'll maybe go with none of the above and look for other stocks with these initials. >> yeah, it's funny how things change really quickly. a couple of weeks ago, one of my colleagues was asked on cnbc if we regretted turning apple in and now we don't boeing has their own problems on the 737 max. china's going to target them probably and reduce their
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orders you know, got to tell you, the caterpillar, they have their own problems too very mixed quarter if i had to pick an abc portfolio today, i would pick amazon for "a," just had a good quarter. momentum continues it's a service and e-commerce company. for b, i would take bristol meyers like this acquisition and think it's going to be creative and then chevron with the anadarko that's my abc portfolio in this environment. >> all right just for the record, only the "c," chevron is part of the dow. but for now, we'll allow it. follow us on twitter at @tradingnation. back to you. >> michael santoli, thank you. ahead on "power lunch. trade tensions heating up. china targeting the u.s. with tariffs. more on what this means for boeing next and how big businesses are reacting to these tariffs. we'll speak to the president of the u.s./china business council
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and what happens if china stops buying u.s. debt those answers when "power lunch" returns. >> and now, the latest from and a word from our sponsor. >> some people refer to the vix as the market's fear gauge but i like to refer to the vix as a gauge of uncertainty an elevated vix might imply big moves, it could be tore side i'm randy frederick and schwab is the better place for traders.
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dow is lower off the lows. more comments on tariffs and eamon javers has that. >> reporter: the president said a few moments ago, he's not decided yet whether or not to push forward on tariffs on an additional $325 billion of chinese goods. remember, the tariffs that kicked in last week were a rate increase on $200 billion in chinese goods just over the horizon though is another speculation whether the president would kick in on that group of products as well and the president saying here he hasn't decided yet no more information on that. he does have a message here, apparently, this is to american
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companies paying the tariffs the president said if they don't want to pay the tariffs, make it here or buy it from another country. the wants to change the way manufacturing is done affecting supply chains around the world being very candid and likes the position other countries leave china and he thinks it's good. >> go pro this morning and u.s. production and mexico from china and first off the lows on the mnuchin comments on cnbc let's go to sue herera for a
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cnbc news update sue? >> reporter: hello, kelly, everyone at this hour. britain is worried about a war accidentally breaking out between the u.s. and iran. jeremy hunt made comment after an eu minister attended by secretary of state mike pompeo. >> very good discussions with mike pompeo in london last week. we are very worried about the risk of a conflict happening by accident with an escalation unintended on either side but some kind of conflict. >> churchill downs announcing maximum security joke luis saiz suspended following his disqualification in the kentucky derby. he said he did nothing wrong and will appeal that suspension. university of michigan head basketball coach john belon is leaving for the nba to join the cleveland cavaliers. he reportedly agreed to a 5 year
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contract under his tenure, been to two championship games and won four big ten titles in 12 years you're up to date. that's the news this hour. back to you. >> thank you very much, sue herera. 90 minutes until the closing bell rings on wall street. a check on this sell-off and kelly mentioned, a number of comments from the administration have brought us off the lows of the session and incrementally higher although firmly in the red. dow jones down and s&p 500 down 65 or 2.25%. we went low as 28.01 on the s&p 500 until secretary mnuchin's comments came out about talks and bounced 10 points or so off the level and the balance of that came when president trump made the comments that he'll be meeting with xi on the sidelines of the g-20 and that meeting could in fact be fruitful. the nasdaq though, really taking on the chin today 238 points or three full percentage points >> melissa lee, thank you. the oil market closing for
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the day. eric chemi at the cnbc commodity desk eric >> oil prices lower adds investors are worried about the heightened trade tensions and the demanded on supply side, mike pompeo, there's not been a disruption we went lower, not higher, not radically higher or chaos but lower. >> international brent crude prices at 74 and that's the day the u.s.withdrew from the deal and right behind me, trading at about $70 right now. so $4 lower than them.
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back to you guys. >> eric, thanks very much. president trump is meeting with the prime minister of hungary and comments a few moments ago let's take a listen to that conversation >> we have with us the prime minister of hungary and victor has done a tremendous job in so many different ways. highly respected, respected all over europe. probably like me a little bit controversial but that's okay. that's okay. you've done a good job and you've kept your country safe. we'll discuss nato hungary is a proud member of nato and we are, we've really gotten to know each other a little bit and we'll be discussing trade very much so and lots of other subjects we'll be meeting with representatives of hungary later on with the prime minister and spend very good time together. mr. prime minister, thank you
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very much for being at the white house. a great honor. thanks yes, please. >> president, thank you very much for the invitation. may i just say here that we are proud so many hungarians contributed to the tremendous progress of the united states. i am very happy to be here again. may i say, to be young again 20 years ago, first time here. and i have some expectations for this meeting this afternoon. first of all, to strengthen our strategic alliance and then to discuss global political issues because so many changes are going on and we have some similar approaches and i would like to express that we are proud to stand together in the united states on fighting against illegal immigration, on terrorism and to protect the christian communities all around the world. so president, thank you very much for the invitation. >> and you have been great with
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are t respect to christian communities. you have put a block up and we appreciate that very much. so we're going to have some meetings now a lot of subjects under discussion >> retaliating on tariffs and the market reacting to that? >> well, the reaction is very simple china has been taken advantage of the united states for many years. i'm not just talking about during the obama administration. you can go back long before that and it's been taken out 400, 500, $600 billion a year out of the united states and we can't let that happen. we're in a very strong position, our economy has been very powerful theirs has not been. we've gone up a lot since our great election in 2016 and if you look at the numbers, they've gone down quite a bit. we're dealing with them. we have a very good relationship
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maybe something will happen. we're going to be meeting, as you know, at the g-20 in japan and that will be, i think, probably a very fruitful meeting. but we are taking in right now hundreds of billions of dollars. we're taking in billions of dollars of tariffs and those tariffs are going to be tremendously, if you look at what we've done thus far with china, we've never taken in 10 cents until i got elected and taken in billions and billions it went up as of friday, very substantially, 25% or $200 billion so now the total is 25% on $250 billion. in addition to that, we have another $325 billion that we can do if we decide to do it so we are taking in tens of billions of dollars. we've never done that before with china we've never done that before with anybody, frankly. because we've been taken advantage of on all of our trade deals, practically
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this is a very positive step i love the position we're in there can be some retaliation and can be substantial by comparison and out of the billions of dollars we've taken in, a small portion of that are going to the farmers because china will be retaliating probably to a certain extent against our farmers. we're going to take the highest year, the biggest purchase that china has ever made with our farmers. which is about $15 billion and do something resciprocal to our farmers so our farmers can do well they'll be planting, be able to sell for less and make the same kind of money. until such time as it's all straightened out our farmers will be very happy our manufacturers will be very happy and our government is very happy because we're taking in tens of billions of dollars. i think it's working out very well again, we do much less business with china than they do with us. if you take a look at $100 billion versus $600 billion and
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just so you understand, we don't have to pay any tariffs if you're a manufacturer in this country. you pay nothing. open your division or open up your product have it made in this country as opposed to made in china or if you don't want to do that, and that would be the ideal, that's what it used to be a long time ago, when we were smart, when we had an economy that was really something very special. now we're having a period of tremendous growth and tremendous success, like we haven't seen for a long time, but in the old days, we made our product and we took our product and that's what it was and now we go to china and buy it not anymore. if they don't want to pay tariffs, make it here or buy it from another country that's a non-tariffed country so whether you go to vietnam or so many others, you can do that. so the bottom line is, we are
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taking in tremendous amounts of money. it already started as of last friday but it really started seven months before that it's in the form of tariffs or taxes and it had a tremendous impact if you look at the first quarter, as always, historically, the worst quarter, we were at 3.2%. people were very surprised a lot of that was the tariffs we were taking in from china. so we're in a very good position and i think it's only going to get better >> can you guarantee a trade deal with china? >> we're in a great position right now. no matter what we do i think china wants to have it because companies are already announcing that they're leaving china because they can't do that they can't compete if they're in china with the tax. so what a lot of companies are going to be doing quite naturally is leaving china and going to other countries so they don't have to pay the tariff, that's something that's a problem for china. they don't want to have that and
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we don't want that necessarily to happen to china but we had a deal with china. 95% there and then my representatives, as you know, secretary mnuchin and bob lighthizer, ambassador, they went to china and they were told things fully agreed to, we're not going to get anymore they're going to unadwree gree them that's unacceptable. put on the tariffs so we have tens of millions of dollars pouring into our coffers of the u.s. treasury we'll see what happens with iran if they do anything, it would be a very bad mistake i'm hearing little stories about iran if they do anything, they'll suffer greatly we'll see what happens with iran i'll meet with him directly. yes. i'll be meeting with president xi of china, yes i'll be meeting with president
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putin also there's never anybody so tough on russia but at the same time, we'll get along with russia. nobody sanctioned russia like i have and talked about the pipeline going to germany and various others, having to do with the united states and nato and if bigger than saudi arabia and anybody, all happened since i've become president because i've made it so that you can do that we have tremendous scientists and as far as the deal with china is concerned,
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believe it or not, very important but a very small part of the kind of numbers we're doing since my election we have the right to do another $325 billion there's never been anybody so transparent as the trump administration and it was no collusion and no obstruction and wasting a lot of time with that stuff but the mueller report came out, it was a very good report for us [ inaudible question ] >> he's a tough man and a respected man and done the right thing according to many people
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on immigration and you look at some of the problems they have in europe that are tremendous because they've done it a different way than the prime minister but i'll let him speak to that question, mr. prime minister, please >> from the people, by the people, for the people this is the basis for the hungarian government so elected by the hun kbagarian times. [ inaudible question ] >> we have a new constitution accepted in 2011 and functioning well. >> mr. president -- >> don't forget, they're a member of nato and a very good member of nato and i don't think we can really go into too much of a discussion, unless that's mentioned. yeah [ inaudible question ] >> because they're asking for things that they're not entitled to and i could ask them, i assume, if they ask me i could ask them for the same kind of thing. they wouldn't want to do it.
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all they're trying to do is win an election in 2020 and i think we're in good shape. the strongest economy we've ever had. we had the single best employment numbers we've ever had and unemployment numbers you know, it's very interesting but mr. prime minister, as of today, we have the most number of people working in the united states that we've ever had at any time in the history of our country. almost 160 million people are working. so that's a big number i just saw the final number, we're close to 160 million people if you look at african-american, asian, hispanic unemployment the lowest number it's ever been so we're doing really well and all the democrats want to do is find any way they can to stop it they're putting their own personal goals ahead of the country and you can't do that. you just can't do that and we have a wonderful attorney general, he's done a very good job and i'm sure it will all work out >> on your campaign, will you commit to not losing any
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information? can you make that commitment >> i never did use, as you probably did know. that's what the mueller report was all about. they said, no collusion and i would certainly agree to that. i don't need it. all i need is the opponents i'm looking at i'm liking what i see. >> mr. president, are you concerned about the taxes? >> we'll see what happens. it's going to be a bad problem for iran if something happens. they're not going to be happy. they are not going to be happy people you can figure it out yourself they know what i mean by it. does anybody else have a question other than these two? any questions for the prime minister are there any questions for the prime minister please? [ inaudible question ] >> yes, the french did a great job and we appreciate it much and already communicated that feeling. we worked with them on intelligence and we were able to get that person back and we
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thank the french very much great job. i don't want to tell you that now. i'll tell you at some later date, i'm sure >> the package for $15 billion, can youfrom? >> well, it's being devised right now. it's something that has taken place over the years and if you would like, speak to sonny perdue, department of agriculture. we love our farmers. we take care of our farmers. our farmers have been incredible no country can get in the way of our farmers. our farmers are great patriots and they've done a fantastic job. so our farmers are going to be very well taken care of. thank you all very much. thank you. >> president trump wrapping up a discussion with the hungarian prime minister viktor orban at the white house. let's go to eamon javers with more for a market down 700-plus points at parts of this afternoon, the president didn't seem especially bothered by that, nor did he really seem to be directing his comments to wall street.
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>> not at all. this is a president who was projecting confidence there, confidence that he's got the right strategy and confidence that this will work out in the end for the u.s. economy you heard the u.s. there suggesting that the chinese can't retaliate as much as we can put tariffs in place and that is because of the imbalance in trade the white house staff over the past year or so has said again and again that the chinese can't tariff as much as we can because we import more than the chinese import from us that is true the question is whether or not this tariff trade war will jump the banks of the river here and become a trade war in other fronts like business licensing and other areas where the chinese could take action against the united states. this president here was projecting also a very nostalgic vision of the american economy he said back when we were smart we made things in this country he's talking about a more manufacturing-centered economy in the united states much like we had in the middle part of the 20th century, and this is a president who wants to are sort of redirect the curve of the economy back toward that vision.
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and he sort of had a message there for american importers saying you can simply make these products in the united states or buy them from some other country other than china >> all right, eamon, thanks very much eamon javers at the white house. >> our next guest is the president of the u.s.-china business council it represents about 200 american companies that do business with china. craig allen joins us now mr. allen, welcome how do you react as the leader of a trade group or a group representing 200 american companies when you hear the president suggest that if you want to avoid paying tariffs you ought it make your products here or buy them in a non-tariffed country, i.e. not china. is that feasible >> well, the most important thing to note is that most american companies are in china for the rapidly growing chinese market they -- china will represent approximately a third of global growth over the next ten years, and american companies must be in china if they are to take
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advantage of that growth and that is true across the board. so we have a globally integrated economy and china is a part of that we have become very prosperous as a result of that collaboration. we hope to get to yes as quickly as possible with regard to these negotiations >> so if most companies are there to tap into the chinese market that would suggest they're there to sell to that chinese market rather than to source from the chinese manufacturing base so you must be very worried that retaliation against american companies that are exporting into china is going to be harsh and is going to hurt them. >> well, i think that that is possible if the additional tariffs actually go through. the chinese have many ways to
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make life difficult for american farmers, american workers and american ranchers. they have a rapidly growing market that we need access to over the short term and perhaps more importantly over the longer term and therefore, it's important that we resolve our differences and get to yes let's keep our eyes on the prize. that prize is structural changes within the chinese economy with regard to intellectual property rights, technology transfer, market access, and high-tech policy let us satisfy those requirements and move on to have a normal trading relationship with the chinese >> it sounds like, craig, that your members are willing to endure the short-term pain in order for longer-term gain is that a fair representation? >> the chinese economy does not provide to foreign enterprises a
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level playing field. rather, state-owned enterprises are preferenced throughout much of the chinese economy that must change china must live up to its wto commitments. and this is the perfect opportunity to do so >> so is that a yes? >> yes >> okay. got it craig, thank you craig allen. >> thank you to the bond market now it is being rattled a little bit on fears that china could sit out upcoming treasury auctions and potentially even sell its u.s. bonds rick santelli is at the cme. rick >> yes so many questions but so few answers as traders try to brace for potentially more volatility, not only in stocks but of course in treasuries. look at a february 2018 start for two-year notes down eight basis points we haven't closed at these levels since valentine's day of 2018 and if you look at what's going on down the curve on ten-years, we're down seven basis points. now, as you look at a march 27th
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start to 10s, that is the only close that's lower for the whole year than we're currently trading. and if you open it up to december 2017, you can see once we take out the 2.37 from the end of march, that's what we're going to be comping to and finally, even though the curve in general 10s and 2z has steepened, 21 basis points the highest level it's been all year is about 23 basis points but if you look at the bills side, and this is what many fed watchers look at, three months to ten-year as you can see on this year-to-date chart, it has inverted again by one basis point. melissa lee, back to you >> rick santelli, thank you. let's get back to the sell-off on wall street steve grasso's at the nyse tracking all the direction he's the director of institutional sales at stuart frankel, a "fast money" trader and a cnbc contributor steve, great to speak with you let's start off with the nasdaq. across the board we've seen quite a bounce off the lows. for the nasdaq it's a bounce of
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about 57 points. what levels are you watching at this point >> let's look at it through the prism of this. these were the old highs this was the low in the nasdaq shot down here we bounced pretty aggressively, melissa, from this low all the way back up to here. that's basically a 34% bounce we've seen what. >> generated is the first fib, which is a retracement, is your 7390 level in the nasdaq you want to be cognizant of that level. we're below it right now also what we're below is the 50-day moving average, which is right there. 7499 so we're way below that at that -- at present so you want to watch this level for your first pop to rally. then if it fails, as it's been failing right here because we broke through the 50, we broke through the first layer of the fib, we're about 2% from this
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level. that's your 200-day moving average. that's the bear case scenario where we were back a couple of months ago you want to keep that level if mind but these are the levels you want to watch on an intraday basis. your fib -- seems an eternity away right now >> let's talk about the s&p 500 because we've seen quite a bounce in 2800 was what we were watching very, very carefully. we got away from that level. how important is that level to defend >> so this level is extremely important because once you slip below this level then you get caught up in are we dropping back to the 2346 level where we bounced? that was that december low so you have to be cognizant of these levels to hold the only reason why it's so important, round number. that's to begin with secondarily, you want to look at this fib from straight up to the highs. the first level of defense to defend for the overall market
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was 2810 so once we broke through that 50-day moving average which you and i spoke about last week, which was 2862ish, we broke through that level the next level is 2810 currently above it right now in the marketplace. this is the round big fat number to watch if we break through that, then you're looking at levels of 2775 and 2750 let's all focus on this first because as the market is every day -- >> appreciate, it as always. steve grasso at the nyse >> one of the things that may have helped put a little sort of slackening in the decline is when the president said he had not made a decision about putting an additional 300-some
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billion dollars worth of chinese goods under tariff i think that was an important thought there. >> that and the notion that he's meeting directly with president xi he's much into this idea of personal relationship and forging deals with the counterparts that will be important also. >> thank you for watching "power lunch. >> "closing bell" starts right now. >> welcome to "closing bell. i'm sara eisen >> i'm scott wapner in for wilfred frost. the dow plunging more than 700 points at the low. >> we've got full team coverage for you as we begin the final hour of trade. bob pisani on the floor of the nyse bertha coombs is at the nasdaq mike santoli is at our new post with the market dashboard. kayla tausche is in washington with the latest on trade and tariffs, which is the root of this sell-off. an


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