tv Power Lunch CNBC May 29, 2019 2:00pm-3:00pm EDT
into the threes to see movement. >> yeah. you need a ten-year treasury of about 1.5 to 1.6 >> oh, thanks. good to see you. appreciate it. that does it for "the exchange". it's time to join tyler for "power lunch." welcome, everybody, so "power lunch." new at 2:00 today, worries about an economic slowdown sending stocks and bond yields much lower. is the u.s. economy about to slow maybe grind to a halt? that's maybe a little extreme, but slowing? that's certainly possibly in the cards. it's a retail wreck today. canada goose getting cooked. is this another warning sign for a looming recession? plus with all this market volatile is now the best time for you to amp up your savings for college? we're going to talk about 529s it is 5/29 today "power lunch" starts right now
and another formal welcome to "power lunch. the markets are sharply lower. the dow had been down more than 400 points at the lows of the day. right now it's down 266 points could be headed for the lowest close since january. nearly three-month slows for the s&p 500. the yield on the ten-year note just above 2.2%. that is the lowest in nearly two years. >> thanks. let's drill down on some of today's biggest movers on the floor of the new york stock exchange >> kelly, so far this year the economic data has held up relatively well in the face of higher tariffs and the ongoing u.s. china trade dispute now there are indicators the yield curve, weaker retail earnings, the drop in crude oil. brent crude at $69.58. plus the technical breakdown in the s&p 500 below the two-day
moving day average the stocks hitting 52-week lows in the last one hour largely cob finfined to retail names. michael kors saw comps decelerate the key rival coach has seen an acceleration in comps as of late let's pivot to yields. the impact on stocks those sectors energy, tech leading us lower and check out the banks. remember, lower yields squeeze the net interest margins that's the gap between what banks borrow at and what they pay deposits jpmorgan and morgan stanley down and we're off the lows of the session. stocks selling off as the ten-year hits its lowest level since september of 2017. that happened earlier today. more pain ahead. let's look with steve liesman. some bond market signs
what are they showing? >> the inversion warning sign. fairly consistent recession indicator. here's the tale of the tape. go back now to 1990. you see it goes negative up to a year before the official recession until official recession is declared. you nou we're in and around that zone looking at the ten-year to fed funds yield spread which is approximately three-month. they say the bond market is frightening the stock market with the death spiral and yields setting off alarm bells for investors. a recession is near. markets to increasingly price in a fed rate cut this year not just this year but in several months now 58% probability now of a september rate cut going all the way up to 85 by december near certainty at 95% in january. the credit recession model not flashing red because there's
been no titaning of credit standards. ubs says low policy rates and global qe make the yield curve signal different this time i suppose the debate is whether the market is reacting to fed tightness or to trade policy or maybe both the market could be saying that fed policy is not now in the right place because of the coming negative effects of a prolonged and nastier trade war. i don't see the recession in and of itself in the data. >> no. >> and the coming to a stall with 3 .6% unemployment. high consumer confidence wages above 3.1% >> and first quarter growth. >> even if fed policy is wrong, it's not dramatically wrong for this particular economy. i think it might be wrong for the next economy that may be coming as a result of slapping additional tariffs on china. >> hang in jim is joining us as well to talk more about this jim, i know you actually think it might be different this time. maybe not as predictive of recession. you want to talk about that?
>> well, sure. when you notice that 20 % of the globe's sovereign debt is trading at negative yield, and look at germany right now. there's been a flood of money in a compression of term premium. a yield curve in normalcy is operating at a much flatter level over the last few years than it has previously so for it to dip into negative territory to me i don't think has the same sort of cacher as before i think it means something i just don't think it has the same level of predictive power to me it's more of a sign that money is just being flooded on to the globe we've seen it in things like artwork that's selling for $90 million which is no more than a chrome bunny that's silly and i'm trying to be funny, but money is everywhere it's chasing the long end of the yield curve. >> let's do an illustration of this why this is so weird okay tyler? >> yeah. >> give me $100, and the year
from now i'll give you $10 okay now give me $100 >> ten more? >> now give me $100 and ten years from now i'll give you 5 bucks. that's what an inserted yield curve is it perverts the idea the concept that jim is saying that the market sort of is operating despite this, but you have to admit, jim, it's weird not the way -- stuff ought to be >> it's totally weird. in germany you buy their bonds and then you owe them money. i don't know how that works. to me it's amazing and everything has been on if i skated by proactive central banks. yes, it's -- >> jim, come onto new york i'll buy you a beer and you can pick up the tab. >> no doubt about it that's perfect that's exactly what we're talking about. yes. >> i thought when you said -- >> i'm a sublime to the absurd
>> your idea sounded like a lot of investments i made. >> i meant ten extra, of course. your money is good with me >> thank you, guys the bond market is not the only worry for investors on mad money last night jim cramer sounded the alarm on the economy and consumers take a listen. >> you can't live with this market because we've got some real worries here. first i think we could be on the verge of a significant slowdown in the u.s. economy if something doesn't change soon. consumer and corporate confident waning things don't feel right. the economy seems strong but that doesn't mean it can't get weaker >> that's what cramer says if there is a significant slowdown, how should you position your portfolio? victoria fernandez welcome. you know, andrew, why don't you react to jim cramer. do things just not feel right to
you and do you see the same thing jim sees consumer and business confidence or something different >> absolutely. no doubt we're coming off a sugar high of last year from tax cuts, and i think we're going to see some weaker economic numbers for the second quarter and third quarters because of the year over year comps. what he did say on the show, though, tyler, is he said a lot of that is already baked into bond and stock prices already. so i think to get conservative here, i don't think we're at the bottom of the market, but a lot of this is baked in already. >> how about that victoria do you agree with that the prices are reflecting those more muted sort of anticipations on behalf of investors and i guess by implication what andrew is saying is if you haven't sold already, now's probably not the time to sell because most of that decline is already in there. >> yeah. i think that's true, tyler
when you look, no one is going to deny there's a slowdown going on we have ism and pmi numbers declining. even though they're in expansion territory, housing has not been doing as well. but the fundamentals don't tell us we have an imminent recession coming we have the regional manufacturing numbers that were doing quite well empire manufacturing philly fed, even the richmond today was higher than lost month. you have a strong labor market and look at the consumer confidence number yesterday. that was higher than expected. so i think the consumer is pretty steady out there at this point in time. the fundamentals are not telling us that we should be going lower in yields. i think we're possibly hitting a trough at this point in time unless we have another catalyst hit the market >> i don't know. victoria, this situation we were talking act in germany where investors are happy to park their money in negative yields, it's creating distortions, isn't it >> it absolutely is. there are distortions in this market, and i think that's a lot
of why you are seeing the demand here for the u.s. market look at the options we had yesterday. there was really strong demand in the two-year option i think rick santelli gave it an a. there are so many ncertaintied there are it's china trade tariffs, brexit, whatever it is, you have foreign investors that are piling their money into treasuries keeping rates low and then you have a stronger dollar. dollar index over 98 that's another benefit for the foreign investors. i think there's a lot of things that are keeping our rates low at this point. i'm not sure we're going to go to negative rates like the german bund which is almost at all time lows. but it's keeping a lid on rates on the u.s. side >> andrew, you say you'd be looking to buy big u.s. tech names and if you like taking risks, you also like chinese internet stocks. it's a little too rich for my blood. >> sure. it's too early, tyler. the market's only down 5.5%. big whoop.
but we get down below 2700, you know, closer to 10 % correction, and i think you get a situation where you might have the fed react. you might have the administration turn a little more soft on trade, and so much money is now piled into risk off, that a lot of these things have sold the risk on is sold off a lot. you're going to get a sharp rebound. my point is to the risk off trade, the ship has already sailed i don't think we're done on the downside, but we've -- we're already down 6%. we're well on our way. >> all right thank you both andrew slim and victoria fernandez. coming up, shares of its our daily beyond meat report claiming 7%. a bright spot in today's one of my favorite cliches, sea of red.
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shares of mcdonald's up more than 10% this year but down 2% today. we spoke with the ceo about what's working for the fast food giant and how mcdonald's is handling the economic slowdown in china >> we sound down with the mcdonald's ceo as they launched this new location in times square stocks have been on a tear up 22% over the last year but with all the tension regarding china, we asked if that is altering the company's strategic vision >> absolutely not. in the shorter term business slowed down a little bit as the economy is slowed down a little bit in china but in long term interest, it's an important market for us i think it will stay that way for as long as i can imagine >> and with all the attention beyond meat has gotten we asked if mcdonald's has any plans to get in the plant based burger business in the states >> we're trying to understand it
better and understand customer's acceptability of that particular type of product. because if there's a buzz around it at the moment, but it's clearly prepared in a different way to a traditional beef patty. we're keeping a close eye on it and watching the space >> finally we asked about the u.s. consumer. he says largely the consumer is in a fairly decent shape although he did say they're watching a difference among consumers who were ages say 35 and younger whose consumer confidence numbers are not as strong as the overall ones back to you guys >> interesting carl, thanks let's bring in piper jaffray senior analyst is there softness with the younger group, the millennials here in terms of the consumer? >> actually, what we've seen in our surveys is restaurants are the one place they want to be. so it is being trumped to some degree by having some desire to travel and do some other leisure things we compare and contrast it to
retail when you look at retail they'rithey're spending more dollars on food spend. >> you're saying relatively speaking that's holding up i wonder how alt meat, the survey was interesting that said burger king saw a big change in foot traffic and he said watch this space does it make sense for mcdonald's to jump in? >> i think this absolutely makes sense for investors to jump in i think there's two things you can do the first idea is to trade it. there's the tactic that burger king is deploying. that's novelty this isn't about good or bad, tactic versus strategy the tactic is get the attention and it's driving burger king traffic. you flip to mcdonald's and they're saying if they're going to do it, it's going to be strategic. they're going to wait and see if this is just trial and awareness
or long-term permanent consumer demand >> let's talk about delivery and whether delivery is already or in your view will be a revenue driver i'm a little skeptical because my personal experience is that french fries don't travel well >> so delivery is definitely a traffic driver and it will be going forward but it won't be the same type of traffic driver for everybody so mcdonald's wins in terms of delivery global scale matters in a digital world. the thing that they'll do this fall is take delivery direct to their app. and that's the thing that we should watch if they're able to do that, that is probably the number one metric of health of a restaurant company, because then they own the consumer >> and nicole, mcdonald's is up 22% over the past year it's $150 billion company. how much do you see it growing from here?
>> we see it as both a defense and offense play so there's plenty of up side to our price target they have a nice add or slightly above dividend it's a good way to be defensive and invest in the market, especially when it's been a choppy backdrop. we also look at the fundamentals, and take a look at what they've done internationally in terms of 2.0 mcdonald's of the future, experience of the future, however you want to label it they're translating that to the u.s. business, and it's taking a little bit slower. but that's something that can also give them a nice comp lift. we like it as an offensive play as well. >> all right nicole, good to see you. thank you so much. nicole miller reagan a rough day for retailers. canada goose, abercrombie & fitch down whether you should invest in the names at a discount is the topic we'll tackle next. the cloud i need? it has to keep up with sales, supply chain,
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abercromb abercrombie & fitch and canada goose sell off sharp a rush of releases tomorrow. that includes gap, costco and ulta beauty. we have guests to size up this group. jc, we've had these kind of retail armageddon trades before where almost the whole foods deal was announced, that was another one. is there any sign of relief in the charts to the group? >> not right now i think the message from the consumer is let's sell now and re-evaluate the positions later. i mean, the weakness in the xrt, the retail etf, is nothing new i mean, it's been weak for quite some time. earlier this year we traded sideways we consolidated two weeks ago we broke critical support at 4 3 on the charts since then selling has intensified. for me there's no support levels until we go back to the december lows
that's a few dollars lower i think we want to stay away from this area >> maybe treacherous the xrt is an etf that's basically equally weighed. you don't get necessarily the benefit of the heavy weights like amazon pulling that group michael, are there any names within retail that you think right now might look attractive? >> yeah. two things matter here it still comes down to who has the most unique client experience in a rapidly changing environment. high touch matters just like a restaurant just like when you goto the doctor's office or come to wealth management offices. the high touch service matters the second thing is the amazon disruption effect is in full effect they have changed the whole world. they've changed the environment. and they're going to continue to lead in 2012 nordstroms market cap has been cut in half the same time that amazon continues to grow earnings and their market cap is worth tenfold.
i would only play that stock in that space everything else can be on the side until this market gets past it >> you would only play nordstrom or amazon? >> only amazon amazon disrupted the market. they're leading the market they're the number one player. i see that happening for a long time >> all right sticking with the big winner there, michael, jay see, thank you. for more trading nation, follow us on twitter. thank you, like. ahead on "power lunch" pivotal research has a big note on the tech sector we'll talk to the analyst who just became the biggest amazon bull and preparing for the future we'll ask a financial planner for tips on protecting your family's finances through market volatility the dow is down 409 at the lows. down 284 now much more when "power lunch" returns.
generally speaking a strong dollar is good for the economy but that doesn't mean that all companies are going to benefit equally. in fact, companies that do a lot of business abroad and those in manufacturing tend to be more vulnerable to a strong dollar. so if you believe that the dollar is going higher, you might want to check your exposure to those types of companies. who says our bank isn't tech enough? everyone, look at your phones. the design thinking, the digital engineering,
welcome back, everyone here's your c nbc news update. the secret service says a man set himself on fire outside the white house and is being treated at the scene police administering first aid after the incident near the washington mall. it was the second such incident since april 12th president trump declaring the russian investigation closed following robert mueller's first public statement since his appointment. the president tweeted that nothing has changed from the original mueller report. mitch mcconnell says if there's a supreme court vacancy during the 2020 presidential election year, he'll hold -- he was asked about the snare joe during a speech in kentucky on
tuesday. >> i would fill it yeah you know, the reason i started with the judges is important as all these other things are that we're talking act. i mean, if you want to have a long-lasting positive impact on the country -- everything else changes. >> you are up to date. that's the news update this hour back to you guys thank you. let's get a check on the markets here we're off session lows for the dow which was 409 point drop we've lost momentum. we're down 273 that's a 1% drop a little better percentage for the s&p and nasdaq about three quarters of one point declines the nasdaq closer to correction territory. the s&p the levels in the markets that matter. 27, 70s. the 200-day in focus the 22 point drop. >> kelly, the oil market closing for the day.
let's go to the cnbc commodity desk >> much like the broader market, trade tensions are driving down crude prices but well off their sessions lows. wti crude down about a half a p perce percent. flooding in the midwest has not affected oil prices so far, but if refinery and pipeline disruptions continue especially in louisiana it could change tomorrow we get the u.s. inventory offering a check on the supply side. domestic stockpiles have climbed 8 %. that's the quickest pace to start a year since 2016. >> thank you meantime lower interest rates aren't appealing to many home buyers total mortgage apps fell last week as the spring season comes to a close hard to believe that already we are joined with a run through of the numbers >> rates are significantly lower than they were a year ago, but we're not seeing the excitement from buyers that you would expect the average rate on the 30-year
fix second down falling back toward 4 % it was over 5% last november and 45 -- 4.5% last spring the applications have fallen even as rates fell they were down last week slightly higher than last year, but not as much as you would expect that is likely because home prices have overheated so much that the rate drop is not making up for it. also there's still a lack of supply on the low end. mortgage refinances are fairing better down for the week. up 29% from a year ago the trouble is that they're working off small volume because so many people already refinanced in the 3% range also not a lot of people are doing cash out refinances. they're holding onto their home equity and have a lot of home equity now given the heat in home prices. >> what's the sweet spot where buyers get off the couch and start looking? >> i think you have to go below 4 %. we're just so used to the 4% range that when we see the
fluctua fluctuating, they really want to see that 3 handle on it. >> yep gotcha thank you. digital ad revenue keeps growing with advertisers continuing to seek massive audience that the tech giants can attract. many analysts believe digital ad revenues can keep going up pivotal research group uncovered with the firm holding buy ratings on tech giants, the likes of amazon, facebook, and twitter. here to expand on the note is michael lavine, senior analyst at pivotal research. good to have you with us one way to get attention when you're initiating coverage on a stock like amazon is to initiate with the highest price target on the street yours is 27.50 on amazon right now it's trading about 18 -- 75. why do you like it so much >> a number of reasons
i basically entitled in the note we looked at the move amazon made with regards to crossing the rubi con in a reference to their one-day shipping the day after amazon earnings must have been a challenging one. we think that this will significantly increase the value of prime likely translates into gmv acceleration that's seen slow and growth, and as we look a couple years out the value of aws, the retail business and advertising on sum of the parts basis gets us to a higher stock price >> what about the fact that walmart was quick to roll out one-day delivery of its own? >> i found that to be fairly impressive my suspicion is they had something in the wings and the message i've heard from the company is they don't feel like it's going to be at a loss there probably is some reflection that a competitive environment has gotten a little bit stronger
if you look at the e-commerce numbers from walmart, home depot, best buy, smaller bases than amazon but growing at faster rates >> finish your thought i'm sorry. >> i think it will be more competitive, but i think ultimately this is a company with a very clear mission in mind and where we look at the one-day shipping really is an interesting stop along the way toward same day. that's where this really gets interesting. >> i want to correct myself. i said 1875. it's about 1814 right now. what's your second favorite stock among those that you initiated? is it fabsz? you've got a $220 price target there. >> i think twitter is probably a bit more interesting from a risk reward perspective we like both in terms of twitter, i'd say it's a little bit less controversial than the other names at this point. really, at this point from our perspective it's getting through on a two-year basis the comps getting more challenging into
the second half of this year we think they've got some terrific momentum in the business starting to see fabulous signs into the back half of last year, and we believe you're going to see margins begin to expand into 2020 >> the common thread here with a lot of your coverage is about internet advertising i may or may not sneak a peek at interest every once in a while their ipo has gone pretty well are they going to be able to become one of the go to platforms in this space? if so, how much room is there for all the different players? >> i think that there's ample room especially if you think through two different vectors. there's direct response advertising. and brand advertising. what we found most striking about pinterest was in their when they call it two-thirds of their advertising base was direct response. it's not an either/or when you're saying i'm going to advertise on facebook or pinterest if the metrics are coming in retive to your expectations and targets
i think where we have a few more questions on pinterest, we know they've done excessively well in consumer package goods in retail it makes sense and we think it's a user base that's already prefiltered itself by going to the site in terms of discovery so we actually think they're doing a good job we're being a little bit sensitive from a valuation perspective given already the trading at a several turn multiple premium to the other names in online advertising. >> you have to hold there on snap, pin test and alphabet. >> michael, thank you. we appreciate your time. >> our pleasure. >> thank you a health care stock under pressure crop prices driving higher bizar bizarre bruise and a fast pitch you've got to see. that's coming up on the tasting menu
after a little flurry the dow getting weak in the knees. now down 326 points. that's a better than 1% decline for the dow. only two dow stocks are higher, intel and united health. the rest of them are in the red. s&p down 1% and so too nasdaq down 1% as we close in on the last hour of trading here's a taste of some of the other stories. the landmark opioid trial against johnson & johnson continues with testimony from the father of an overdose victim today. oklahoma prosecutors accused j&j of intentionally fueling the country's opioid epidemic. shares of that company down 5% and they are among the leading dow decliners. and tornadoes are sweeping across the midwest causing severe damage for the 12th straight day kansas, oklahoma, texas, ohio, even new jersey experiencing
severe weather corn futures are surging this month as the storms impact key farming regions. i don't think new jersey is one of them. still, i heard it last night >> it was a big storm. series of storms coming through. i think more expected later today. we get a taste of what's been going on in the stricken midwest as you see there lots of big storms out in lawrence, kansas kansas city area craft beers have become a big business 13% of the u.s. market now according to the brewers association, i can't imagine any of these being big sellers here's a list of what was available at the strange brew festival in reno this month. a peanut butter and pickle pilsner. a a maully logger. smoked carrot stout. others that tasted like steak and onions or macaroni and cheese i like beer that tastes like beer >> this is how you know we're at
peak craft beer. finally check this out the chicago white sox honoring their employee of the month by giving her the honor of throwing out the first pitch at last night's game but it didn't go well. she wound up, took a step to the left, and hits the photographer who was there to record her special moment >> that is really funny. can we see that again? let's see that again >> she's celebratory >> good for her. all right. ball one >> in a way, her aim was great, just at the wrong person >> it looks like some of my son's little league games. >> employee of the month >> whoops. >> ouch. and she could have done serious damage she's lucky he didn't get clocked in the eye today is may 29th. that's 5/29. we're talking college savings. we're raising awareness. is it the best way to save for higher education the pros and cons next
and tune into closing bell today. bob iger will be in on a first on cnbc interview with a sneak peek of disney's latest "star wars" park t too? if these industrial plants had technology that captured carbon like trees we could help lower emissions. carbon capture is important technology - and experts agree. that's why we're working on ways to improve it. so plants... can be a little more... like plants. ♪
welcome back with markets down big today it could be the right time to start or add to a college savings plan may 29th, today is 5/29 day. joining us now is our senior personal finance correspondent sharon eferson and casey robinson say casey, when we went to set up one of these, it was very difficult. every state has their own rules. it's stuff about going through a brokerage. help us understand the appeal of 529 plans and the best way to set them up. >> absolutely. so the 529 plan, it was named after the section in the tax code and the primary benefit of opening one is to tax benefits a lot of states are give you a state income tax deduction when you contribute to it your earning are tax deferred and if used for qualified education expenses your withdrawals are federal tax free
and state income tax free. as far as trying to understand the sea of 529 plans out there, it can be overwhelming there's as you mentioned plans that you would invest with a broker plans you could go online and open yourself. as far as which plan is best, it really depends on the individual's personal situation. >> but i think the key, sharon, is you want to look for the ones that have the lowest fees. you want to start these things as soon as you can, and they've just expanded their use. not even just for college. you can use them for high school >> it depends on what you want to use them for, and yes, you can now use them for k through 12 private education the key is to understand whether you'll get a state tax deduction for that some states don't allow that you want to consider that. taxes should not drive your investment strategy you know you really need to look at what your growth is how long you have until your child is going to college, and also how comfortable are you picking your own investments
if you're not comfortable, an age based 529 may be perfect >> target date fund. >> and it matures based on their edge when we have a market turn, you're not going to be as worried. >> casey, i don't know if it's a misconsumption, but new jersey residents can choose any state's 529 plan and put money into it but where and how do i find out which ones are better than the other ones where can i find out whether new york's is better than new jersey's or california's or texas's? >> you hit the nail on the head. it depends on what your state of residency is a great resource i recommend to look at is saving for college dealership it's one of the premier resources. you can sort by your specific state, by direct sold plans. you can see the underlying fees and expenses, and what tax benefits you would get if any. >> tyler, another great resource
also is morning star they came out with an interesting study looking at whether states that were highly populated, big states had better plans than smaller states. bigger states do part of the fee is the oversighe smaller plans may have larger fees larger oversight fees. so you may want to keep that in mind as you're looking and also just because they have generous tax benefits doesn't necessarily mean they are a great plan according to this model. >> what happens if your child chooses not to go to college and you've been using it >> you give it to the other child. you can change the beneficiary any time >> what if i don't have another child? >> you can give it to me >> you said you want a ph.d. use it for yourself. >> how many times are they transferrable and who is eligible to use them >> anyone can -- you can transfer the benefic year anybody. a niece, a nephew, godchild, you can put it for -- again, wait for yourself you may want to go back to school you can use it for yourself.
you are able to change the beneficiary. it's not easy, but it can be done >> if i withdraw money not for a qualified education expense, what happens >> if you pull money out of a 529 plan and it's not listed as a qualified education expense you'll pay ordinary income tax on your gains plus an additional 10% federal penalty. >> but i can take out the -- i guess what i would call the cost basis, the money i deposited that's already been subject to tax so i can take that out tax-free >> correct but your withdrawals will be pro rata if you have any gain, you'll be withdrawing some of the gain every time you take money out of that plan. >> and i also -- can you explain whose name the account should be in, and if everybody wants to contribute, are there any issues around how to make those checks out or -- >> and how much can you put in there in a year? >> another good question >> as far as how much you can put into it, it's subject to the federal gift tax limits which is
$15,000 per person but the 529 plan has a unique feature that the irs allows you to front load it with up to five years of gifts at one time then you'd subsequently file your gift tax return for the next five years. so you can really do $15,000 times five up front, all in one year as far as who should own the account, that really depends on the personal situation and how you are planning on funding that child's education the reason that i say it really depends is because, say, for example, a grandparent is contributing to the plan and it's the grandparents' plan, this will not show up on the fasfa when the child goes to apply for federal aid. however when they take money tourkts will count as income to them for the year which will affect their financial aid it's really a timing thing >> sharon, are people putting too much money into 529 or for their children's education at the expense of putting money aside for their own retirement
>> unfortunately, people aren't doing enough of either you should be funding your own retirement first definitely >> because there are other sources of payment for college >> exactly even now, most people are using their own savings, scholarships, financial aid to pay for college. again, you cannot get a scholarship for your retirement. make sure you fund that first. >> guys, thanks. sharon epperson and casey robinson on 5/29 day the ongoing trade tensions with china we'll head to the floor of the new york stock exchange for how to play today's action and ybmae even the weeks and months ahead that's next.
take a look at the market losses the dow down 345 1.3% the s&p down 1.09. and the nasdaq down 1.1% let's bring in matt chesslock from virtue financial. he's at the stock exchange tracking all the action. matt, welcome. we broke, what -- or broached, breached, i guess, an important support level on the s&p earlier today. it bounced back a little bit how much of this is algorithms clicking in as we tag support levels how much is fundamental worry? >> i think technically we broke down a key support level, 2802 we held it yesterday on the close. super weak and then broke through it today. accelerated lower. we saw that disturbing mueller
report come out. that took us down another leg. now we're resting on some deeper support levels of 2776 we're ticking below that right now as we accelerate but i am not going to say it's algorithms they aren't getting credit for taking us up 11% earlier in the year algorithms are allowed to sell and right now that's what they're doing. >> it's interesting that you mention the mueller press conference because certainly the market did dip a little on that. to the extent that he basically punted this back to congress and it probably inflames an impeachment drive, that means for the next year and a half, the politics are going to be real ugly and that's going to be a backdrop for the market. >> yeah, the word impeachment, obviously, scared everyone it's not a good scene right now in washington. we were hoping to get finality in that. we got anything but that so without clarity, the market is going to sell off especially on that news with the
backdrop of what's going on in u.s./china backdroch iran there's really nothing positive out there geopolitically or politically whatsoever >> on the bond yield front, is it the curve that has your attention, just the level of the ten-year, some of the international yields >> you know, it's funny. we talked about not long ago we were worried about 4% yield. now we're talking about 2% it's changed quickly and now the fed, are they going to pivot again there's a lot of questions out there. it is concerning that we're getting to these levels and talking about an 85% chance of maybe two rate cuts by the end of the year where we didn't have that at the beginning of the year all of this is coming at us pretty fast. >> last fall, the -- baked into the cake was the assumption rates were going to go up well into 2019 and beyond and that changed, and the stock market rebounded. so sentiment improved. and now in the past three or
four weeks since there have been hairballs in the u.s./china relationship, sentiment seems to have gone down again as jim cramer cited in his commentary last night >> yeah, we see the retail numbers today. some of these retail stocks are taking it on the chin today. we've seen some economic numbers out of europe have been weak really nothing giving us reason to be too exuberant. they are telling us, he's even cheering for some of that right now. kind of unusual. >> thank you matt chesslock, virtue sneak in a quick check before we go it's about checking your phone in the middle of the night according to common sense media, 36% of kids wake up to check their phones in the middle of the night, and 25% of parents are guilty of the same thing >> i don't do it unless i want to know a ball game score that i
missed at the end of the night >> once you have that phone on, it's harder to fall back asleep, don't you think? >> no, it is >> i leave my phone on a whole different level. >> mine is in a charging dock most of the time thanks for watching "power lunch. "closing bell" starts right now. stay with us could be a busy hour always a busy hour welcome to "closing bell." i'm sara eisen >> i'm scott wapner in for wilfred frost. less than an hour to go. we'll tell you everything you need to know before this market closes >> it's two key factors driving the action today the rate scare and the trade war. the drop in bond yields sparking fears of a potential recession and china's people daily state-run newspaper coming out with an editorial saying, don't say i didn't warn you. also the s&p 500 broke a key technical level earlier today. >> experts ready to tell you what to do with your investments right now, including bond guru scott minerd, plus disney's ceo bob iger joins