tv Power Lunch CNBC August 24, 2015 1:00pm-3:01pm EDT
josh. >> low. >> please. >> the way it works. >> eight seconds. >> i'm done. i give up. but i will see you tomorrow. >> excellent news. all right, guys. a lot of fun. that does it for us. "power lunch" begins right now. >> an historic day on wall street that we have seen. hello, everybody i'm mandy drury, tyler is out. after dropping 1,000 points dow staged remarkable recovery. let's get to sarah and bob pisani at nyc. people thinking i wonder if we can close flat or positive bob and sar sarks. >> astounding to watch with the do you down 140 points. lets bring in bob pisani. we were all shell shocked where the dow opened 1089. >> this chart doesn't do justice. there was panic selling on levels. i've been here 17 years. i'd have to struggle to find something like this at the open.
9:30, 405, massive sell orders. not all stocks opening at 9:30 exactly. so that created different waves, different kinds of openings. let me give you a traffic representation. put up the full screen. show you what happened. between 9:30 and 9:35 we had what i call panic slg selling going on. the dow dropped. 9:30 to $935 we had the opposite. panic buying. people came in with orders to buy everything. suddenly dow rises 500 points. we had the test. we knew it would happen. sell the rally. we knew the rally earlier than we thought. test came 9:55-9:54. selling is exhausted. a rebound, dow rises 550 points for the next half hour. the next test is 11:30, europe closed. as everyone expected panic selling at the open european
people largely responsible for that open. dow rises in the next half hour. united technology oldest chart, huge down at the open. start retest half an hour later for the downside and up here. some of them already positive. disney is positive, for example. incredible morning. >> turnaround with dow around less than 1%. bob, continue to check back throughout this historic day. nasdaq, bertha coombs following big movers over there and recovery we've seen in those shares as well, bertha. >> we've seen a reversal particularly in the large caps seriously led by apple. look at small caps, not as much off their bottoms as we've seen with large cap move, power shares qqq, etf, nasdaq 100 almost going positive. chips have been turning positive. apple is really the story of the day here. that's the reversal that really has created a bit of a halo when it comes to some big cap stocks.
some of the others as well. netflix off more than $20 at the open. intraday $25, back to 105 here. >> remarkable turn around. stocks stealing the show. moves in other markets stunning. panic moments traders hide out in safe haven for shelter. we see that in treasury, soaring. make traditional safe haven spots gold and the dollar are not. gold lower most of the day, now down less than five bucks, less than half a percent. gold has, however, rallied strongly off the july lows lately. the dollar is getting hammered today against major currencies like euro and yen. so much for parity marching toward 116 on euro, dollar yen seeing big move as well. 2 to 3% moves are absolutely unprecedented in currency world. we've been seeing them a lot lately. the only place the dollar is
stronger right now is against emerging markets currencies. one reason why people say the dollar is selling off against the majors is this idea the fed isn't going to raise interest rates in september, maybe not this year. that makes the dollar a sell. that way your dollar isn't helping oil much. hitting 6 1/2 year lows, jackie deangelis, 39, in 38 territory earlier. >> exactly. i wanted to talk about the range for crude oil, really an incredible morning. as high as 40.47, low 37.35. dipping under that $40 mark and really staying there. at this point treating at 39.32. depending what happens with equities, that's what's influencing oil today, we could close anywhere around this mark. if we had a close under $40, of course, it would be paramount. that's to watch. >> thank you for that. 40% of the technology sector is now in a bear market.
76% of the market is in correction territory, materials, industrials, telecom in correction territory. so what do you buy now? dominic, kind of like rummaging in the bargain bin and getting 10 or 20 off. >> i like the socks in the bargain bin, 50% and 50% off on that. >> socks and stocks. >> i wish i could tell you what is going to go up, my crystal ball doesn't go like for the stock market. we could see value plays that held up or had momentum given the fact we've had this massive selloff in stock. s&p 500, price to earnings below index 18, slightly higher a little bit higher than index average now. look for positive returns on year-to-date basis. medium turn momentum and ranked by one-week returns, all right? here are some of the stocks we came up with overall for this particular screen. tyson shares. so far on year-to-date basis, 1%. reynolds american on the tobacco
side of things. here is where it gets interesting. some real relative strength in home builder stocks, d.r. horton and lennar, both top our list after we ran that careen with those particular factors in there. again, take a look at some of these stocks, passed some value and growth screens. back to you. >> thank you very much dom. is this major market selloff making the fed rethink raising rates. is september off the table. steve liesman you've been watching some of those expectations shift, haven't you? >> they are shifting in a big way. barkley making a more dramatic call on wall street pushingist expectation from september to march 2016. barkley says the six-month delay stemming from fed fears of rate hydrocarbon destabilizing markets. lower inflation than the fed wants to see. and i just got off the phone with economist at wells fargo, he says they are considering changing their september call to
the spring of 2016. so this market meltdown perhaps forging brand-new market consensus of much delayed, much delayed federal rate hike. adds selloff raises concerns about u.s. economy, especially consumer spending. >> what you've seen in the past is about a month or two after a significant correction. the notes that people will get from the mutual funds or etfs or brokers will signal a decline in net asset values. we do see a negative impact on consumer spending for three to six months after those monthly, quarterly updates are published. >> market plunge affect business confidence reducing investment and potentially hiring as ceos become timid at lower prices especially exports to asia. the stock market, not the economy, big down drafts in the past usually come along with already weak economic growth rather than ahead of them. sometimes white knuckle nose
dives in '97, economy shrugs is off. found a short rise in the vix, never so solid could withstand a market plunge. now concerns about economic growth and jobs and inflation. fed has reason to wait maybe sell on wall street until next spring. >> thank you very much. steve liesman, bring in mad money's jim cramer his take on comeback here. history showing when there's blood on the streets it has been sometimes wise to get in. if you're looking at some of the buying opportunities out there, this time three occasion in particular, high growth, dividend stocks and domestic stocks. let's start with dividend stocks. >> i want to preface by saying it's a long day. probably people in the last half hour say chinl be down again, this might be your chance to get into general mills which is having a very good quarter reinventing either receive.
pepsico, down, very levered to commodity climbs s kimberly clark, a fine company to buy, they buy back, leverage to commodity. southern if you want utility that's my finest yielder. a real estate investment trust, no reason not to have 5%, a little growth in. verizon highly yield in the dow but the yield i trust. not an oil yield. >> not an oil yield. what about domestic stocks. >> we have to go after what we just heard that we know is doing well. kroger 19 times earnings may not be everybody's cup of tea. last time i looked beijing does not have kroerg. we don't want anything with beijing. nordstrom reported what a great quarter. give them their due. darton very big on gasoline decline. home depot just reported stocks been clocked. >> how growth are they? >> we want no china, nobody lud to do business in china, google,
netflix. these are stocks i'd like to be down, at one point below where it was at the quarter. apple, we have information apple is strong as of last night. >> that's right. you really moved the market this morning. you got some comments from ceo. >> apple move the market. >> tim cook trying to put to bed fears about kpoexposure to chin >> i felt like it's important to check in. you always try. i've been trying to get scoops since i covered ted bundy's homicide in 1997. i've been around long enough to try to get a scoop. why not get a scoop. the answer is i was concerned after last week, skyward exclusions, big provider said things on track in china and stock got hit 10%. i reached out and the conclusion i got was i think tim cook, he doesn't do quarter updates, but was kind enough to share, i'm going to have to quote here, continued experience strong growth for business in china july and august. therefore takes entirely the
decline in their dow so to speak. >> sure. >> iphone accelerator of the past two weeks. as the stock market accelerated its decline apple accelerated. >> what's your call quickly on apple yourself. >> 92 today when i told people to buy it. it looked like it was insane. everything can come down. we have a lot of margin calls between one and two, possibly get apple lower. people have tremendous fear between 3 and 4, won't happen tomorrow maybe get apple lower. i just think what matters is we know the business is better than it was when the stock was at 133. >> give me your general sense where the market is going from here, what the market is going to look like over the course of the week. >> i still believe because we're in contagion 1997, 1998 rules, which means we still have 5, 6, % decline, 2011 situation, a 6% decline, so i'd like people to keep some cash. i've got to tell you, for me it's time to look at your children's funds, 529 plan. it's time to be able to buy a
stable mutual fund that has higher dividends. that's what you should be buying. people at home don't have time to look at individual stocks i like these higher yielding mutual funds. put a quarter to work in the last half hour. >> thank you very much as always. great to talk to jim cramer. you wanted to jump in. >> you know i've been falling fallout in emerging market, some of their currencies, some of their central banks trying so hard to defend that. what if you own a u.s. company betting big on growth in emerging markets, what if that is in your portfolio. >> first i'd fire the ceo. what was he thinking, emerging market are terrible. there are pool who go for it. >> they were the darlings. >> if you're chasing emerging market growth mutual fund or ceo, you should be diversified. i don't mind 10% chasing emerging, if you betting the farm on emerging markets i question your sanity. >> i know you're close to the
eye, you know christine lagarde close saying no rate hikes. friday the market down badly suggesting he was sanguine about the situation. sat word that it is is not the one i would come up with. >> lagarde smart two and a half months ago saying beware, fragile recovery, wait until 2016 to raise interest rates. push back, imf has views let them give advise dual mandate for inflation and employment. >> maybe confusing with a movie. she not only looks smart but is smart, a handle on the world growth. stanley fisher, i say my friend because he once said he likes mad money. i believe people from the fed want to talk about raising rates here. if the market finishes up these people come out of the woodwork and say this is a very good time. if they do that they will get
hit with they know nothing. maybe they want to know nothing. they leaughed time i saw it in the minutes. >> some not taking a queue the stock markets but the economy. >> if they did that worldwide economy they could precipitate a dollar screen. the reason the setup work dollar coming down versus euro, gasoline coming down. sure if you're chevron right now you're sweating the probe. >> this is what's different. you can speak to this as well, sarah, being the currency queen. what is really different now from what we saw with gfc is what's happening with the dollar. remember how the dollar soared during global financial crisis now on the back since they start to scale back bets on when fed will hike rates for the first time like steve was telling us. >> i wonder if this is what it's going to take to get a bottom under commodities. interesting to see a big drop in the dollar under majors yet crude oil not getting much of a boost. >> frac now pay later.
when you have that and have them coming out saying take market sure, market share away from saudi arabia. frankly in free fall. i don't want to touch it. when i say i like dividends, i certainly don't like oil company dividends. >> how would you trade commodity stocks in general. >> don't need to own them. >> 401(k), 529, longer term investor maybe now is the time total in and buy stocks at bargain values. is it like catching a falling knife? >> i'm no butcher block. i don't care for value. i care for companies that can raise the dividend in an environment where the ten-year is at 2%. i don't care for companies that reach. i don't care for companies that say my dividend line in the sand. i saw the line in the sand in 2007, 2009 and it didn't work. i don't care for financials by the way because they are not extraordinarily cheap in the yield curve continues to go in this direction. >> exactly. especially if the fed does not rate hikes this year. sar aruba another question. >> i guess finally, what are you
guying for the trust? anything in the last several hours? >> trying to pick companies like cisco just reported great quarter, 3 per yield, a lot of cash. i don't get bear case on cisco, technology stock that has been having a good china. apple unfortunately trust is restricted in but certainly apple can't trade but clearly if apple were to come back to 100, which it could because the markets not great, nine times earnings, i kind of like that. >> i'm going to ask a very short-termers question here but put you on the spot. we've made incredible recovery where we started out the day three indexes, dow down less than 1%. any chance we could be flat or in positive territory. >> it could happen. obviously cognizant we have margin call, 245 if we're going to be up. that's been my time people say i
can't fight it, i'm going to go buy. nasdaq is definitely very strong. there's always people at the end of the day say china is going to be down badly and i can play again. they are the ones that keep us from thinking we could be up. otherwise we could be oversold. also any federal reserve governor or president who comes out and says he's sanguine will kill us. >> you mentioned china a couple of times any chance tonight they will bring out bazooka, put some floor under the market or completely lost credibility no matter what they do are people going to are confidence in that. >> they have tried quad 50s, bazooka, 110 howitzers, sherman tank, adams, literally every general we've ever had had a tank and it hasn't worked. what they should do is focus on economy not stock market. this whole prop up game is embarrassing. i'm embarrassed by party. i thought communist party had
discipline. >> it was awful telling people to buy stocks. >> yao rolling over. >> sarah. >> specific stock line, oil companies, quantico, does fear outweigh what's happening in the price of oil? >> no. again, i'd love to be able to say conoco is committed to its dividend and therefore it stays but that's not enough. i think oil could very easily go to 30, 32 before it bounces back. i think we're at a period of lower oil. i just think that conoco, it's out of conoco's hands. they are a terrific company, but it is out of their hands. by the way, these splitoffs between the oil companies and refineries, the refinery was the hedge. it was the hedge. we'll look back and say shrink to growth and shrink to shrink. >> stocks down 20% respective 52-week high. chevron leading the list. >> buy back 100 buying higher obviously that was the right
thing to do. they are committed to the dividend, lot of firepower but cut capital expenditures. >> great to always talk with you. >> that was like lightning round. i love it. >> cover many topics but get more of jim with m"mad money" 6:00 p.m. eastern. special report monitoring asian markets as they begin their trade plus getting you ready for the day ahead in the u.s. that is tonight at 7:00 p.m. eastern time. now less get to john with a news alert. john. >> i don't expect we'll hear from president obama on market vol tift today but we did hear from josh ernest, the white house press isn't in his briefing when he came out and said the globally economy is interconnected. that creates vulnerability. he pointed to the underlying strength of the u.s. economy, called on congress not to create any additional vulnerability by failing to pass a budget and by failing to pass additional infrastructure spending.
here is josh ernest. >> there's no doubt that the global economy is more interconnected than it's ever been. dollar variety of reasons for that. technology is not the least of them. but what i would encourage people to evaluate is the ongoing strength and resilience of the u.s. economy. >> of course i followed up by asking josh ernest whether or not draw any conclusions about the prospect of recession in the united states in the wake of what's going on in china and mark. he did not signal concern about that over the next year, again, saying this is not the time for congress to make a self-inflicted wound but the united states economy appears to be in solid shape especially compared to the rest of the world. back to you. >> a little different than what real donnell trump was tweeting about how we should be scared of what's happening in china and careful. thank you for the update. from the white house our john harwood. watching dow transportation stocks ample hit the hardest,
down 16% since its high last year. getting closer and closer to bear market territory. at one point this morning it was almost there. wall street so-called fear index vix hitting its highest level since 2009, protecting your portfolio in all this volatile next. you're watching cnbc first in business worldwide. ♪ ♪ it took serena williams years to master the two handed backhand. but only one shot to master the chase mobile app. technology designed for you. so you can easily master the way you bank.
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what a day in the market, 18 month lows, down 192 points. consumer staples biggest drags, different story for s&p tech sector, only sector higher, down 7% at session low. over to you. >> mandy watching financials plunge. kayla on the floor with a look. looks like things are doing well for financials and then collapsed. >> supposed to have positive catalysts but month of august started. the bulk of those declines you mentioned actually came in the last week. within the financial s&p banking sector fared particularly poorly, worse than insurance, real estate. it's the second worst subsector, second to energy. correction territory for 13 out of the 17 components in that
sector, comerica down 22%. there are several compounding head we understand facing banks right now. first concerns over china because an economic slowdown there and currency swings could have implications for the bank's advisory and capital markets businesses abroad. second there's a danger if the price of oil keeps falling, energy companies find it harder to pay back record amounts of debt issued to them by some of these banks. third, if the fed does delay this rate hike, that removes single biggest causative catalyst for this group. this morning actually raised bank of america on that premise, raised it to outperform saying too many people rushed into names like b of a, interest rate sensitive banks making valuation to rich kbw announcing fundamentals beyond a rate hike. they are still good and b of a is a buy with $20 price target. that call did little to help
sector. major banks sinking with rest of the market at the open. jpmorgan falling by more than 21% to just around $50 a share. that's a level it hasn't seen since 2013. some were wondering why these circuit breakers weren't triggered by a move like that with jpmorgan. i was told because that move took place over longer than 30 seconds. it wasn't a rapid-fire move. even so it seemed a stunning move to see. >> david faber was bringing up this idea we might have seen price dislocations at the open because some of these double digit readings on stop -- >> not trading, just algorithms needing to sell. >> would be good if you could get in and buy on jpmorgan. >> kayla, we'll talk more about this wild ride we've been in for today. let's bring in cnbc contributor kenny pickary and michael in washington. down 226, may as well be
positive considering what we saw this morning. >> down 1100, down 200 almost a win-win for the day. back to the comment on jpmorgan. there were plenty of people with the opportunity, did buy when it went down. >> the rally. >> you were here this morning. you could feel it, the chaos, a little bit of the panic in the air. so markets are so automated today versus years ago. instead of stocks opening and then trading lower, stocks just gapped down. they gapped down because the buyers could feel the fear as much as sellers. buyers bid lower test will of sellers. automated programs make a sell where you make a sell and you have these outsized moomts. welcome to world of technology in terms of financial markets. that's what you've seen. markets once they open and stabilize buyers, in fact, saw opportunities and, in fact, came right in. we hit this little bit of a vacuum because sellers pukd them out and rallies market back.
down 234 and that's a win. >> a win, waited to see what china opens, shanghai composite. i wanted to bring in part of this conversation. there's trading activity, in terms of fundamentals, what is your level of fear right now? >> my level of fear isn't that high, though i'm a lot older than i was this morning. i feel like i put in a good electronic month between 9:00 and 11:00 this morning. this is tough. this is what panic feels like. this was really an emotional selloff. so from the fundamental point of view, i don't have any new information that i didn't have on friday. i don't have new data, i don't have new anything. so this kind of panic i think does provide opportunity and you've got to remember warren buffett isn't sitting there thinking how he's going to sell everything, he's thinking about what he's going to buy, attempting to be ferful when others are fearful and greedy when you see this much fear. so i think it's really important.
also really important, i don't feel like it's over. i'm interested in what kenny says but i don't feel like this is over. >> before we turn it back to kenny, michael, are you buying like you say warren buffett would be? >> yes. >> what are you buying? >> if we're doing any selling, for tax loss but i don't think we're doing any of that. we've been buying names that have been beaten down. we have some new clients in who have been sitting on cash for a while. we pulled the trigger on part of that cash today. so actually our trader has been busy today doing some buying and nibbling. >> you're saying very quick -- >> i think michael is right. i don't think this is over. the market had technical damage. it needs to kind of regroup. i actually think down here is huge opportunities for people that have the cash and can put it to work. >> all right. we'll leave it there. kenny, thank you very much. we'll talk to you later as we head into the closing bell. mandy. >> the 10-year note falling 10% this morning. down 10% this month. what traders are saying about
how low yields could go. plus the dow was down 1,000 points. earlier on today stocks and sectors in correction and bear market territory. where the value is in this market. plus gold had been somewhat of a safety trade in the global market selloff. right now slightly to the downside as we're getting ready to close. we'll bring you an update on what is happening with gold, which as i speak is currently down half a percent. live at the nymex coming up. and experience a cadillac for yourself. take advantage of our summer offers. get this low mileage lease on select ats models, in stock the longest, for around 269 per month. every auto insurance policy has a number. but not every insurance company
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welcome back to "power lunch." jackie deangelis reporting, down about $7, you'd think gold would get a bounce, it didn't. safety trades haven't moved gold in the last week or month or so we've seen that 6% move in the gold trade. it's really been a dovish fed. with everybody out questioning what the fed will be, gold not moving on a day like today. right now traders seeing short-term on trade and wanting to see cash on the sidelines. >> what's happening gold close. what's happening in the bond market, equity market selloff earlier yield 10 year note fell below that key 2% mark, sitting right slightly above 0.24%. let's get to rick santelli, the man at the cme. hi, rick. >> hi, mandy. let's look at intraday charts.
intraday five. what should jump out settle at 143, currently trading 149, down four base points. range low to high 13 base points, 10 intraday. low to high range, 14 base points 202, down 2 basis points. 30 year bond, 13 high to low, 274 up to basis points. the long and short of that is the treasury market continues to be the adult in the room. we are in a process of normalization. how do you define process? look at today's prints and equity markets from early in the morning until now. last chart mid february dollar index, we could say it's repricing due to trade, no matter how you slice it multi-nationals note in next earnings statement. back to you, sarah. >> down 1 1/2% today. rick, thanks. >> the dow was down 1,000 points earlier. hard to believe well off lows.
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action on this historic day of trading. dow down 280 points which typically would be a lousy day for the market. bob, after the morning we have on the open down 1100 points. it feels a lot better. >> panic selling at the open in the first five minutes and then for next 10 minutes panic buying. it's really something you're not going to see. at least not in many, many years. take a look at dow jones industrial, down 1100. all the way backdrop 300, 945, came back, european close up since then. just off the highs. a lot of people have asked about unusual openings. i just want to point out one or two of them. hca, for example, at the open. there were prints right at 9:30 or so. in the 40s down there. the one thing i would point out these off the exchange before the market actually opened here. when the market opened here at
9:45, $81 and change. the question is these prints that occurred prior to the open at new york stock exchange, are they going to be allowed to stand, should there be some kind of erroneous trade, have those trades, somebody has to file a report and object. somebody traded off the exchange in the open and got trades in the 40s. i think somebody has a right to be mad about it. those trades did not happen when the market was actually open. some of this occurred when the market opens. >> double digit down. thank you very much. bertha coombs at the nasdaq where we saw tech go positive bertha. >> back in '97 the currency crisis, ibm stepped in when the market was really near the lows and said, hey, going to do a surprise buyback. apple, of course, has that massive stock bye back. take a look at stock turning around today, you have to wonder whether apple itself stepped in, new low.
look at the number of stocks that turned around with apple, a lot having hit new lows. their yields now, dividend yields fairly rich. 3 1/2, kla-tencor down 3%. >> what are portfolio managers selling today. chief market strategist boston private wealth and chaffey investment officer usaa investment solution. bob, are you saying had is a healthy development for bull market at seven years some people felt long in the tooth and val weighings starting overstretched. >> val weighings looked overstretch. market hadn't seen correction since 2011. ween the action is over done today. market has to possibly move lower. forth most part gotten to the extreme. the market continues to be healthy, watching economy for any kind of possible weakness, not panicking, selling into
declines, buyers of this market. >> buyers of what peak, bob? >> solar city, jet blue, sky works, cvs, all high-quality names. nike, under armour, these are quality names. kind of companies you want leadership in the group, not too much exposure internationally. leaders in the companies, market leaders and that's what you want to focus on in portfolio. >> what about you, bernie? how are you using this correction? >> same way. we've been buying, for example, target, tjx, both retailers offering real well, minimal exposure to china obviously. i think they were unfairly punished in this downturn. >> do you think the market can end higher or flat at the end of the year? >> well, we've been thinking the market is going to be flat to slightly up, raerd subdued returns primarily because of valuation and soft earnings. we think there's probably better opportunities in europe with good earnings rebound.
>> any particular place in europe? >> middle of europe, not yapz but europe in general is doing well. spain, ireland is doing well. france. now i know there's a big selloff today in the last couple days. but again, they experienced good earnings recovery. gas prices are low and austerity seems to be off the table for europe right now, all of which is positive. >> bob and bernie, thank you for joining us on this big market day. folks, can also go to website to see what bob says are the chances for september interest rate hike. that is powerlunch.cnbc.com. many ups and downs in your career, right? >> yes. >> someone who has been there by your side for a lot of it. >> the dow hitting down 1,000 points earlier today, well off the lows. question is, was this capitulation, is this forming a bottom. cnbc ron ensana joins me now. what did you think?
we saw the gap. friday was not a normal options expiration. >> correct. >> the odds were kind of whacked out there. so we didn't have what would be considered a regular options expiration, kind of set the table for today. how did you feel about it? >> down 7 1/2%, supporting its market and failing to do it obviously set the table for not only 4% selloff in europe or 4% selloff in asia as well. i'm not sure if this morning was part flash crash, part capitulation or total capitulation. i think the jury is still out as to whether or not we've made perfect bottom that sometimes comes at the end of a correction. clearly we met all the definitions required of a correction having fallen, you know, about 14, 15% peak to trough intraday. but i'm not sure whether or not we're done. i think there are several questions yet to be answered this week. >> what would be most important to you. what is that missing piece you need to see an answer to?
>> well, i think first of all, china obviously didn't make any really strong statements last night or show any resolve to halt the selling in the stock market. >> i was surprised about that. >> you'd think they would try to do something to shore things up. maybe they have bigger plans for later in the week. maybe they cut reserve requirements tonight or talk liquidity injections. for the u.s., fed at the symposium is going to be critical, if they should indicate under current conditions there is no room for rate hike or to begin normalization of policy in september. i think that would be more indicative of the market as we've seen in other jackson hole conferences going back to 2011 when we had the last correction, announced qe program then. i don't expect that now. statements then cured the ills of the market that summer. to me stanley fisher, vice president of the fed says something like this inflation scenario, going lower rather
than higher, not ready to do it, that would ab big help. >> are you stepping in very quickly, are you stepping in or waiting until later in the week? >> i only manage a virtual portfolio which i took to cash last thursday. i would love to buy disney, apple and a host of other stocks given how badly beaten, caught apple at $93 this morning. that was just the blink of an eye. i'll wait to see how it plays out. process not necessarily point in time. >> ron, good to see you as always. down to you. >> this really has been a roller coaster right to recap the session, highs to lows, epic move in the average, dow jones industrial average opening up 11 points lower making its way all the way back to negative 100. now we are down 300 again. this is wild volatility, folks. what should investors do, if you're an individual investor, with one of the nation's top
advisers. we'll get sound advice on navigating this global market selloff next. you're watching "power lunch" on cnn, first in business worldwide. ♪ if you can't stand the heat, get off the test track. get the mercedes-benz you've been burning for at the summer event, going on now at your authorized mercedes-benz dealer. but hurry, offers end august 31st. share your summer moments in your mercedes-benz with us.
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office depot officemax. gear up for school. gear up for great. whiplash yet? stocks well off lows, but in correction territory. give you an idea what happened, opened up this morning down 1,000, dow fell below 16,000 for the first time since february of last year. then if you want to call it the highs of the day, only down 100 points. now we're back sliding a bit and down by nearly 300 points which equates to 1.7%. so what does an individual investor do on this wild global market selloff. personal finance consultant joins us. i'm sure people are saying i don't want to see this. i'm long-term investor, i've got 401(k), don't tell me about this. nonetheless, when do we advise? >> a lot of advisers are saying clients need to realize this is a natural part of the market
process. it's very important when you see s&p 500 and look at 15% annualized returns. that comes at a price. we're going to see pullbacks, 19, now 20 of them over the last six years or so. you need that. when that happens, a couple every year, happen a long time. >> of course if you've got cash, you've got means, then you know, maybe should be buying. >> you should be sticking with your plan, following investment strategy you set up. what other studies have shown when people get out, fall below major indexes. 2014 returns of s&p 500 or barclays or average mutual investor did, did poorly
compared to average. getting in and out of the market is what you don't want to do. you want to stick in there for long-term if you can. >> what shall investor do now. >> telling clients keep emotions in check. don't buy or sell anything today unless it's part of your plan. you really need to take this time to review and assess your financial plan. i say financial plan, right, that's a part. have you to have a plan first, make sure it meets risk tolerance, meets your goals at this time in your life and rebalance that portfolio if it's not where it should be for asset allocation to meet goals. a lot of people wonder when is the right time to rebalance, how do i go about doing that. that's where a financial adviser comes in. if you want 50/50 stocks, major down turin or pullback in the stock market you want to add stocks now. >> excellent advice as always. >> thank you so much. >> welcome back. good to see you. >> you, too. >> sarah, down to you at the stock exchange. >> keeping an eye on markets,
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>> stocks are back sliding again, down about 300 points. we're off by over 1,000 points on the dow with the beginning of trade today. 40% of the tech sector in bear market territory and financials plunging almost 9% this month. pointing out largely due to concerns over china, falling oil prices and of course the rate hike watch. sarah. >> all right, mandy. the dow down 300 points right now. s&p 500 as you mentioned in correction territory off more than so% from its recent highs. stocks looking at the worst august sense 1998. we're going to talk to one top trat gis on wall street who thinks we could still hit 2250 on the s&p 500. that would ab rally of 17% by the end of this year. we'll be right back.
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but you're armed with a roomy new jansport backpack, a powerful new dell 2-in-1 laptop, and durable new stellar notebooks, so you're walking the halls with varsity level swagger. that's what we call that new gear feeling. you left this on the bus... get it at the place with the experts to get you the right gear. office depot officemax. gear up for school. gear up for great. welcome back to "power lunch." let's bring in someone who sees 15% upside. senior equity strategist at wells fargo. why are you confident you're sticking to 2150 to 2250 price
target range on s&p by year en, scott? >> mandy, i think this was a bit of an overreaction. we know valuation august 4th that hit the fuses, pmi below 50 and below expectations kind of set the bomb off. i think we've seen overreaction to fears of global slowdown. we're going to see good growth, 1.5 on the eurozone, good growth in japan, here in the second half of the year. i think we're still improving here in the states. might see 2.8% gdp here. things moving in the right direction. earnings have to come through to get us back into that target range we have for year end. you need to see earnings growth come through here in the third and fourth quarter. >> why do you believe it will come through? why do you believe earnings growth will come through, scott. >> earnings comparisons in energy are going to get a lot better. if you stripped out energy earnings last -- in the second
quarter, earnings were up 9%. so u.s. companies are getting the job done. they are getting it done in a modest environment without a lot of inflation. i think that's doing to continue. but we need to seek continued labor market improvement, housing improvement, confidence improvement, and i think that is coming despite very rocky market we've had the last three days. >> still toting to your price tag at the end of the year, we're going to need a big, hefty rally, what sectors will lead that, scott? >> i think, many, if you look at and this was, of course, before i walked over from my office here. this could be totally different than five or ten minutes ago. the sectors that are leading today, and they are down, are cyclically sensitive, industrials, technology, consumer discretionary, three of the top four sectors today are cyclical sectors. i think this global recovery is going to continue. i think in the u.s. we're the lead sled dog, pulling the globe
ahead. our recovery is going to continue. we want to be in those sectors that are sensitive to the ebb and flow of the economy. earning china will stabilize. i think things aren't as bad as the last three days of market trading made people think. >> the global sled dog, a lot of heavy lifting to do. >> we do. >> thanks for laying out your case. that's it for first hour of "power lunch." thanks for joining us again doing double duty. melissa and simon handing over to you for the second hour of power. >> stocks are sliding back lower. don't let the head arrows on the board fool you. they don't tell the whole story. in fact, we were down 1,000 points on the dow jones industrial, tried to climb back, saw apple in the green, nice gains in semiconductor index. we are down again. dow jones down 2%, dow down 2.4,
s&p had been as much as 40 points higher intraday. nasdaq officially in correction territory down 2%. moving back above 2% after dipping below the level asian session attachment a look at oil as well off the session lows. wti below $40 a barrel. simon is down at the new york stock exchange with us for the buyer hour. simon, what a day we have seen so far. >> it was. from very early hours, everybody knew it was going to be a massive day at the new york stock exchange. that hope bob pisani joining me now, the like of which you'll see very rarely in a lifetime here. >> i was trying to remember, i remember october 2008 we saw this, zero marine dot-combust a couple of days we saw it. that's about it. my memory is take a look at the dow of the chart doesn't do justice when you open essentially down 1100 points,
put up dow jones industrial average. what's important magnitude mood to the downside and rally back. a take a look at the screen. panic selling with dow jones industrial average dropping 1100 points. then the exact opposite happens five minutes later, 9:35 to 9:45 panic buying, dow rose 950 points. we thought a test in the middle of the day, a rally. fifteen minutes in sold into the rally 9:4 5 and dow dropped. that didn't last long. 9:55, saw a rebound, selling got exhausted twice in 20 minutes and dow rose 550. most important event after that, close 11:30 in europe converting what a lot of us thought panic selling largely from europe. dow rose 300 points. we're off the highs right now of maybe 200 points or so. finally one point, there was a lot of confusion about stocks opening at the open. delays in some names.
a lot of trades happened prior to the open. put up jpmorgan if you can, a lot of questions about this. jpmorgan opened $50.75, new york stock exchange. 9:3, $50.55. people said i thought, bob, circuit breakers that kick in if it drops 10% from the opening price in 10 minutes and that's more than 10%. what happens is up and down rolling, if it drops 10% in a rolling period prior to that it will then be halted. they reset every 30 seconds. as it was cascading down, the price reset every time and it wasn't ever hit. didn't hit 10% down over five-minute period. a lot of people wondering what happens to circuit breakers and how they operate. >> how the algorithms operate in the first few seconds of trading. we had some strange readings. bob, we'll come back to you in a minute. >> session low still in the red.
let's bring bertha coombs with the big move here. bertha. >> the big move here was amazing as well, melissa, the nasdaq composite falling 400 points at the open to a level just about 1,000 below its all-time high of 251 july 20th. only july 20th. that put it into bear market territory, well off the lows as we've seen that market recovery overall. we're still in correction territory 12% from that high. apple has given up gains on a huge volume day already trading 124 million shares. friday it saw 128 million shares. so we'll see if apple can hold on and hold up near even mark on the day. a number of the stocks that rose with it have given up as well. some other like netflix back in the red. seagate, xilinx couldn't sustain gains we saw on the rebound.
biotechs, really one of those sectors so emotional for the market, so volatile today, just have not been able to get up beyond the even mark, melissa. >> all right. thank you, bertha coombs. check out what's happening in the energy market. crude oil below $30. wti dropped below $30 a barrel early in the session. back apolo 30. brent bouncing off its low, take a look at the action down 4 1/2%, 4341 is that last trade. energy stocks no surprise taking their cue from the move lower. crude, 3.35%, a los there. all this comes less than 30 minutes to go before the oil market closes for the day. take you there live for the nymex for the settle ahead. meantime get to sue herera with a news alert. sue. >> thanks, melissa. it concerns comments from double lions founder gundlach.
he has delivered alpha. some of the comments he mentioned at delivering alf ark, cnbc investor event earlier this year. he said u.s. stock market is in a mode of uncertainty at best. that's a quote. this is in an interview with reuters. he said you don't correct all of this in three days implying market faces selling pressure. double line capital, $76 billion in assets. he says china's devaluation of its currency was, quote, a kind of exclamation point of corroborating the fact that the global growth is subpar. he says that he is significantly concerned about redemptions in bond, etfs and mutual funds. he says you don't correct all of this in just three days. u.s. equity markets face another major leg down. it's interesting, melissa, that he says he is significantly concerned about reductions in bonds, etfs and mutual funds. when you have the kind of
selling we have today, it will be interesting to see if we had trading and how difficult it was for people to redeem in those particular instruments. >> concerns about liquidity in the bond markets. sue, thank you. sue herera with that. dow seeing biggest intraday swing, let's bring in don to walk us through. how we went from down 6% at the open to where we are now. down 2 1/2% my other day would seem lousy. >> it's pretty bad. if you just woke up and took a look at what happened so far today, yeah, it's a bad day but doesn't tell you what happened in terms of the bigger pick. let's go over here to just moments after the market opened right around that 931, 934 area. talking about markets on the downside. all of a sudden down over 1,000 points shortly right after the open. now, during that time, interestingly enough there were a handful of stocks that saw their own shares. bob pisani mentioned the idea mini crashes. check out some of these names.
pretty interesting. take a look at, say, an apple. also general electric or jpmorgan. all of those stocks fell by around anywhere from 13 to 20 plus percent, just at lows of the session. big moves for blue chip stocks. since then we've had a little bit of leadership from certain key sent ors, certain few key sectors, retail, consumer, technology and health care among some of the leaders that have really kind of taken us back up toward not as bad of a drop type level you see on the screens. take a look at what's happening so far today doesn't tell you the whole story. simon, what's interesting about this, if you count the number of points you dropped and rose and dropped and rose in the first 90 minutes, the dow traveled, think like a pedometer, that's where the action was. see any activity at closing
bell. >> i'll tell you people fell every single one of those as it went down. sit time. lets bring in eamon javers. you've been making calls about eoc and regulators. what's that about? >> yeah, big debate whether this counts as flash crash. there is no technical definition of flash crash. given the speed which we went down then the speed which we rallied at least partially the way back, there are a lot of people out there saying what we saw this morning was more like a flash crash than anything of a fundamental correction at least in the first very early minutes of today. i talked to eric at nan ex. he says he's in the flash crash camp. he feels this was a lot of computerized trading. one stat to back that up, in the first minute alone of trading today, more than 50% of trades were in odd lot sizes. we know from past experience that human beings tend to buy
stocks in groups of 1,000 or 10 or 100, nice big round numbers. computers will buy 621 shares at a time. 423, that sort of thing. that's what eric was seeing in that first minute. he thinks retail investors got frozen out. therefore the whole thing feels more flash crashy to him at least. >> okay. a meamon javers, thank you very much on the flash crash as we're calling it. melissa. >> the dow is right new sliding 2.4% or 399 points. a quick check on the treasury market. this is one that's moved quite a bit too, today. ten-year back above 2%. 2.02% of stocks attempt to stage a comeback from its steps of 1,000 lower. jeff gundlach concerned about redemptions. let's bring in ceo at pimco. great to have you with us.
these comments just coming over. again, highlighting this concern about liquidity in the bond markets and significantly concerned about redemptions. in your view, is this an issue? >> no, melissa, we don't. we've been managing our cash very conservatively. we do think that's happening is a surprise. with growth lower you're seeing inflation lower. what's interesting five-year break even inflation rate 1.1%. that looks very attractive. ill liquidity is creating winners and losers an we're going to step in and take the other side. we think tips are undervalued given u.s. economy. >> we want to ask what all this does in terms of market vol tiflt to projections. pimco further and further away, happened last week. pimco said was going to be 50/50.
now you're saying more and more unlikely. where do you see it coming? >> well, melissa, the market is pricing in 10 to 15%. i think if you look at break even inflation rate falling that's going to cause concern on the fed. they may want to wait. we're going to get one more employment report. i think the point we would make if you look at the treasury market and front end of the bond market. market only pricing in fed fund rate will basis points end of 2016 and 1.25 end of 2017. our point is very simple that the economy is doing better than that. those rates higher a year, two years, three years out. the reality is the front end of the bond market is not attractive here. tips, housing related sectors. >> it's interesting, because barclays, of course, today has moved out its projection now. it's suggested there won't be a rate hike until march of next year. not because they don't think the
economy deserves it. they think arguably solid enough but unlikely to hike in this environment because of the way it would destabilize the markets. i guess that is a game changer given what we've witnessed. >> it is a game changer, although i would direct the attention to the fact these low cosmopolitan prize are quite bullish for u.s. consumers, european consumers, china and japan. and the reality is that this unemployment rate, let's not forget, that come down 2.2%. labor market slack is coming down sharply and housing market is turning the corner and has a lot of up side. the reality is if you look at domestic u.s. economy, the fed has a lot of reasons to get off 0. whether september or a little bit later, it's clear they are going to have to get off 0 eventually. >> mark, we've been witnessing crush of emerging markets, equities or currencies, are we underestimating what we could see in bond market? your domain is corporate bonds.
emerging corporate bond market larger than u.s. yield market, a lot chasing the yield, which is why they have done so well. at this point is it time to look inside your portfolio if you've got some sort of bond fund to see whether or not your fund managers holds these issues? >> yeah, melissa. minim pimco has been early understanding balance of what it would do in commodities and mining. we've actually been quite conservative on some of these emerging markets. it does create winners, however, likeer merging markets like china that actually import oil. overall we think low interest rates, low commodity markets will be good for many consumers including u.s. consumers. yes, it will create head winds and losers for energy sector, commodity sector but also winners in terms of u.s. consumer and housing. >> okay. mark, we're going to leave it there. thank you. >> thank you. >> mark, pimco. coming up next, dow back down
more than 400 points at this hour, 430 to be exact, well off session lows amazingly. tonight we should note 7:00 p.m. eastern time krn special report, markets in turmoil. monitoring asian markets as we begin trading. get you ready for day ahead in the u.s. after this wild day so far. tonight 7:00 p.m. eastern time. meantime "power lunch" will be right back. pus on day one. but you're armed with a roomy new jansport backpack, a powerful new dell 2-in-1 laptop, and durable new stellar notebooks, so you're walking the halls with varsity level swagger. that's what we call that new gear feeling. you left this on the bus... get it at the place with the experts to get you the right gear. office depot officemax. gear up for school. gear up for great.
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markets, dow jones down 2.7% or loss of 135 points. down more than 1,000 points right at the open but it's been roller coaster ride, does look lower. let's look at china, helped spark selling here. shanghai selling off biggest day since 2007. shanghai composite falling 8 1/2%. key support level of 3500 to finish at a five-year low. a 320010.. small are shenzhen composite falling 31% since the beginning of june. let's bring in michael shuman. people saying they can rescue economy. average chinese leader just as adept at screwing up economy as anyone else. you go on it say when executives an economists wake up to this reality the fallout could be severe.
what do you mean by fallout and how severe? >> i think what china benefited from, the world has kind of given their confidence to leadership here based on their past track record, which, of course, has been amazing, that they understand the problems of the economy, they have a long-term plan to fix them and they are really going to follow through on it. i think what's happened in recent weeks, especially because of the their handling of the stock market, handling of currency devaluation, people are starting to question, wait a second, do these guys really have a grip on what's happened with the economy, are they committed to the reform that the economy needs to return to healthy growth and then what does that mean for the future. i think if the global investment community loses confidence in chinese leadership, that means they will potentially take money elsewhere, investment will fall and make the process of reforming the economy, already a
difficult process, even more complicat complicated. >> averages lost gains for a year. each bullet becomes less and less effective. i'm wondering what you think is the next step here for the chinese government, what they are going to do. seems like they are running out of arrows in their quiver. >> there's only so much they can do. this is an economy with tremendous amount of debt, excess capacity. if you're doing to throw more credit and stimulus on top, you're not doing to get the same bang for your buck you did five years ago or ten years ago. what they really need to do is change entire growth model. you hear this all the time, need to rebalance, shift away from excessive dependence on investment and move towards growth model that relies more on private consumption. the leadership knows that and they have a reform plan in place. the problem is they are not progressing fast enough. in some ways recent weeks, you
can see they are moving backwards. i think what the leadership needs to do is start pressing more aggressively on free market reforms. enterprises in a more serious way. the question is, is what where they are going. because we don't have a lot of transparency on leadership and how they make decisions, we're going to be left guessing to see what he do. >> who in the communist party wants the bane pain and gain. big movers on down day on wall street, minutes away from close, could be crucial to see if wti closes below. first in business worldwide. nt'g of the campus on day one. but you're armed with a roomy new jansport backpack, a powerful new dell 2-in-1 laptop, and durable new stellar notebooks, so you're walking the halls with varsity level swagger.
biggest being celgene down 20% at the open. as you mentioned all celticsing back up, down 2% across the board. if you look more broadly for these big four names, they are each down 15% from 52-week highs. they have come back quite a bit causing folks to wonder if it's time to get back in. looking at nasdaq index for today, some of the biggest biotech losers, omaros, winners, epizyme. lexicon and five prime. ags red coming up. >> biotech analyst at rbc. great to speak with you again. >> thanks, melissa. >> i want to get your take and see if you talked to trading desk about opening of biotech, chart meg threw up some down, big cap stocks down as much as 20% right at the open. what's your take on what
happened this morning. >> i think a lot of panic, volatility, talking about all morning, probably some computers setting off those trades. obviously a lot of panic. fw biotech is high-volatility, a lot thought they would get crushed. they did. why there's pn an oversold situation here and we're seeing some of that rally back. >> i want to talk to you about which you think oversold. more broadly, investor for biotech, for the year you're up past month ibb painful trade down 12%. at what point do you start thinking, you know what, market conditions warn me to ratchet down price targets. i like them but market environment is terrible. >> well, look. i think you're correct. ibbs had to pull back along with rest of the broader market environment. but when you look at the four big cap names like meg talked about amgen, biogen celgene, a
lot came in but no change to fundamentals. things going on in china, interest rate, no impact on cell gene's cancer sells. upside possible to things like celgene and vertex. not in the mood to lower price targets on big cap names because they have been pulled back and nothing actually happened. >> in your most recent note beginning of august you laid out catalyst for some of the stocks you cover. i'm wondering cop bind with catalyst and pullback we've seen over the past month or so, which stocks, your highest conviction holds now, buys i should say. >> sure. we're telling people to buy vertex. we keep that company is going to have a strong launch of cystic fibrosis drug for q 3, q 4, no impact to china. that stock came back in. we like that for numbers going higher. celgene, a name we like talked about a lot, pulled back on open, nothing happening there. upside to those numbers as well.
those are two names we've been talking about to investors over the last couple of weeks. >> michael, thanks for your analysis, appreciate it. >> the final oil trades for the session with that setting down new 6 1/2 year low. we'll get to jackie deangelis to set us up for the close. jackie. >> interesting day for crude, tracking along with equity markets. finally get that close under $40. weave we'll have to settle when "power lunch" comes back. innovating. they e and apparently, they also love stickers. what's up with these things, victor? we decided to give ourselves stickers for each feature we release. we read about 10,000 suggestions a week to create features that as traders we'd want to use, like social signals, a tool that uses social media to help with research. 10,000 suggestions. who reads all those? he does. for all the confidence you need. td ameritrade. you got this.
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come on. do it. come on! yes! awww, yes! that is what i'm talking about. baby. call and upgrade to get x1 today. ♪ welcome back to "power lunch." we have statement from treasury department on market developments saying they don't comment on day to day but as always monitoring ongoing market developments and is in regular communication with regulatory partners and market participants. i guess i toss back to jackie, we have a first statement here from the treasury about recent market developments. jackie. >> thanks so much, steve. looking at the crude price as we just settle add few moments ago, $38.24, six and a half year lows for crude oil, very volatile roller coaster ride in this market as well tracking with equities. the range was very significant.
session lows 3775, then trading over $40 at one point. so you could see that the sentiment was simply to the downside. traders saying barring catalyst, unpredictable catalyst they do think we're going lower from here. back to you. >> let's bring in someone who made big bearish call early this year turned out right. ed morris global head of commodities research at city back in february on cnbc that oil could go to the 30s or, indeed, to the 20s. do you see at this price any physical sign that supply is taken off the market? >> actually, no, the supply side remarkable robust. as we had argued early this year, we need a low price to ration that supply. i think it's going to take a bit of a lower price than the one we've seen so far. >> how far down do you think we'll go? >> i think i would not be surprised to see a $20 handle.
we have to remember that oil is in the way an exception to other commodities. most commodities are seeing lows not of 6 1/2 years ago, lows that go back to 2002, before the period when the commodity super cycle began. we were in a deflationary period and there are a couple of really bearish factors going forward. one is the refinery maintenance this fall. we know there's probably going to be at least 3 million a day of less crude oil demand from refining system including from russia where they are going to be down a million barrels a day just in the month of september and then by the end of the year we'll have iran on horizon and a wave potential of another million barrels a day in a supply in a market that doesn't want to see supplies. >> what would you say to investors who stand ready to buy xop, oil and goods exploration etf who reported a month ago things would come back and stand ready to buy again.
good idea or bad idea? >> there will be a comeback. the question is timing. what kind of risk profile you're looking at. this is not a market where every sickle factor is bearish. there are a couple of fundamental bullish factors in the market that could bring really significant rewards to those who want to look at those opportunities. i'll just point out two factors. one, saudi arabia, which has been the real cushion to supply through spare production capacity has basically no spare capacity. they lose boosted production to incremental amount they put in the market is negligible. yet we have really significant potential of disruptions, disruptions in venezuela or nigeria or even iraq where the situation internally is not going -- getting much better. one interruption will spike prices. >> just to underline that point if we get a two-handle on oil prices, that would appear to be
kind of spring-loaded given where we've traded on oil and markets return to norm. would you expect substantial snapback on this at some point? >> certainly. indeed the snapback we saw this spring, a recovery that turn out to be false was based on signals that were worth looking at. underlying fundamentals deeper. financial markets spring-load and get rapidly to a significantly higher price based on whatever those expectations might be. >> nice to see you. ed moss joining us from citi. melissa. >> big breakouts decline at the open or attempts at breakouts. let's get to julia borsten with those movers. julia. >> roller coaster is a term we've been throwing around, applies to media and social stocks. facebook shares turned around, popped into the green and reversing. now trading down 2 1/2% after
being down as much as 16% this morning. linked in and twitter rebounded from the open but both in red, linked in down 3 1/2%. netflix did a dramatic about face after selling off as much as 18% this morning it was up as much as 5%, now off more than 3%. disney shares also rebounding into the green. they were up 1%, now down 1%. this morning moved into bear market territory down from its 52-week high. a handful of other stocks that moved into the green. viacom positive for while. viacom, cbs were all positive. they have all since turned back into the red. quite a volatile day. certainly we will keep our eye on those big social media stocks.
melissa, back to you. >> thank you, julia. volatile day. where will it take us as a trading nation. a technical analyst, aaron gibbs, equity chief investment officer with s&p capital iq. chris, taking a look at charts, what is an attempt at reversal and failure of reversal mean to you? >> attempt tactically signs of oversold in place. what worries us is this decline is only three days old. i think 2011 playbook actually makes sense here. we had that climatic low in 2011 then undercut that in october. given where we are in the calendar here, given seasonal problems, i still think it's wise to stay patient, wise to wait here. >> to connect the dots, chris and be obvious you're saying in october another pullback. >> i think given weight of the evidence any rally in the
short-term is probably not the real good tradeable low. we want more signs of stabilization. i still want to see sentiment wash out a little more. we've started to see it with volatility measures, internally, i don't think survey data as washed out as we like here. >> aaron, do you agree with chris? are you being more cautious using it. >> we don't see signs in other markets we've hit bottoms. we've seen a lot of widening of spreads and high yields the last couple months, we haven't seen that slow down yet in emerging markets. when lou at evaluations for s&p 500, getting closer to 16 times earnings, a low this year but high last year. we could easily see us go down to 15 times earnings, 1800 or another 7% and we'd still, that would really ab place where we'd see a real value. >> hold off on buying. thanks, guys, for time and
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made the argument thursday and lost money through today. what are you telling clients right now? >> i think it got to a point today where it's irrational, got to 7 times cash. we put out a note and said, look, our numbers for calendar 16 were slashed by 60%, stock trading half times earnings in line with s&p 500 apple has grown three times s&p in the lass five years. >> tim cook wrote an e-mail to jim cramer about china, china saw strong growth, accelerated in the past few weeks. basically allaying investor concerns. eric jackson an investor wrote a column saying this concerns me, the fact tim cook, ceo, is using up bandwidth to allay shareholder concerns. this is a departure of from what apple used to do, didn't respond to anything, give quarter update, shows a little bit of
panic, western the declining apple share price is going to be a reason for employees to leave. i'm just wondering what you think about that sort of counter-argument? >> i think tim cook feels an obligation to make the market feel at peace with what's going on at the company. it is an employee concern big big shareholder concern. i'm sure big shareholders are saying what are you doing, why don't you say something. i can understand why he would want to do that for sure. >> the fact they did not reiterate guidance, does that concern you? bothers to go out and write e-mail and say soothing things about china but doesn't go as far to say, we're still good for the year. >> the other thing you want to keep in mind, apple has to keep that buzz aldrin in china, also good for business. everything we've seen in china, we were just there a couple weeks ago, i was shocked by the number of iphone 6 and 6 plus we saw out there. we know penetration is very low in china. >> you're telling people to buy essentially. >> absolutely, absolutely, a
great opportunity. >> brian, thanks for stopping by. brian white. simon. >> melissa, our next guest actually added shares of apple. he bought more. channing smith managing director and co-portfolio manager at capital advisers. good morning to you. why did you buy? >> we thought it was a great valuation opportunity. we're using $10 for next year's earnings, stock trading 10 times. the story of apple taking market share, gross margin increasing revenues and earnings moving north. the big concern was china. oh, my god china falling apart, investors selling out on that concern. tim cook calmed fears that business in china is good. that's why you saw the reversal, fortunate to get in on this price. go ahead. >> having watched, having been here at the new york stock exchange and watched the leadup and the tension to the open and see the dow fall by over 1,000 points at the open, the idea that guys like you are pulling the trigger and saying i'm going
to buy in the middle of this chaos, frankly, you know, lack of price discovery, why did you buy today? why didn't you wait and see what happened? i'm interested. >> great question, simon. if you look, why have we had the selloff, a lot stems from china. what's interesting last thursday chinese pmi at the lowest level in 6 1/2 years. we've seen a bear market in china, weak economic data. we've seen chinese currency devalue. all of a sudden on thursday, we see this weakness in china and spread global. we just don't believe this weakness in china means we're going to see weakness in the u.s. we think shallow correction. we don't think it's going to turn into anything more than a couple percent down potentially from here. >> if you heard prin white speak just now when melissa said why don't you put out notes reiterating stance, essentially seven times earnings, even if we slash estimates in half, only 14, 15 times earnings, same as
the rest of the market. there's almost a feeling of exasperation what's happening to the stock despite fundamentals of the business. do you share that exasperation? do you think that's a correct way to i have it. >> watching market action is a tale told by idiot i can't tell you what's going on. if you look at earnings visibility apple has it one-third of upgrade cycle 6 plus we'll see continued buying there. not just discretionary, they want to have that product, it's part of our life. if you look at china, china has been a growth driver for them, 20% of iphone sales. it was a concern. tim cook allayed those fears. we think it's a good opportunity to jump in here, property that has best earnings visibility of
any company in the s&p 500. >> we appreciate talking about it. channing smith from capital advisers. the bad news is this market is now heading in negative territory or further into negative territory again, down 464 points and falling. that wouldn't be so bad, of course, had it not been for where we tracked during the course of this section. more on that after this. need to hire fast?
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welcome back to the floor of the new york stock exchange. we are finding difficulty maintaining 16,000 on the dow. we keep attempting to regain it and slip lower before falling again. currently down 487 points. this is only half the losses we had at the beginning of the session. the bad news is you might have thought climbing back as steeply as we did and on the volume, we would be able to sustain fewer losses. that is clearly not the case as we head into the final hour of trading. >> what are mom and pop investors doing with these wild market swings? sue herera knows. >> we did a poll of about 18,000 people who participated. we asked them what they are buying and selling.
from cnbc.com. what are you buying and selling? selling? nothing. 37%. buying nothing, 13%. selling everything 4%. what are you buying? disney, facebook and netflix, the top three results there. in terms of what are you selling? oil, netflix and bonds. apple stock off more than 20% off its recent high. about 21% are buying the stock. only 4% are selling it. there you go. just a little sample. >> i'm glad only 4% said they were selling everything. that would be panic selling. >> absolutely. >> we are down now on the dow jones by 530 points. down 69 on the s&p 500. one we are watching on the dow is ibm. 3.4% loss. that is one of the big pressures on the dow.
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how to follow the wind. so while the ones on the left are waiting, the ones on the right are pulling power out of thin air. pretty impressive, huh? now, two things that are exactly the same have have never been more different. ge software. get connected. get insights. get optimized. no sixth grader's ever sat with but your jansport backpack is permission to park it wherever you please. hey. that's that new gear feeling. this week, these folders just one cent. office depot officemax. gear up for school. gear up for great. another check on the markets. declines seem to be worsening. the dow jones industrial average down 575 points. look at that decline down by 3.5%. nasdaq lower by 3.5%, 165
points. s&p pulling back 75 points, down 3.8%. guys, great to have you with us. matthew, you are selling strategies and etfs. how are you managing with this decline? >> we are holding off doing anything. it doesn't make sense with the panic and volatility we are seeing in the market. we've got two etfs out there. one is mostly treasury, one is stocks. we are hedged either way. we would be looking to sell into any strength because we do think we'll see a balance at some point within the next couple of days. >> sandy, what is your interpretation of what's going on in the market today? >> we think they will stay. i don't think they will go back to the lows from this morning. they are clearly -- 0 the
numbers don't want to come back to break even. looked like we would come back, but i think it will still be an ugly day. >> it's one thing monday morning in the middle of the summer to have difficulty opening the market and falling 1,000 points. this is much more scary. we can turn 200 points on the head of a dime at the moment. we are heading down towards a loss of 600 points with full consideration and in a cautious gradual manner. that is much more worrying. what do you think? >> i agree. it is concerning. the problem is a lot of people are looking at this likes matt's firm does to be in or out of the market or in stocks or bonds. investors need to think what exposures do you want? do you want to be exposed to china? buy the asian stocks. buy the s&p 500 that has a lot of international exposure. think about u.s. small caps. that is a place where you can be more protected from some of the swings we just have no idea what's going on in china. >> what is the big picture here.
you believe there are further substantial declines to come? we are going to have to spend weeks trying to mend the technical damage here at the least, aren't we? >> oh, yeah. the technical damage has been huge. short term, the markets oversold. we could get a little bounce. we think it's going to get worse before it gets better. we don't think this is the end of the bull market though. we are going to look back on this and realize this was healthy for the market. unfortunately, i don't think it's going to be healthy for the individual investor. this just drives individual investors crazy. >> i want to get back to the point on small caps that are more insulated from the china story. at the same time, you take a look at what the russell 2000 has done. it hasn't done that much better for the nasdaq or s&p 500. are we in a market now where there is no cover from the china worries and you have to accept
that at this point? >> when the market is down and everybody is dumping stocks, they are going to dump them and sell. we are looking toward the long term which companies, the stocks may be down today, tomorrow, certainly were down last week. how are the underlying businesses going to perform? if you want to avoid some of that china risk, you should stick around in the small caps that don't have that heavy non-u.s. exposure. >> have you gotten small with the sell-off? have you sold positions here to manage a risk? >> we trimmed a lit wrl we needed cash. this is not the day where we would be looking to sell. we look for opportunities like this as more buying opportunity than selling. >> thanks for your time. appreciate it. we are looking at a dow down by 625 points. we are down by almost 4% on the dow. s&p 500, 1890 is your level
there. down by more than 4%. looking at steep declines across the board. different picture from two hours ago when we thought we could go to the flatline. >> absolutely. much more on the market sell-off tonight on "fast money." this really is the most important hour of the trading day. let's hand it over to "closing bell." hi. welcome to this special edition of the "closing bell." i'm kelly evans at the new york stock exchange. the dow trying to recover from an early 1,000-point plunge at the open. if it closed there, it would have been the single day point drop ever. the dow down 652 points. what a roller coaster ride we have been on today. those early declines almost wiped out as markets rallied throughout the afternoon.