[closing bell -- [closing bell] alix: u.s. stocks had the biggest selloff in earnings. on tomorrow'sare jobs report as jobless claims coming at the lowest in four decades. alix: we will speak to the wall street veteran strategist on market momentum and what keeps this bowl of that night. -- bull up at night. and we have one chart that will make all of those apple bulls breathe a sigh of relief. alix: about 11 point away from that 200 day, the longer trend line, but the story today was

all about the media stocks, the big five like disney. the worst media selloff since 2008. joe: people have known there was ,his issue with media companies cord cutters and yet they just kept buying them. they are one area that was really strong and now they have erased their gains for the year. this one area that was holding up the market, gone. alix: and when you look back to 2009 when their annualized returns were 33%. now they are so up in the air. joe: suddenly, they story is -- the story is refocusing and media is changing. dive into mya deep terminal to see what was moving this morning and that was, really the pound. spike ande the euro the pound decline around 7:30 a.m. this morning when the bank

of england rate decision came out. it was dubbed super thursday. a downgrade inflation forecast and a little more cautious on the labor market. that means no more rate hike this year, pushed out to 2016. take a look at this longer-term trend line. this is a one-year chart. decline -- a big excuse me. a big rally that we have seen due to the fact that we are expecting this kind of rate hike. boe'sis kind of did the job for it. joe: everyone is expected a rate hike and then at the last second, maybe not. alix: you go first. joe: exactly. we got initial jobless claims this morning, the blue line right here. it has hit for decade lows. you can see the white line that i have drawn. it hasn't been this low since

the early 1970's, an incredible number. what is even more incredible is if you are just the line -- if you adjust based on population. the population has grown a lot since 1970. that has never been this low, population adjusted claims, extraordinarily low levels of layoffs happening right now. alix: that is fascinating. joe: the participation rate and retirees, some of that matters, but i still find that to be an incredible stat. alix: it is. abby: is a senior investment strategist at goldman asked and hen is a senior investment strategist at goldman . thank you for being with us. what do you think of this leg at this point? abby: i think the s&p 500 will be data dependent, as is the federal reserve.

investors are waiting to see how the economy is going and we have probably is -- we have obviously seen some mixed reads. some readings have been disappointing, but earnings in general have been quite strong and investors are waiting to see what will happen in the second half of the year. our view is that the economy may look somewhat better. we think the economy will ask and again in 2016 and that is the bassist -- the basis for our bullish call. what we area concern is have talked about with the media companies that were holding the s&p up have collapsed in the last few days. a lot of concern that this is a very narrow bull market. does that interest you at all? abby: it does interest me a great deal. another way to look at that is to can do this discrepant --

etween thoseb funds that are lightly managed and those that are actively manage. you can see they are driving the up and down. one of the things that we believe this has led to is a valuation opportunity. it basically means that within the overall stock market that is roughly at fair value, we think it is modestly undervalued with a one to two-year time horizon in the future. even so, we see that there are some areas that offer much more attractive valuation than others , in part because there has been so much focus on index motion, which means that market cap of the securities and momentum behind it drives things rather than relative valuation. alix: i love that you brought up valuation because the debate seems to be how you decide what

stocks are actually cheap right now. one analyst was saying, this is not your grandfather's market and trusted market indicators may not be germane today. stocks?ou value abby: we look at than the old-fashioned way, which is to look at earnings, cash flow, dividends, and things like return on equity. we are basically fundamentally driven in our investment research as opposed to technically driven. and based on the fundamentals, we assume, based on our economic growtht that economic will continue, number one. and number two, earnings growth for companies in the s&p 500 will likely outstrip that of the rest of the economy. these are the best companies, the best managed, and those that good growth opportunities around the world. or the dcf the ddm

approach, our conclusion is that share prices will be higher a year from now than they are presently. and if we go even two to three years in the future, our conclusion is that stock prices will be writing, not to climbing, not declining, even in the face of interest rate. joe: can you toxicity about what interests you hear? abby: what we have seen over the past 12 months is that defensive issues have dramatically outperformed those that are economic have cyclical exposure. as a consequence, there is a pretty significant piece/e -- p/e ratio gap between those to get a great. and if we were just making a ratio on relative value, we would have to go with those that are cyclically sensitive. but that assumes that their earnings growth would be good. we are beginning to see some

indications that there are improvements in a number of those subindustries. alix: and you've been talking about those companies with exposure overseas. what do you do with a stronger dollar? abby: the stronger dollar does represent a problem. you mentioned a few minutes ago problem inresents a the u.k., the sterling. we see the headwinds of a stronger currency. of that is the work of central banks, of perhaps pushing an interest rate increase further into the future. that is number one. number two, with regard to individual stock selection, let's keep in mind that most companies that do business overseas are selling high value-added goods and services. byy are not as afflicted just the rise in the currency. because they are not selling their goods and services just based on the -- just on the

basis of relative price. and number three, u.s. companies more than other multinational companies around the world look at opportunities in other nations not just as potential markets, but sources of supply. and to that extent, like the weakness in china that has been problematic for many based in europe, it has been much less of a problem for companies in the u.s. joe: you mentioned you liked stocks in the 1-3-year timeframe going forward. where could we see that? at thef you look forecast strategy team, they are looking at something like 2150 fivee s&p 500 in the next months. then it moves higher as we move forward. 2150, then to 2200, 2300, and so on. basically modest, but upward movement. joe: abby joseph cohen of goldman sachs, you are staying with us. will haveng up, we

one chart that will make all of the apple bulls brees a five relief. ♪ -- breathing a sigh of relief. ♪

alix: i'm alix steel. joe: and i'm joe weisenthal. would you miss? -- what'd you miss? check it out. many users are planning to upgrade to a larger iphone screen. some good news. alix: morgan stanley believes that will lead there growth -- lead their growth for iphone sales. joe: it seems everyone will keep buying iphones. alix: big screen. zynga is falling in after-hours

trading after third quarter missed estimates. joe: how long will it last? it depends on who is answering the question. one of the most successful traders in the past year sees more oil routing ahead. he said cover -- prices will not recover until 2017. andy hall says the market has it all wrong. he sees a glut in oversupply is overstated. alix: and one of the biggest supporters of lifting the decades-old ban on u.s. oil exports, i spoke with her today. benefit to the u.s. if we lift this outdated policy is jobs. it is increased economic gain to increasedry by way of production that allows for a stronger economy and greater jobs.

but also, from an energy security perspective, this is a benefit without parallel in my mind. your topse are headlines. we are back with goldman sachs, senior investment j -- investment strategist. abby joseph cohen, what keeps you up at night? that collegeis matters. how far you get ahead in this world based on education. it is not just college, but a good quality education that prepares workers for the jobs that are on offer in this economy. but if we look at the gap between college education and high school education, right now there is a four percentage point gap in the unemployment rate. it is a lot better than it was during the recession. there was any percentage point gap. the rest of the country was suffering double-digit unemployment rates. those with a college degree

typically had on average an unemployment rate of about 4%. that is a huge difference. there is also a very big benefit that comes to so-called stem education, science, technology, engineering, and now. in onts who have focused those categories tend to have an and lower unemployment rate income. and you don't have to be the technologist or the engineer yourself. but you need to be trained for the skills that are paying well in this economy. joe: people have been concerned about the gas in stem training for some time. do you see any policy thatatives or experiments could fix this problem? abby: we have finally stopped moving in the wrong direction. keep in mind that in the aftermath of the financial crisis and severe recession, many state and local governments were cutting their education budgets.

the wrong thing to do, obviously. we do see a number of experiments around the country and the world. among those that look most interesting at this point are programs that are in the k-12th area. you howust told important a college education is, let's keep in mind that perhaps biggest challenge we face as a nation is that our pipe line of getting into college and our pipeline of students who are capable of studying the stem subjects has gotten weaker. we need to address that at the elementary school level. alix: and the last thing that keeps you up at night, how the u.s. is falling behind some of its peers in r&d as a percentage of its gdp. why is that so significant for you? abby: we had an increasingly lower length -- lower bernanke -- an increasingly lower ranking then we did previously. we know about public

infrastructure, what has happened to our roads and airports and want. we also see it -- and so on. we also see it in our basic research. in the decades immediately after the second world war, the united ofes dedicated about 4.5% its gdp toward these categories and now we are well under 3%. we used to be number one in the world in this ranking and now we are in the bottom of the top third of nations. don't get me wrong, by dollar amount we are still out bending -- outstanding every other out sp every other countrye, but wend have the world's largest gdp. ing when we are not doing as ,ell as either the countries and these by the way are the countries that are investing heavily in public education. alix: fascinating. abby joseph cohen, a pleasure to have you with us. joe: coming up, we will tell you

who is feeling the pain and why. ♪

alix: i'm alix steel. joe: i'm joe weisenthal. as -- has cost russia more than $5 billion in two weeks. prices slumped to a five-year low. joe: check out these two. they have been the biggest buyer of gold in the past two years. it has not done well. what do they need that for? alix: diversification. the central bank is buying gold.

the hike could come as soon as next month. our next guest says the federal reserve should be careful not to raise rates to vast. --n baker is the codirector dean baker is the codirector of the center for policy. why should they not raise the rates in a hurry? that weere is concern are creating too many jobs and we have an issue of inflation will stop it is hard to fit with the economy we are seeing. unemployment rate of 5.3% is not -- ifbut if you look at you flip that over and look at it, we have nowhere near recovered to the employment rates we saw before the downturn , and that is true even if we control for demographics. if we look at prime age men, we are still down about three percentage points. that is a big fall off and it is hard to say it is due to anything other than weak labor

market. it looks like there is still lots of room to grow there. and on the flipside, worried about inflation, it's hard to see that. the inflation target is 2%. it has been 1.3% in the core pc deflator, so we are below the target. wage growth is going lower. we don't see any evidence of inflation and there's a lot of we as in the labor market. -- a lot of weakness in the labor market. why should we raise the rates? concernede have been about this for a long time and every time we think it is about to take off, it doesn't. what policies should be in the fed to get this going? had: i don't see a downside they gone bigger. they are not about to go back to that now. they are still at a zero interest rate. i would like to see them leave it there.

it would have been great if we had more fiscal stimulus. i understand the politics on that, but clearly, that is where the big 10 is. -- the big bang is. i just heard abby joseph cohen talking about research and element. she's absolutely right. government in real terms could borrow at zero. this is a good time to do that. it is a shame we have not been more aggressive in pushing for that. alix: one of the positive elements has been the emergence of the part-time economy because of the health care act. more people are going part-time. what is your take? dean: this has been incredibly underreported. it is important that people get health insurance and that is a really big deal, but one of the problems we had in the market before we had the affordable care act is that it was felt tied to their jobs. most people get insurance through their employer.

that means that particularly if they are in bad health, they are very worried that if they leave their job a lose their job will lose insurance for themselves and their family. now that you can get insurance exchange, you can there is a big increase in voluntary -- and i have to emphasize voluntary part-time employment. these are people who choose to work part-time. it is particularly among young parents and also pre-medicare age, 60-64, particularly women. these are people who work part-time and can get insurance through the exchanges. to my view, that is a great story. they can spend time with their families, their kids, and if they are in bad health or an older person. it is something that has been underreported. joe: you pointed out a bright spot in the economy that people are not hang enough attention to. what is a dark spot that keeps

you up at night? dean: we did see a big rise in the value of the dollar last year that increased our trade deficit. that creates a whole into man -- a hole in demand that is hard to fill. there is no easy way to offset that. we would like to say, ok, trade deficit goes up and interest rates go down and we will increase consumption, housing, whatever it might be. i not going to happen right now. -- that is not going to happen right now. easy way to an counteract that and that means less demand, less growth, fewer jobs, and the opposite way we want to grow. alix: thank you so much, dean baker. joe: we will be right back. ♪

alix: i'm alix steel. joe: i'm joe weisenthal. don't miss this. ;'s jobs report. economists are looking for 25,000 new jobs. we have been getting these 200,000 jobs reports for several months. anything roughly in line with ideawill keep in with this that the fed rate hike is coming. the only thing we don't want to see is a gigantic mitts. if it was something in the -- a gigantic miss. if it was something in the low 100s, people might think they have missed their target. alix: and do not miss energy. over the last 12 months, about 48,000 energy jobs have been lost, 32% of the entire oil and

gas workforce here in the u.s., and that makes up about 20% of the total job losses in north america. do not miss these job numbers. it will be a good day.

emily: mark pincus gives us a view of where his turnaround investors exist. where the companies that are seeing growth summit. ♪ i'm emily chang and this is "bloomberg west." to court, uber heads over whether its drivers should be classified as full-time employees. we just caught up with the company's lawyer. plus, corn companies wreak havoc on traditional media