. this is the worst week for the dow since 2011. >> dow down over 1,000 points last week, falling 530 points on friday alone. >> the picture, not pretty. >> what's behind the selloff? >> china and the emerging markets remain in turmoil. serious questions about currency and contagion. >> commodities playing a role in the volatility as well. >> we are nearing a seven-year low for a barrel of crude oil. >> big names punished all week. >> apple this week technically has gone from bad to ugly. >> the other 29 dow components also suffering big losses.

the carnage extended to the nasdaq and small caps. tonight, preparing you and your money for the uncertain week ahead. this is a cnbc special report, "markets in turmoil". >> hello, everyone. i'm kelly evans. some of the biggest names at cnbc are we me to get you ahead of what is happening this week, steve liesman, sue herera, dominic chu all weighing in shortly. as we begin, consider this stunner of a stat. $1 trillion wiped out of the market in last week's selloff. tonight we're looking forward but in order to do that, first, dominic chu is here to talk about how we got here in the first place. >> if you think about it, the dow jones industrial stocks lost $338 billion in market cap just last week alone roughly the equivalent of losing exxonmobil.

will you let's take you through the volatile week. first of all, on monday, it wasn't a big loss of a day. we did know here, though, that china had devalued its currency. it's the first time it's happened in quite some time and provided a setup for what we saw later on in the week. you can see the central bank sets the yuan per the dollar. it hasn't done that kind of a move here in years to devalue the currency. again, the markets didn't really have a shake until maybe we saw what happened here on tuesday. here in the home front, dueling economic reports and earnings coming out. walmart versus home depot on the housing side of things. walmart took a hit. home depot held up pretty well. this is playing into things right now especially in the retail front, the health of the american consumer key there. that makes up two-thirds of the economy. then interesting things happened. first of all, on wednesday, the

fed minutes. remember, that was the day that they were released early. whether or not it had an effect on the markets, it had a bump and people are trying to figure out what the central bank was saying. was it a situation where the economy was getting better or worse but by the end we saw fresh lows for copper, 52-week lows for copper and the markets sold off there. and then on thursday, stocks lost all of their gains for the year again. so we saw a lot of weakness going into the close here. gold hit a four or five-day winning streak. at that point, people nying to the safety trade perhaps a little here and on friday oil falls below $40 a barrel, the first time since the financial crisis we've seen that kind of a move. this is the way that we've set up going into what could be a tumultuous week of trading. kelly, back to you. >> dom, thank you. the dow jones industrial average focused on the far side of your screen down 90 points i mplied t

the open as investors did i jge what happened. nasdaq looking to give up a further 29. bob pisani is joining us now here for the hour. bob, listen, walk us through where we should be watching to see what happens as investors set up for this week. >> i think the important thing, kelly, is we need to see some stability in china. let's look at the carnage that happened. particularly in the second half of the week, after the fed minutes, every metric of stock market activity picked up in the second half of the week. volume, volatility, sentiment indicators, culminating in a mild panic on friday that caused investors to sell even the best performing stocks on the year. take a look at it. in the final two days of the week, widely held names like netflix, google, amazon, all big winners on the year. notable drops on very heavy volume. this is a sign that traders were taking down exposure in even the

most profitable of their investments, even less talked about winners, like mastercard, nike, home depot all sold off heavily. these are the winners. besides concerns over a china slow down and confusion over whether the fed would or would not raise rates in september, another new low in oil. there was no bottom in sight. picking a bottom in an oil stock was one of the market's obsessions this year and when it became clear that they were wrong again about the bottom in oil, big stocks like chevron, con knock co-phillips, devon and marathon all went to new lows again on very heavy volume. this was a real heartbreaker and goes to the perils of picking bottoms when fundamentals like subpoena ploy and demand are still not in demand. kelly, in the next half hour, we'll look at potential signs of a market bottom and what traders

are looking for and that fear out there might be one of the big assets towards moving us. >> i know you've been having that conversation bob already and thank you for bringing us up to speeds. this can mean more than losses in stock portfolios. they can have negative effects on the economy. steve liesman is here with more on that. steve? >> kelly, thanks. last week's 1,000-point plunge in the dow raises fears for next week of a real economic fallout in the form of less investment, fewer jobs and lower consumer spending. right now, the u.s. economy performing reasonably well, certainly relative to other countries around the world. solid job gains and decent overall economic growth. but the sharp selloff in stocks ends up being more than just a normal correction could zap confidence from business leaders home buyers could delay purchasers and pantheon macroeconomics wrote today, "we have to expect a substantial

adverse reaction in that consumer and business confidence numbers to the drop in stock prices prices." and sometimes like the white knuckle nose-dive in 1987, the economy just shrugs them off. >> well, this is the eighth or ninth 5% plus selloff since the bull market started. every one of them has been a buying opportunity. i suspect this one will follow suit eventually. >> that makes the cause of the recent decline very significant. is this just the market letting off steam after a four-year run without a 10% correction or is it a fair enough fear response to the economic slow down in china or the chance of a fed rate hike in september? that's what the fed will have to decide when they meet next month amid good consensus that it would hike rates. many on wall street began to change their mind believing the fed would not hike rates in september, december, or even at all this year.

what's clear, if the fed see as direct line from the downward sloping dow to a falling economy, it's going to hold off on hiking rates. kelly? >> steve, thank you. let's bring in michael block, chief strategist from rhino trading partners. welcome to you. >> thanks, kelly. >> a lot of investors are sitting there this weekend wondering if this is an historic correction they need to worry about or be buying into. >> well, i'm in the latter camp here. i'm about bob. this does create a buying opportunity. i'm asking myself what really happened last week. global growth slowing down is not a new story. china devaluing the y ucuan a couple of weeks ago is. it's going to cause more problems that we'll have to worry about in the longer term. >> china's currency? >> yes. >> china's growth slouing is not news. i'm going to look at the energy space. a lot of folks a few months ago when crude was at $42, they hated it. suddenly it ran back up to $60

and everyone hated it and loved it and you had to own energy stocks and high yields and then what happened and now here we are. >> but where are we? it's fine for people to be on the wrong side of the boat. >> yes. >> but listen, if this happens, people who have been sitting out this entire rally, one of the longest on record, thinking valuations are way too high, is this the moment for them to be getting in? >> this is a chance to dip their toes in the water, kelly. including the move tonight and obviously it's liquid. been open for an hour on the futures. s&p 500 futures were down 7.5%. >> from the peak? >> from what we did -- where we were a month ago on july 20th. so from there, i have a lot of people saying 10%, 10%, 10%. enough of people saying that that 10% might be 8%, 7.5%. you put your toe in the water, nibble and save power and that's what i'm telling clients to do. >> what about when so many people have looked at this

wondering if they should get involved now wondering if that was a terrible move. >> i can't find anyone who likes crude here. this sounds like march but even worse in terms of the voracity of the sentiment. we could have an exacerbated move one way or the other. folks are watching that. i say we have a good chance of going up on that. the key thing i'm doing is watching the blue chip names in energy. big oil service names like halliburton, baker hughes getting acquired. if those stocks start outperforming what the underlying commodity is doing, i think it's a good sign that things are going to clear up. it was about pain. it was about people foreselling, being forced to sell, spread throughout markets. we've seen this before. that's what i think is happening here more than anything else. >> mike, love your perspective. thank you for joining us. michael block from rhino trading partners. now, asia opens for trading

later this evening. japan, australia, south korea all kick things off in about an hour follow crucially. china today saying the country's giant pension fund can now invest a third of its total 3.5 trillion yuan in assets in chinese stocks. it's an attempt to stop the losses. second, also breaking this weekend, former treasury secretary larry summers writing an op-ed to not raise interest rates. finally, let me touch on commodities again. oil down 56% in a year. copper often looked to as a gauge for growth down 20% in three months and gold up 5% in a week. there's still a lot more to come on this special cnbc report, "markets in turmoil." we'll speak with moham

mohamed el-arian. >> announcer: when stocks go haywire, many people rush into the bond market. is it happening this time? is it too late to get in on the action? there's an impact potential on mortgage rates. also, getting into the source of one of the major issues for the markets. emerging markets. as they fall, is there opportunity? we're coming right back. after we're all inside for a while,

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we are watching futures closely right now set to open lower across the board. the dow looks like it will open lower by 135 points. 40-point drop relative to our last check. futures are volatile at this time of night. we'lling followi we'lli

we'll be following it for you all evening long. sue herera is joining us. >> friday's flow of money into the bond market was really quite dramatic and one of the first areas that we'll see the effect of the bond markets rally is the mortgage market. the ten-year bond is one of the key instruments that major banks and mortgage lend ares watch when they decide to change mortgage rates either up or down. lately, the rate on the ten-year has pushed up home loan rates as it climbs. there's the yield or interest rate on the ten-year beginning back on april 1st. everybody was betting that the federal reserve was going to start raising rates sooner rather than later which pushed the interest rate on the ten-year up pretty steeply. but the slowing of china's economy and the volatility of the chinese stock market has a lot of investors looking for safety. and they are putting their money in the bond market as a result. friday's rally is the perfect example of that safety play. take a look at the dramatic drop in the interest rate on friday.

it was the most dramatic drop in ten-year rates in three months. and it means that rates on home loans are going to go lower as well. it takes a very short period of time for banks and mortgage companies to factor in a move down in rates so we should see lower home rates by the beginning of the week. as they stand now, here's a look at three key home loan terms. the 30-year fixed rate holding at 3.93%. the 15-year is at 3.15% and a five-year adjustable now below 3% at 2.94%. historically, all three are still at very, very low levels. the question now is how much lower do those rates go? and if the volatility on wall street and in china continues, a number of strategists i've spoken to in the last day or so say expect rates to move steadily lower for at least the next month and puts the focus, kelly, very much on the federal reserve. >> oh, it does. sue, thank you so much. it's just after 7:00 p.m. here on the east coast.

it's already 7:00 a.m. monday morning in parts of asia where markets are about to open there for the week. let's go to pauline chew live singapore with a preview. pauline? >> kelly, things don't look that good. new zeeland's stock market is down pointing to a lower open. all eyes are on the chinese markets when they open in 2 1/2 hours from now and the big news came out on sunday when the government announced that pension funds in china can begin to invest 30% of their assets into the stock market. so that turns out to be about 600 billion, which is 97 billion u.s. dollars. there's talk of a triple r cut, another one. we've seen so far three cuts and four interest rate cuts since november. now, kelly, you've been talking about how the dow and the nasdaq and the russell 2000 are in correction territory there in

the u.s. let's take a look at this graphic. shanghai composite, first off, is down 32% since the peak in august. the taiex down 21% and new regulations that came out in taiwan with new regulations about short selling. also, jakarta composite is down 22% and the hang seng in hong kong also down 21%. in correction territory. but, again, all eyes on the chinese markets in 2 1/2 hours when they open. tokyo opens in about an hour. that should give us a better indication of how this day will pan out. kelly? >> we'll check back in with you. pauline, thank you. joining us on the phone is mohamed el-erian from allianz.

across the globe, is the selling over yet? >> not yet, kelly, because we haven't seen one of two things that we need. either we need better economic news to calm concerns about an accelerating global slow down and/or we need some policy intervention but not from the fed or the ecb. that's what is different this time around. we need policy intervention that holds in the emerging world because this crisis is emanating from the emerging world. >> mohamed, the very source of funds just evaporated. let's look at crude oil which dipped at $40 a barrel. china was a huge source of income. if you say other countries need to spend in order to prop up their economies, where are they going to get their money? >> that's the problem. the american world is being hit in one of two ways. one is demand shock and two in terms of trade shock.

they are commodity exporters and commodities have come down. a little bit was because of supply issues, particularly in oil but now we have a supply shock and demand shock. that's why this is very different from the selloffs we've seen before. the selloffs we've seen before came from the u.s. or concerns about europe. here you have the fed and ecb with much more direct instruments. this time around, the contagion is coming from elsewhere. >> it's impressive if figure that the markets have handled this as well as they have and the u.s. economy still is growing. ultimately, as lower commodity prices are good news for consumers, does that mean people who might put money to work in this market are doing so on the premise that we might be okay here in the u.s., some companies might benefit from all of this? >> if you put valuations aside and that's an important assumption as well, if you were to put valuations aside, then

the argument is that the u.s. would come out of this stronger economically because it will benefit from the lower commodity prices and it has much more resilience than anybody else. the issue, kelly, if you are looking to buy on the dips is the initial level of valuations. and as you know, my sense is that those have been boosted tremendously by faith in central banks and there was quite a wedge between fundamentals that were sluggish and valuations that were high. so the issue for someone looking to come in right now is first with respect to technicals, understand it's going to be volatile for a while. second, focus on the good fundamentals and, thirdly, don't forget valuations started out quite high. >> we'll leave it there, mohamed, thank you. all right. you just heard the concern from mohamed who said this isn't

something we should look to the fed to solve necessarily. is that the right move? >> certainly it would be interesting to see how the fed lines up and if this becomes a game of, hey, we're not going to respond to china. they kind of told us what was going to happen but the other thing that mohamed said is that this comes down to em at their core. there's a lot of policy changes that emerging markets need to bring to the table. this is the painful transition china is going through. this is why people are concerned about emerging because a lot of people not looking at china every day don't understand china policy and a lot of people looking at china every day don't understand china policy. >> what do you recommend u.s. investors do who are cognizant we may be in a ichanging global environment but this is an opportunity to put money to work that was on the sidelines? >> as we just talked about, this has been one of the longest train wrecks in history in emerging markets where things

usually happen fast and sometimes crises can take place. em, if you're measuring against the s&p, for example, is down 55% relative to the s&p over the last four or five years. so what is causing it, talk about commodities. i think what happened last week is very significant so people say the kazakhstan, what does that mean to me, there's been a series of devals which started with china which i don't think we should be terribly surprised about but they are devaluing the currency and bringing down the cash costs at a time when producers are fighting for market share. we've never seen this before. what this means for commodity and people following emerging, it could go lower. i don't think as much momentum has been terrible and relative strength indicators and these wonky traders tell you, em is oversold in the rest of the world and commodities are oversold. right now is not the time that you jump in with two feet. >> tim, thank you so much. keep it right here. we have much more market

coverage coming your way. >> announcer: gripping wall street, more than $1 trillion wiped out of the market in just one week. the biggest companies in america feeling the pain. what do you need to do tonight to make sure your money is safe tomorrow? this cnbc special report, "markets in turmoil," is back after this quick break.

we have declines of 3% or more across all of the major averages. >> the dow down 1,000 points in a week. stocks that have been the darlings of wall street are now dogs. big names are in bear territory. tonight, is this the opportunity investors have been waiting for? a chance to get in and make big money. >> this is the kind of thing i'm talking about. after the stock comes down, you might want to get involved. >> or is it time to watch and wait? this is a cnbc special report "markets in turmoil." now, once again, here's kelly evans at cnbc global headquarters. >> the dow jones industrial average is now in correction territory, down 10% from its trading highs. one-third of that index, some of america's best known and largest stocks are even deeper in the red. in fact, they are in bear market territory, meaning they've dropped 20% or more from their most recent highs. we'll start over here with

chevron plummeting over 40%. in fact, 42%. the biggest decliner. even caterpillar, intel, not related to the commodity story we were just discussing, 30% down, exxon, walmart down more than a quarter and apple all down at least 20%. and if you own exchange traded funds, the most popular is the espy which tracks the s&p 500 and the index has lost 5.5% just last week. another popular etf, the qqq fell more than 7% and small cap russell lost 4% last week. that's a look at how the biggest name stocks have been hit. what can investors do to make sure their money is safe? let's ask same stovall and kenny picari, a trader on the floor of th