it does hit $25. i think we go higher. >> stock is moving lower here. maybe on some of the comments made in that interview. last thoughts? >> i'm watching the media stocks. they got crushed down 20% from their highs. they're bottoming. zbh all right. stocks are lower. "power lunch" picks the story up now. >> "halftime" is over. the second half of your trading day begins now. >> a major selloff going on right now. welcome to "power lunch," everybody. i am tyler mathisen. let's look at the numbers behind this big selloff. as you see there, the industrials off nearly 300 points at 16235. and the s&p 500, right there in between them at 1.8% decline at 1931. that is a 35% decline. mandy is down on the floor of

the new york stock exchange. >> let's get right to it. stocks are plummeting. you put out an excellent note this morning saying what changed between close yesterday and open today? >> you have -- it was one headline. a series of small headlines. we have a six handle on the china gdp. then when he credit suisse coming out with negative reports on the commodities market. and this whole volkswagen thing is a mess. let's look at the s&p 500. we're just off the lows for today. we started down and really haven't had any significant attempts at a rally. take a look at the markets. let's call it trading on the global slowdown again. five to one declining to advancing stocks. that's declining to advancing. materials, credit suisse, their negative comments about the overall market. you can see what is going on with the material names. free port, vale sa, rio tint yoe

is down 4%. glencore is down 10%. commodities markets are going to be weak for some time. they took down the ratings on several stocks as well here. oil has been all over the place. look at this oil service. oih is the oil service index. this moved in a 4% range. started down. rallied into positive territory. sold down. this is a 4% trading range, mandy. they don't understand what they want to do. they can't figure out what they want to do. the thing just going all over the place. tech stocks are also weak. i note the storage names like seagate are also week. intel, all down a little more than 1%. finally, add fuel to the fire, car manufacturers are weak across the board. the french finance minister wants an investigation of the entire auto sector in europe on the heels of that volkswagen scandal. look what it is doing to daimler and gm and ford. the point at the top, the ewg is

the etf for germany. you can own the german stock market. look, it's down 4% today. this is germany. this is not daimlerchrysler. the whole market has been down since the move yesterday. >> okay. we'll get back you to for another check on what's going on with the market. thanks a lot for that, bob. let's head to times square with courtney reagan. >> yes, the nasdaq is the biggest loser of the day. we're looking at the indices. the kpod it is negative year to date. every single component in the nasdaq 100 also in red. it's the worst day for the composite and the 100s since september 1st. as we fall, it could get worse from there. the nasdaq biotech etf down 3%. and that says we will have more details from hillary clinton on her big drug plan. it's not so positive for pharma and biotechs. vertex is trading down lower, almost 6%. and last but not least, take a look at shares of staples, down

almost 8%. a new york post reports that they may be opposing that staple/office depots merger. die lett tyler, back to you. >> how many stocks are positive right now? there are 500. 18 of them. oil also tanking this hour. west texas, brent, there you see the numbers. so goes oil so goes equities. down 3%. brent down about 1.5%. jackie deangelo is not tanking. she's at nymex. >> hi, tyler. one headline for you. oil volatility lives. as you mentioned, we're seeing a selloff of more than $1. several reasons. let's break it down. obviously, the steep selloff in equities having an impact. the fears about china continued to rat this will market. also you had two very strong days of gains. it's not surprising to see some profit taking here. at the session low today, $45.14. we were holding over that critical psychological and

technical level of $45. another headline that is interesting. traders are focusing on the fact that we have lobbyists from france going to iran. this is reminding them they're forging forward with business links and iranian oil will be hitting the market when sanctions are lifted. that's an issue as well. >> all right. thank you very much. the other big commodity, copper also taking a hit right now. china worries among those that are affecting it. let's take a look at copper. you see down almost 4%. that's a big decline there at $2.299. we'll have more on that and the gold close, of course, at the bottom of the hour. mandy? >> we certainly will. we have a news alert in the bond market as well with two year notes up for auction. rick san telly, what is demand like? >> well, the grade for demand at 1:00 eastern was a krchc as in

charlie. two year notes offered for auction. the yield .699. basically right at the 70 basis point bid of the when issued market offered at 69 1/2. 3.27 was the cover. that was a little light. 3.41 auction average. all the other metrics are close to the average. 13.3 on directs. and 43.5% go to primary dealers. it's a sea in considering all of the volatility in the two year. not surprising tomorrow we'll have five year notes to the tune of 35 billion. back to you. >> thank you very much. i'll hand that over to tyler. >> all right. no worries. josh lipton is live at the tech crunch disrupt conference out in san francisco. just got an interview soft banks coo.

>> i are buying soft bank stock. a huge vote of confidence. why the move into cash and why so confident about soft banks future? >> i worked at google for ten years. i came to this country with $200. i've done reasonably well. i expect to be able to work softbank for a long time in my life. and i hope to be able to have tremendous amounts of value. i think we is a phenomenal portfolio of assets. phenomenal opportunity in front of us. and what better way to align my interest with the interest of founder and our shareholders than for me to go all in? more than my net worth and buying stock of the company i'm going to work for for the next 10, 15 years. it's whether i'm committed to the company or i'm not. >> looking at that portfolio of assets, i'm interested to get your sense of when you look across the landscape right now, you talked about this how kind of a great time to be an entrepreneur. lots of capital.

people throwing money at entrepreneurs. if they have a profit or path way to profitability, no problem. what's it like to be an investor right now? >> i think it's a good time to be an investor. there's a lot of entrepreneurship going on. it's hard to be in a market where nobody is innovating. but there is lots of entrepreneurs. everybody is sitting there saying i want to change everything around me. i think for the next 10 or 15 years we'll have a phenomenal opportunity to be able to invest in great people who want to change things. think about it. right now it's so much more easier to start a business. you can get a cloud computing platform, can you write an app. everybody has an iphone or android device. can you start a company and a month later addressing an audience of two or three billion users with some new concept, new company in front of you. when was that possible last time? >> it's a good time to be a entrepreneur and investor but a big conversation out here we have a lot is valuations have become in some way disconnected to fundamentals?

where is your take on that? >> i think the market has a liquidity premium. they're trading at much better valuations. so i do believe there is a bit of a valuation disconnect. at the same time, there are great companies and it will always be hard to buy them because they will do better and better and better. and you'll make money. but on average, investors will link low returns if they're from 2015 vintages than they might in the past. >> when you look for the opportunities right now, broad strokes, what are the markets where you're seeing opportunities? >> we made a big bet in india about a year ago because we thought it was an inflection point with tremendous amounts of connectivity and sort of going to the country. the same entrepreneurial spirit kicking in and china is slowing down. if you combine the factors and say where else can i get a billion people i can target with new products and new services? a majority of the people we're targeting speak the english language. we thought india was a big market. some of the bets so far on paper

have proven to be good bets in the e-commerce space. it's going to be a big market. there are many technology sectors in service that's we believe are going to have an opportunity going forward. >> some of the bets, i want to drill down a couple of them. you invested in a couple companies. >> we invested in ola in india and one in southeast asia and in china. we like transportation as a services as a platform. we think uber has done wonderful things. we think that market is just starting. if you look at i, great sstss when people use the service, it expands the markets and expands the opportunity set. >> you saw uber is doing great things. you thought the companies you mentioned were better invest. thanksgiving uber? >> from a valuation perspective, and management team perspective, we thought these are good places to be. we think this will be a good space. it remains to be seen if a

global competitor makes it big in the market. there are many examples in asia, specifically, where local players held their own ground, whether it's against amazon and companies can hold ground. >> let me get one question that i have to ask. you have seen the drop in the stock price in alibaba. >> if you step back and look, this is a huge company in china which is created as a start-up. not unlike any startups around the world. they have hundreds of billions of dollars. they're serve mag jort of the chinese population. i think it's a great company. if you look at the public market, every company, whether it's a google, twitter, facebook, has been through ups and downs. google, i worked at google for ten years. they went through a 50% correction in the stock. now it's back up to higher than where it was. i don't think that we can take a short term view on a company like alibaba. in the next five to ten years,

alibaba will continue to be a great company. i think it's a buying opportunity. >> all right. maybe buying opportunity. thank you so much for your time. we appreciate it. >> thank you. thank you for having me. >> thank you tyler, back to you. >> volkswagen, boy in the spotlight today. shares continue to be slammed down more than 15%. this, again, automaker aemissio scandal is growing. the ceo may be out. >> this is one of those stories where the damage control, you can see it coming from germany. we've had multiple apologies. we also had one in new york. the bottom line is this. for volkswagen ceo, he is on the hot seat right now because so many people are saying will he keep his job? his contract up is on thursday. question is whether or not they extend it after that. one german newspaper reported that his contract has been terminated. v.w. responded by calling it ridiculous. there are a couple board meetings this week.

earlier today, yet another apology from germany. this time from the ceo again. >> i'm deeply sorry that we have broken this trust. >> translator: i would like to make a formal apology to our customers, to the authorities, and to the general public for this misconduct. >> there are 11 million diesel engines. and as a result, as they try to figure out how to remedy this situation, whether it's through engine management software, a formal recall in many markets, it's a charge of $7.27 billion in the third quarter. and that's why you look at shares of voek wag lkswagenvolk. the story is whether or not he keeps his job. it gets to the broader issue of how great will the financial impact be for volkswagen? that's why the stock is down so much. >> and internally, and also

potentially criminally who was responsible for this misconduct and might they in a new justice department sort of mindset face individual charges? >> exactly. you were already seeing the same game plan spelled out here that we saw for general motors and for toyota. all of the usual players, congressional hearings, the doj investigating, and you're seeing what they're doing at volkswagen, it is almost exactly what we saw from general motors when mary was apologizing after the ignition switches. now he is doing the same thing. i'm not surprised we're seeing this play out. >> all right. phil, thank you. mandy, over to you. >> talking of germany, the dax, the index is down about 22% since the april high. firmly a bear market territory. as for our market in the united states, we have a selloff on the street at this hour with a number of big names hitting new 52-week lows. they're on the board for you. tive niz, wynn resorts and macy's. also, america's rental crisis.

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they may oppose the merger

of the two companies, office depots and staples. so again those shares very much a focus, mandy. back to you. >> yep, tanking by 9%. thank you very much. housing stocks are also really getting hammered this hour. take a look at the home builders etf. the taking a look at the individual names for you. you have ryland group, pulte, lennar, they're all firmly in negative territory. down 5% for lennar. check out the performance this year. ryland and the number two home builder are both up 10% this year. d.r. horton is up about 17%. toll brother has a sharp drop in august. now it's up 3% year to date. pulte taking the biggest hit, down 10% this year. tyler, over to you. >> we've been reporting for some time now about how home rental

prices keep soaring. today a new report showing the rental crisis, it's affordability, is getting worse. what will that mean for home buying? diana olig is live in washington with more. >> it's short supply and high demand that keeps pushing rents higher and that will hit renters harder than ever. take a look at the number of renters spending half their income on rent is expected to rise to over $13 million in the next ten years. that's an 11% jump according to new research from the joint center with housing. and that is only if rents and income grow in line with inflation. right now rents are going faster. affordable is generally considered spending about 30% of income on housing, not half. so who will be hardest hit? seniors, hispanics and single person households. the study found that even if incomes rise dramatically, demographic demand will keep the number of severely cost burdened renters near current levels. the number of severely burdened

households with renters age 6 ato 74, that will jump 42%. you say to yourself what about the construction you see around you and all the big cities, all the apartments going up? the vast majority are luxury buildings. the median rent of a newly built apartment is $1,290 which is also about half the media renter's household income. so apartment rent growth has been above 5% annually for seven straight months. no stopping there. occupancy in august was at 95.4% nationally. that is the highest since they began recording that back in 2008. so again, no holdoff. >> for more on the rental crisis, let's bring in a real estate professor. susan, welcome back. you know, diana pointed out that there is a lot of building going on in rental apartments. but they seem to be at the high end.

do we just need to build more units for people at the median and lower income? and what's the economic insentive to do so? you can obviously see why builders want to go upscale. >> traditionally that's the only roout is to go upscale. costs are very high to build new. but there is building through renovation and upscaling existing properties. so that is happening as well. but the pace is just not fast enough to keep up with growing demand for rental units. so indeed, rent rises have been persistently over inflation rates. >> let me ask you a tortured question. we've been concerned about the idea that people are less inclined to buy homes today than they might have been a decade or 20 years ago. is it possible that a rental crisis, a shortage of rental properties could turn out to be good news for home sales? >> absolutely.

it's better to be on the right side of that price increase and rents and prices are both going up because of lack of inventory. so if you buy, you're on the better side. and with low interest rates, low mortgage rates, of course, that's a plus. we don't know where ten year treasuries is going. that is going to hit homeownership. what is really hurting homeownership is that it's difficult to save for a down payment. >> you know, all real estate is local, susan. so let's go right into philadelphia. if you were a young person coming out of warton, would you rent or buy right now in philly? >> well, am i going to be in philadelphia for three years or more or hoping that i'm going to stay? if i'm going to stay, i buy for the long run. that hedges rent increases. >> all right. we appreciate it. mandy? >> let's take a look at

commodities. they've been slammed on the fears about china. the major mining stocks are getting whacked at the moment. names like barrick gold is down 7% in trade today. also one of the world's biggest commodity traders is feeling the brunt. so how are the commodities crisis playing out at glencore specifically? we look at the most active stocks. brazilian oil giant petro is down about 6%. we'll be back after this break. . ♪ one minute. ♪ hi. hi dad. we need to do this, yes. ♪ you be good. alright. ♪ letting go... don't say a word. it's a little easier when you've saved for college, with state farm.

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welcome back. carnival cruise lines down 5% and trading is the world's largest cruise ship operator issued a current quarter profit forecast that fell below expectations. a stronger dollar put a trip in the value of the ticket sales at the company. also saying that global issues like the current prices in europe could affect pricing in that region. a slew of reasons for carnival shares taking a hit. >> thank you. talking of that stronger dollar, it's not being very kind to gold prices which are closing right now to the down side. that's down by $8. silver, copper and platinum as well. let's take a look at the board. all in red. copper is down by nearly 4%. that is the worst day since the middle of january. worries about what's going on in china and demand. i think tyler is the world's largest copper consumer.

>> this is having a major impact on the commodities traders. kate kelly has the details. >> hey, tyler. glencore, one of the biggest commodity trade serz now essentially a penny stock. in intraday trading on the london market, the swiss minor and marketer fell more than 10% and at one point touched below a pound. sinking far past the ipo price from 2011. and the could have to protect one's self against a default on glencore's debt shot up raising new worries about the langer term health. it's also symbolic of the continuing headwinds where copper, the most important raw material from a revenue perspective hit fresh lows. concerns about decelerating growth in china and down turn in manufacturing both of which would hurt base metals like copper as well as have an impact on energy going forward are clouding the picture too. under the ceo, the single biggest shareholder, they've been scrambling to address the

concerns. they put together an offering at they pressed it to raising about $2.5 billion in a deal that was announced yesterday. they also announced asset sales and the cancellation at least for now of the dividend. but many remain dubiousst longer term. market pressures continue and the amount of leverage they need to finance the trading business in particular is considerable. making investors worried about its balance sheet going forward. >> all right. kate, thank you very much. kate kelly reporting from manhattan. to the bond market we go. rick santelli tracking the action in chicago. hi, rick. >> hi, tyler. if you look at intraday, you don't see much of a blip. the story is yields are going down. down four basis points in a two year. down more in the long end. if we look at a two day, we're under yesterday's low yielded, that's important to open it up. those are the only two days we blipped up and closed above 80

basis points. dollar index since mid august, if it wasn't for that september 3rd to the two third over on your screen in that chart, these are the highest dollar levels since the 18th of august and last chart is tens. flat ening. we're down close to ten basis points in tens, ten basis points in 30s and way more action on the long end. >> thank you very much. we're sitting at session lows. the nasdaq is also sharply in the red. the s&p 500 is off by nearly 2%. let's check back in with bob pisani on the floor. anything in particular that made us take an extra leg down here? >> volumes on the moderate size. 5-1 to advancing stocks. no bids in the market. it's not like there is selling pressure. there is not a lot of buying interest. look at the s&p 500, we're sitting at the lows for the day. key point here, volume is on the moderate side. want to show you, hope you listen to kate kelly, weakness and commodities at the heart of

the market. if you look at the big names, credit suisse had an article out and they cut the ratings on several kmot ti stocks including anglo-american which trades over in europe. you see on the bottom down 6%. all the big names all down about 4%. also i want to point out what's going on in germany. the whole voek wlkswagen thing causing problems for germany. cars are at the heart of the german stock market. they're calling for an investigation of all the autos over there in europe. that is causing problems there. this is causing major problems for germany. remember this is one of the world's most important stock markets. i've been highlighting the ewg down 4%. this is german's stock market. it's now down, mandy, 8%. this is a two year low. this is the german stock market, not volkswagen at a two year low. >> the dax itself is now down 22% from the april highs in bear

market territory. thank you very much. see you later on. stocks are selling off today at the lows. down on the s&p 500, off more than 1%. the nasdaq is down more than 2%. what do you do as an investor? thank you for joining us, mark. quick word on china. estimates for growth in china are coming down. the adb, most recent one to lower the forecast there. we nearly at the point where we have sufficiently factored in the china slowdown, therefore, you can start picking a bottom in the number of the sectors affected by it like commodities? materials, et cetera? >> certainly think it's too early to begin bottom fishing. i think china may be at that point. i think you're starting to begin to see some more positive data, specifically when you look at real estate, loans, housing, things like that. i wouldn't necessarily hop into those sectors yet. i would stay a bit more

domestic. >> let's bring in someone who does like the materials sector. kevin martin. you think that materials are a buy? >> i think materials are a buy in a rising interest rate environment. based on our research that we did to 2004 to 2006 when the fed raised interest rates 17 different times, materials were actually the best performing sectors during that cycle. so it may have further down side risk over the course of the next four to six weeks. but it could be also a good entry point. >> and at the moment though, mark, you would be sticking with domestically focused stocks to sort of try and hedge out some of the global ris tlk? >> yeah, absolutely. so really our investment strategy is to focus on defensive sectors that are domestically oriented and also experience something pricing power. pricing power is just scarce in today's market. there is not very many sectors experiencing pricing power. for those sectors that are, one of our favorites is the insurance group. but the other sectors, pharma,

biotech, those sectors that have pricing power, they're experiencing valuation premiums. the insurance sector hasn't quite got threaten which is one of the reasons that we do think there is upside potential there. >> overall, kevin, the s&p 500 is down 6% year to date. let's be honest going forward, we're not going to have the fed at our back the way we've had it over the past six or so years. do you think we have to completely reset our expectations, lower the expectations on what we can expect from the market over the next five, ten years? >> that's right. i was on earlier this year. i forecasted that s&p 500 return of 6% to 8%. i was considered a bear. it used to be 6% to 8% was a good mark for the investors. that's where we have to set our expectations going forward. >> that will be decent. >> it will be fantastic. we won't get there in 2015. i do anticipate a strong fourth quarter. the fourth quarter has proved to be better than the first three quartersst years combined. >> why it is going to be better?

>> i think we'll pull back. i think we're part of a sector bull market right now. even with the dollar getting stronger, i see opportunities going forward. >> we don't have time to go into further opportunities. it's been great to talk you to both. kevin and mark, thank you. can you go to our website to see how kevin is playing the fourth quarter. that's the website. tyler? >> all right. thank you. take a look at this. i want to show you a really graphic view of a market with a tail between its legs. there are one, two, three, four, five, six, seven, eight, nine, ten stocks of the s&p 500, ten are in the green right now. that is called wall street's wall of worry. we head out, a look at the biggest losers now on the nasdaq 100. right now they include staples, western digital, vertex pharma.

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russian forces reportedly appear to be expanding military presence in syria. satellite image reviewed about it "wall street journal" shows the development two of additional air force bases. it is latest sign russia is preparing to come to the aid of syrian presidential assad in that country's civil war. bank of america's ceo gets to keep the duel role as chairman of the board. last year the board elevated moynihan to chairman without first consulting shareholders. 63% of bank of america shareholders today voted to let moynihan stay. >> south korea has begun construction work on the site of the 2018 winter olympic game. the athletes village is scheduled to be built along with 600 apartment units. the olympics will be asia's first winter olympics outside of japan. harry potter fans have some catching up to do.

j.k. roulg h j.k.rowling has written a new article. she also reveals how the potters acquired the cloak of invisibility which any fan knows helped harry out of several jams in all seven books. can't wait to read it. that is the cnbc news update. >> thank you very much. ron insana here now just published a story online on how the fed has just made a big mess. ron, you're quibbling with the fed here. what is your beef? >> my beef is you can't say we're going to put rates on hold and say the world is in turmoil, emerging market currencies are a problem -- >> at the same time you're going to say we're going to normalize. >> as early as october. you know, in many ways, i think the fed created a negative feedback. so you don't want the world to be unstable. you say you're not going to raise rates. we could raise them within six weeks. so the world becomes unstable again overnight. emerging market currencies fell out of bed. europe is down 3%. so we're getting a situation where if the fed, i think, would

have just taken a rate hike off the table for the year, we would be fine. you have competing and conflicting ajenld yaz gendas i fed. >> you have a chorus of fed officials. they've gone so far for so long in saying that they think jointly and collectively that the conditions will be right at some time later this year to do it. well now we're getting to later this year. and many are still saying that. >> a friend of mine sent me a study about 1932. the fed raised rates in 1932 because bankers said they weren't making enough on the spread. and so it kind of the same complaints we hear today. in '37, they raised them prematurely as we were coming ow of the recession. we had blowback that affected both the domestic economy, the global economy and financial markets. as much as everybody wants to say rip the band-aid off and do it, we are not living in a normal global economic environment. deflation can come wherever it comes from whether it's china,

he marria emerging markets. we're in this situation where these are inputs for the fed. as we discussed last week, as they have been over the decades. global markets matter. global economies matter. even if they're relatively isolated. so i think this level of confusion is really certainly counter balancing anything the fed hoped to achieve. look, i very -- the only way to get rid of the confusion it would seem to me is to say rate hike off the table for this year. we'll get back to you in 2016 or do it. and say one and done. be very clear. >> here's where we are for now. don't expect to hear back from us. >> we think we met the employment mandates. we'll raise rates for one time. >> got to leave it there. >> i think it's a mess. >> all right. on that happy note, for more go to powerlunch.cnbc.com. >> we're coming off the lows for the dow. it is down by 257. s&p 500 down by 34. the nasdaq, however, has gone

negative for the month of september and negative year to date as well. as for global stocks, they're falling. what exactly is driving them lower? we're standing in front of a big wall of worry. dohm, climbing that wall? >> we're trying. the bulls want to climb this wall of worry. we're going to talk about what ron insana spoke about and add a few more bricks to the wall. get ready to channel your inner pink floyd. we're back after the break. at mfs investment management, we believe active management can protect capital long term. active management can tap global insights. active management can take calculated risks. active management can seek to outperform. because active investment management isn't reactive.

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let's talk about the reset here and what's driving investor concerns. behind us we have a massive brick wall filled with a the love bricks and those are all bricks in the wall of worry for the markets.

ron insana spoke about a few of those things. of course, these are just a handful of the numerous bricks china the world's second biggest economy always a part of the discussion right now, fed interest rate uncertainty also playing into that discussion as well. so again, another brick in the wall. and then, of course, you've got global markets. german stocks, volkswagen not helping matters. german stocks down 20% from the recent peaks. then, of course, you have a slew of other things as well. check out what is happening overall with these names. the brazil currency on the emerging market side. that hit a record low against the u.s. dollar. value wise, they're interesting. also home building stocks. the real strengths in the market here are now showing signs of weakness. they're dropping below the long term average trend price line. of course, biotechnology stocks, part of the whole health care leadership sector. over the past couple years, showing signs of weakness here as well. tyler, numerous bricks in this

wall of worry. those are handful of them. >> let's stick with health care. more outcry surrounding touring pharmaceuticals and their decision to increase a single dose of deraprim from 13.5 $$13 tab to $750. dr. peter bock is the leading authority on drug pricing. welcome. let's just start right there. was that 5,000% increase excessive or not? >> well, thank you very much for having me on. there is not much question this is a piece of financial engineering, not a true step forward for the pharmaceutical industry or for innovation. >> this is because that company bought the rights to sell that drug, a company run by a former hedge fund manager. is it as simple as they can charge that amount just because they can and because there are not really lots of other drugs

out there to fight the condition that it is most infective at? >> yes. there is no -- what it illustrates is a bigger problem. it's not just about touring. there is no mechanism in place to hold prices to any system that makes any sense. so companies for a long time have been able to charge whatever they wish for drugs. in this case, locking out competitors and raising prices many, many fold is something we've seen from a number of companies, val yeniaent is anot one. >> i've been absolutely shocked at what u.s. consumers have to pay for the same drugs that we have overseas but maybe we only pay like i don't know, 70% of the price that you pay, right? there are very good reasons for. this i understand it. but what if, for example, here in america insurance companies didn't have to cover all those

drugs? what if they said, no, therefore creating a situation where the drug companies have to cut their price maybe to get it over the line? >> i think a couple things. the average price discount is about 40%. u.s. compared to eu countries. that's adjusted for purchasing power differences. but we know what happens when you say no and insurers say no. my hospital said no to a cancer drug because we thought it was twice as expensive as it should be. and then the company lowered the price by 50%. express scripts said no to another drug, got a great deal on another drug. and then their price fell by the same amount too. even a small amount of market resistance leads to major price concessions. another drug was just given back to the foundation that produces it just because of outcries over the increase in its price. >> why doesn't that happen more? >> well, i think it is happening more. and secretary clinton is going to unveil some plans to approach

this problem of sort of egregious pricing now. and i think that small amounts of market resistance is emergi g emerging. we need a comprehensive approach that involves the industry, involves both political parties to come up with a system, a formula for finding appropriate prices for drugs so we don't have these swings in price and we don't have, you know, in this case sort of egregious capitalization. >> can that formula be market driven, doctor, or must it involve the government's intervention? i was speaking on another program last night to a man who has two proposals. the australian approach where there is a single buyer of drugs for both whatever federal sort of medicare core there is and for private insurers. the other being the swiss model. there is a ceiling on the price that drug companies can charge. neither of those are

particularly sort of natively american solutions to the problem. >> yeah. true enough. so we need our own solution. those systems don't map well to ours. and we do need a market base system. but what has happened with touring demonstrates that market is currently broken. pricing is out of control. and we need an approach that has pieces of that but ties price not only to the value of drugs, better drugs should cost more than less good drugs. we know that. that's not what we see. and we also need to take into account the fact that innovation is important. this is an incredibly important industry for our future. we want it to be successful. so we need to find a way to reward companies who win the game by making patients better by the largest margin. >> it is value as opposed to price. effectiveness and price. >> that's right. >> we appreciate your time dr.

bach at memorial sloan keterring cancer center. thank you. >> thank you very much. >> okay. let's take a look at the dow. it is down by 257 points. now to the absolute lows of the day which is down 280 points. nonetheless, 1.6% drop is not what you want to see. and also, the three major averages at the lowest self since september 4th. just to put a little history in there. sectors right now, materials and tech leading the declines. you're watching cnbc, first in business worldwide.

let's bring you up to date on the market now. the dow is down 256 points. nasdaq is down more than 2%. as i was saying, negative year to date and for september now and the s&p 500 is down almost 2%. the biggest dow losers, united technology, goldman sachs, boeing, those are just some of the names that we're watching to day. "power lunch" is back in two. don't go away. this bale of hay cannot be controlled. when a wildfire raged through elkhorn ranch, the sudden loss of pasture became a serious problem for a family business.

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sh. don't worry, we got a big investing playbook just for you. plus, the staggering sum that one analyst says could be at ris physical oil stays below $50 a barrel. if you think china is a problem

for america. we will tell you two other countries you may have to have your investing eye on even more. all that coming up in a couple minutes. back to you. >> we're looking forward it to. thank you very much. we have a selloff on street. let's bring in the managing director. jimmy, what levels are we watching here? >> okay. to me, it seems like if you can settle below 1930 in the futures that, is 1936 in the xpx, to met rising wedge is broken. from a technical analysis to a standpoint this is ugly. this means we resume our down trend first test first of 1830 which was the low a couple week ago f that gives, i think 1760. this is a pretty powerful technical number. if you look for fundamental analysis, just say to yourself for five years the fed has been saving the stock market with dovish red rick and it didn't work. >> yeah. do you think as well we're going to make test the august lows, maybe over the next month?

>> i think there is a very real possibility. to jim's point, i was look ago the 1925 on the cash as kind of being a level of support. but one or the other, i think is a robust possibility. you're coming into earnings and the nfp report next weekst and there is concern over china and the forward guidance. we're seeing numbers come down, estimates come down. therefore, i don't think people should be really shocked if in fact we do test on the cash it would be 1860 on the s&p 500. >> so super short term. the volumes are going to get light they are afternoon. >> today and tomorrow it will be very light. therefore, that tends to actually cause an exaggeration in the moves. there is less people, there's less people playing. >> okay. jim? >> i don't think there is any huge bear market. we're talking about a 15%, 18% correction here. at some point in time it becomes a place where people pick back up. just not today. >> not the end of the bull market? >> i don't think so. >> okay. thank you very much, jimmy. thank you, kenny as always.

tyler? >> thank you very much. that will do it for the first hour of "power lunch." we have another strong hour of "power" coming right up and brian is here to lead it. >> tyler, mandy, thank you very much. it's now 2:00 on wall street. 11:00 a.m. in seattle. the president of china is right now. as you heard, stocks are selling off. right now the dow down 1.5%. the nasdaq is down 2%. and crude oil is down again to about $45.78. i'm brian. melissa is joining us at the nasdaq. we'll have more on oil, infrastructure and die yoe tebi. we referenced the president of china being in seattle. that's not an descent. once again, china concerns are in focus in the american stock market. >> and it's rippling through in commodities. we had very important comments from credit suisse as well. why are we weak today, brian? a good part of this exactly is due to china. we had comments overnight. take a look from the development

bank. china gdp, they say he has a six handle on it. they think china gdp could be below 6% for q-3 and q-4 this year. in the 6% range for the overall year. credit suisse out this morning talking about commodities in a race to the bottom. that didn't help. of course, china was a big part of that. then we have the whole problem with volkswagen. they came out and said let's do a probe of the entire auto sector. that really hurt european equities right now. take a look at the material stocks. anglo-american was downgraded by credit suisse. we're talking about china plays here. glencore, big commodity play in london down 10%. that's not a typo. rio tint yoe and vale down 4%. voekz w volkswagen is a very serious problem. autos are at the heartst german economy and stock market which is the biggest stock market in europe. when you have volkswagen, porsche, daimler, bmw down

double digits, that's a major issue. germany now down about 8% in the last two days. that's the entire stock market. back to you. >> all right. thank you so much, bob. china's president xi ping jinping arriving in the united states. he is starting in seattle. here is the chief international correspondent. >> the chinese president is here in seattle. he'll be meeting with a who's who of american ceos from apple, mo microsoft, general motors, berkshire hathaway to name a few. after two days here, he'll move on to the white house for an official state visit beginning on thursday. and then the top of the agenda for the meetings with president obama, cyber espionage and cybersecurity. the ultimate goal, no one knows if it's possible, the two countries put out joint statement about the cyber rules of the road when it comes to cyber warfare. the president of china moves on to the u.n. general assembly.

he'll make a speech there on monday and then head back to china in a little less than a week from now. back to you. >> all right. all right. and by the way, michelle's got a gigantic interview coming up in the next hour. that guy, former treasury secretary hank paulson. china going to be in focus. much more of this as well. you with catch that exclusive interview at 3:00 p.m. eastern time today right here on cnbc. china certainly being blamed for many of our stock market woes this year. and certainly trying to slow down does matter. but are some overstating china's economic importance? check this out and you can decide for yourself. though we import a lot from china, they aren't the number one or even the number two market that we sell to. in fact, america's biggest export partner by far is canada. as of july, we have shipped $166 billion worth of goods up north and look at this. mexico is our number two export market. so far this year, we have sold $138 billion goods down south. china is in fact only our third

biggest export market. currently sitting at about $6 abillion worth of goods sold there this year. keep in mind that is less than half the size of the business that we do just with mexico alone. so why is china having such a big impact on the american market? or should it be? let's bring in dan varue. dan, i think you get the point here. i'm not saying china doesn't matter. it certainly does. but we buy a lot more from them than they do from us. is the market overstating the china concerns? >> i think it is. you know, it's really more about not so much the economy there which obviously is troublesome, but also the systemic effect of the devaluation. is that going to set off a string of currency devaluations throughout the emerging markets and the rest of asia? and so far that has not happened. but that's a risk. >> why do you think china's -- by the way, hi.

i materialized. it's amazing. i'm a ninja. why do you think it gets blamed f for everything? we have brazil which is a dumpster fire in terms of an economic disaster. we have obviously currency concerns around the world sparked by the china concerns. commodity thing is related to china s becau china. is it because there are so many halos? >> the stock market in china has taken a big amount of the story. >> it is still well up over where it was a couple years ago. we need to put that in context. it's been terrible this year. but it still made investors a lot of money. >> it did. but everybody got in at the wrong time as they usually do. so that outperformance set up a lot of capital in the wrong time. nobody gets into the bottom. they get in when things look much better. >> so why do you think the dow is down 8% this year? >> first of all, go back to late august whether we had that big 1,000 point, almost 1,000 point

drop in the dow. that did a lot of technical damage to the stock market. you don't correct that in a matter of a short period of time. and plus, you have to look at the calendar. we're coming into the seasonal time when stocks are traditionally weak. and if you look at from this time going forward, pretty much a replay of what happened last fall. we're going to go into the preearnings dance where every anl sift going to lower guidance. >> and then we'll be -- >> things are terrible. and then they'll lower the bar. >> are you a net buyer of equities? are you bullish? a lot of people seem to be, wall street strategists have been nowhere near right so far on their s & p targets for the year. >> short term i'm cautious. i think the market has to go lower to kind of make the full transition of stocks out of weak hands into stronger hands. that's just time. but then as you go into the endst year, you get through earnings, valuations are much, much better than they were before. we've been complaining all year that we haven't had a pull back

in stocks. >> we've been kblang fcomplaini four years. we're putting stocks on sale. no one is buying them. they're run ago way from them. >> thank you, dan veru, a real pleasure. thank you. brian, beyond china, other emerges markets are feeling the pain. take a look at the eem. joining us is the head of the emerging markets and global macroteam at morgan stanley. great to have you us with. it's interesting to hear lots of market participants discount the impact of china. you write in your column that next global recession will be made in china. what is the transmission mechanism for contagion for what is going on in china to actually spread to other economies? >> i think it's already happening. china is the largest contributor to global growth this decade. if you look at the trends in

asia, asia is in a trade every asian country is collapsing. the big story of lat couple decades is china is the hub of global manufacturing and global manufacturing growth, if you look at it to day has come to a stand still. now these are typical indicators that you get off a global economy that is very weak and is on the brink of a recession. so i think that we only have signs here that global economy is very much close to a recession and the article i wrote, i think one shock away from the global economy entering the sixth global recession in post war history. >> you know, it's interesting. take a look at the brazil market. that is in bear market territory. you take a look across the emerging markets. you see them being beeten up. in the united states, there is this belief that people are a really holding on to that perhaps it will not contaminate the slow recovery we have here.

i know you're an emerging market strategist. in your experience, do you see this impacting developed markets like the u.s. or europe? >> i think that the economic impact in the u.s. is likely to be much more limited than any other region in the world. i think the streets are up at the top of the show showed that. but i think the earnings impact would be much more than what people think. we look at the composition of the u.s. stock market today, about one-third of total earnings and sales come from international sales and a large chunk of that is from the emerging world. and then there is the effect of the dollar which i think has been underappreciated. it has appreciated a lot. and the earnings for the international companies are going to be pretty badly hurt by what's going on with the dollar given the weak currency that's i just mentioned. i think that the stock market effect on what's going on is possibly underestimated. and the economic impact will be

limited but let's not forget that we're living if a much more globally connected world than 20 years ago. >> sure. we have 20 seconds. what is your emerging market pick right now? is there anyplace in the world where you say, you know what? it's time to go in? >> well, i think that we have to do that as an investor. as an investor, i like parts of eastern europe. i think that i like parts of south asia. they're much more insulated. in general countries, you still think are going to benefit from lower commodity prices over the next few years on r. a better place to be. and the emerging world is 40% of the global economy. so there is always some opportunity somewhere. those are my top two picks for now. >> all right. thank you for your perspective. appreciate it. >> as bob pisani mentioned, shares of london bliss commodities giant glencore struggling with falling commodity prices and growth concerns out of china.

remember china is the world's biggest consumer of raw materials. as for those commodity pressures for the year, gold down 5%. silver down 7%. copper is hit. it's down 19%. copper losing another 3% today. is there opportunity in all this? glencore is not the only company crushed in this commodity collapse. look at the gold miners. goldcorp, barrick gold off by more than 4% or more today. let's bring in michael gudas. you are representing and analyzing one of arguably the most hated sectors of the entire stock market right now. how do you convince investors to ignore the short term pain and think out multiple years from now? >> don't i know it, brian? i think you have to have a locker term view. lower prices will reduce supply. i think you're seeing across the board from all the major base

metal and the precious metal miners that production is flat ening out and looks like it's going to decline dramatically over the next three to five years. that's one of the first pieces you need to get a recovery in the commodity cycle. >> it's funny. whether it's gold or oil, sort of insert commodity here. what we continue to hear is this. don't worry, whatever commodity we're talking about. prices are down. the producers will slow down. and prices will eventually rise back up. we have not seen that happen in oil so far. production is still so high. why you are so sure that will happen with gold, silver or copper? >> so i think from the oil standpoint it's been a more recent phenomenon. remember, it was just about a year ago oil was near $100 a barrel. we've seen a multiyear decline in gold prices from 1900 to 1100, silver from the 20s and 30s down to 15. so i think those metals and those cycles are two, three years ahead of where oil is today. so i think that's going to be more helpful.

but, brian, you have to admit with a stronger dollar and fear of global growth right now, it's very difficult to get a bid on the commodities in the very near term. >> newmont mining, i know you like them. >> yep. >> what are you recommending to investors? hold their nose and buy it. or do you believe it's a solid story here? >> it is a very solid story for investors that can recognize that the central banks around the world are flooding the world with money. there's a reflationary cycle and increased demand for the markets when they return. it's not happening today or next week but over the longer term, i think a name like newmont which has low costs and good quality mines will be a very good performer on the bottom here that the stock is making. >> all right. michael dudas, thank you for joining us. we appreciate it. >> brian, my pleasure. thank you. >> much more ahead including big slide that we're seeing right now in what we just talked

about, oil. crude can't hold any rally lately. coming up, why one analyst thinks $50 oil could turn into a $1.5 trillion problem. as we head to break, look at the most active stocks on the nyse. we'll give you more on this market selloff with the dow down more than 200. we thought we'd be ready. but demand for our cocktail bitters was huge. i could feel our deadlines racing towards us. we didn't need a loan. we needed short-term funding. fast. our amex helped us fill the orders. just like that. you can't predict it, but you can be ready. another step on the journey. will you be ready when growth presents itself. realize your buying power at open.com. selling 18 homes? easy. building them all in four and a half months? now that was a leap.

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we're off the session lows. still firmly in the red. take a look at the dow. down 247 points. 1.5% is the loss. nasdaq is the biggest loser of the three major indices. down 2%. let's get you caught up with the stock headlines. general mills, a rare green spot in the sea of red. they beat earnings by 10 cents. restructuring and could cost controls help the bottom line? the latest version of microsoft suite is out today. office 2016, improvements to word and excel for business. take a look at tiffany, macy's and kohl's. >> we get a read a lot of research reports every day here on cnbc. but most don't catch our eye as much as the next one. wood mckenzie saying if oil stays at $50 or below per barrel, 1.5 trillion on spending

products may not go forward. that report is talking about oil projects all over the planet. let's put that big number into perspective. $1.5 trillion is 10% of the entire american economy every year. the same as the entire economy of texas annually. wow. joining us, jim webb. james, how did you come up with the $1.5 trillion number? >> well, it's really interesting question. the big thing is that the oil and gas industry has cost problems. this $1.5 trillion is related to spend that is associated with new products or new projects that are uncommitted or in the future. and these projects are not returning above 10% returns for their investors. and that's an issue. we believe that capex is really at risk. >> we have already seen probably hundreds -- i'm not sure the

exact number. tens, hundreds of my yonz of dollars in capital spending already cut. to you though that is perhaps just the tip of iceberg if oil stays as we say in america, lower for longer. >> absolutely. and since january, we've observed around $220 billion of cap ex removed from the plans in 2015 and 2016 alone for the oil industry. so that is the tip of the iceberg. they're big numbers. as we see, this $1.5 trillion sat risk. >> is there a number per barrel that you think -- i know they'll have all different cost basis. is there a number, 55, 60, 56, 70 a bare wrel you say most will then become economic again? >> yeah, well at $50 we're talking about 25% of our capex working or a quarter working at $50 but as you edge up, the

price code, we see the cost code. we see people comfortable at $65, $70 per barrel range. >> james webb, wood mackenzie. really interesting report we appreciate you staying on late and joining us. up next, more on yesterday aeg big drugstory. plus the best banking mets to make right now. we'll talk about bank of america, goldman sachs and more. again, we're all over this market selloff. the dow is off its lows. still down 246 points. you're watching cnbc, first in business worldwide. stick around.

the company raised price of a drug used to treat infections of $13.50 a pill to $750 much here's what he had to say whether that drug price would be cut. >> doctors are come out saying that you guys need to revise the pricing strategy. patients can't get access to the drugs. they're trying to hoard it in order to provide it. do you feel badly about what is happening? >> no, we're increasing access to patients. i think that we're dra mat

beingly increasing it and lower co-pays and giving more drug away for free. half of the drug we give away is for $1. i'm not sure what you're talking about. >> you are going to change the price? >> no. >> for more on this story, we have our health care reporter with us. melissa is at the nasdaq. you've been doing digging on the founder and ceo of touring pharmaceutical. >> in addition to being sued by the company he previously founded that he had sued a former employee in the context of that suit trying to recover $3 million. said that employee had taken in stocks that he engaged in a long sustained pattern of harassment against this employee whom his company was suing. that included supposedly facebook friend requests to the guy's family and to sending letters saying i hope you and your family end up homeless to his wife and allegedly possibly accessing his social media accounts as well. >> okay.

>> i think what is disturbing a lot of people here are that these details about the background are coming out and in this lawsuit from the former company is alleging essential will that he did a similar thing there by acquiring a drug and raising it by a lot. >> a kidney drug, righthe? raised it 20 times. >> right, for a rare disease and patients with no other options. and so folks are wonldering is he actually going to deliver on this promise to develop a better version of deraprin in this current company? we didn't see that happen at the last one. folks are saying let's see the proof. let's see if he is going to turn around and actually put his money where his mouth is and develop a better drug here or is he just doing this to enrich himself? >> i'm curious, in your view, does his spotty past make him less of a poster child for this issue? do you think that this hampers the issue going forward? >> i'm very struck by the fact that he appeared, you know, on air with us yesterday and talked to a bunch of other media about. this i'm surprised he stuck his neck out this far given what i

found ought which is in the public record about the allegations of harassment which he had no comment on when i reached out to his spokeman today. >> we did invite him back on today. we invite the his lawyer on. we invited them both to come on. a team of lawyers. and they declined. >> yeah. and now congress wants to ask him questions as well about the drug hike. >> all right. thank you very much. and for more on dan's story, go to cnbc.com. thank you. the final oil trades crossing for the day. let's set up for a weak close. jackie? jackie is there somewhere in tv land. we're going to go to a quick break. you totalled your brand new car.

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liberty mutual insurance. hello, everyone. chinese president xi jinping arrived in washington on his first official visit to the u.s. the president was greeted by the u.s. ambassador to china, the seattle mayor and the governor of washington. he is set to deliver a policy speech tonight. our michelle caruso cabrera is

in washington and will be following xi. the pope is on his way to our nation's capital. he left cuba a short time ago following a three day visit. he is set to arrive about 4:00 p.m. eastern time and will be met by the president and the first lady. amazon is celebrating the first emmy win with a deal for new customers. the company is offering a one day sale on its prime service for $67 a year. it's usually $99 a year. amazon won for the original show "transparent" at the 67th prime time emmys on sunday, hence, the $67 price. and a new report shows doctors aren't always right. it says most americans will get a diagnosis that is wrong or late at least once in their lives. the reports author say they don't know how many diagnosic errors take place but some estimates put it at about 12 million a year. that's the cnbc news update. that's a scary statistic.

>> yeah, and it depends on what the diagnosis is, too. >> absolutely. time sf the essence. >> when i was born, they said i would have normal sized ears. >> through go. >> look what happened. >> the statute of limitations hasn't passed already. >> you're a good sport, you know that? >> you have to be. sue, thank you very much. >> you're welcome, brian. >> oil is seeing a pop into the close. still in the red, jackie -- where were you, jackie? >> i don't want to go there right now, brian. let's talk about the oil price. closing over $46 a barrel. what is interesting is our session low, $45.14. we couldn't break that technical and psychological level. we did rebound a little bit. down about 60 cents on the day. a couple reasons for this, equities, of course, adding pressure. stronger dollar, adding pressure. and traders worrying about the iranian sanctions being lifted and that oil coming to the market. we've got a french lobby group in iran today trying to forge forward with ties and business

relationships there. having said that, the fact that we were rebounding to day does leave us a little vulnerable to keep moving a little higher from here. anybody's guess. we'll see. back to you. >> all right. tomorrow will be down and that will be up. jackie, thank you. gasoline is falling along with oil. the average price for a gallon of self-serve regular is $2.28. that's down more than $1 from last year. i filled up in jersey yesterday, $1.93. kidding. just as important for the economy is that diesel fuel now at a six year low. it's at 2.50 a gallon. to build a transport sector has not benefited. it's down 7% over the past 52 weeks. time now for street talk. other things to keep an eye on like the stock recommendations you need to know about every day. the first stock, expedia, outperform and top pick on this name. they raised the target to $150

to $135. you know the commercials with the guy. >> no. i don't watch commercials. i have a dvr. >> we work on tv. >> i watch tv. i just don't watch commercials. we should know that it's a great performing stock. it's up 45% year today. second stock that we're watching, virgin airlines getting a downgrade. market perform from outperform. there is limited up side of $39 a share. substantial upside likely to require further evidence that growth strategy is paying off. the remove willval of the overh. it hedges. >> through go. maybe that's what's happening with the transports. if you think everybody's bottom line is going to be cut -- >> not everybody. >> you have to know what the books look like. gold rallied a number of years ago because they were hedged the wrong way. goldman sachs starting coverage of net app with a sell.

they got a $30 target. but we'll watch it from here. goldman sachs's analyst expect further estimate cuts on both product and execution challenges. they also see the potential for an issuance to announce this buy back. that stock is down 30% this year. >> there was a little optimism in august when they reported earnings. the ceo is talking about a new chapter for net app. obviously that quickly faded. you can see the trade since august. due ponlt, citi upgrating t upg one. of course, there is potential split of the company. a lot of activities agitating for that. that split could be the separation from the materials business. >> just reminder, they're in the middle of a $4 billion stock buy back. ben, companies are not obligated to do it. they can announce it. they don't have to buy a penny. dupont says they're still committed. finally, under the radar name is

ldr holding. austin, texas based medical device company. a bigger research call. they started coverage on the name with a buy and a $48 target about 20% upside seen since then. ubs though very bullish in that same note on edwards life stinss. they have a $201 target. ldr holding under the radar name of the day. >> long term the stock looks good. but since reported earnings in august, the stock is down 11%. a little rough patch there recently. >> yep. there you go. all right. with that, we're wrapping up "street talk" for today. the materials sector getting hit hard as well. falling 2%. global growth concerns incense fig. let's get more on the trading nation team board. stacy gilbert joins us with susquehanna. are the global worries overblown? we highlighted that in the first half of the show. >> they may not be overblown. the story of the materials is the market is looking 18 months

forward. they're really not seeing anything exciting there. china is in the midst a transition from industrial to a consumer based economy. so the massive boom that you saw in chinese building is really going to be over. i think the market is just simply not excited about the sector even despite -- even if it sold off considerably over the next couple of months. >> okay. stacy, your real folk us is looking at the options market. based on that, how do you foresee people trading the options or equities coming up? >> sure. if we take our 30,000 foot approach of materials, the subsectors are not all the same. look at the x lchl b. that is the material select sector spider. it is pricing in less premium. the options are less expensive relative to the s&p 500 than they've been in a while. there is not that significant fear within material. the important part of why those are a little cheaper right now in a relative base sis because that correlation, how well the stocks are going to move together is at one of the lowest

levels we've seen. let's look at a couple scams. take letter x, u.s. steel. typically trades around 16,000 puts. today you have north of 140,000 puts trading. majority of that is investors rolling long puts they had down to lower strike. so maintaining a protective position. opening some new put positions and closing winners that investors have h let's look at fcx. the flow is also seeing increased volume. the majority is both ways. inve investors are positioning for more, less, bullish, bearish. so just because something is trading and x doesn't mean you're seeing the same flow through into scs, i think that's really the take away for the materials is that it's becoming more subor specific. we can't just broad base materials. >> just he minder on fcx specifically is everybody hated the name. the stock was whacked. then carl icahn said he owned the stock then it went up.

you have that push-pull around carl icahn. >> i think that's fair. >> for more trading nation, head to our website. once again folks. selloff tuesday. take a look at the markets. the dow off the lows. we're still down more than 200 points. 1.4%. the nasdaq, the biggest decliner on a percentage basis. it is off 1.9%. but what should you do with your money right now? you know, for next year, for five years out? we're going to ask a guy that manages half a trillion dollars when cnbc rolls on.

can it make a dentist appointment

when my teeth are ready? ♪ can it tell the doctor how long you have to wear this thing? ♪ can it tell the flight attendant to please not wake me this time? ♪ the answer is yes, it can. so, the question your customers are really asking is, can your business deliver? take another check on the transports here. down by 3%. take a look at the worst performers here. a mix of sectors from the airlines, alaska air, trucking

as well as avenlt is. >> did you know just how bad it has been for stocks? consider this -- if the year ended to day, this will be the third wost year for the dow since 1977. only 2002 and 2008 would have been worse. luckily the year is not ending tomorrow. let aeg figure out why good place to invest going forward might be. jech jeff knight is with columbia investments. they have $500 billion under management. most of our viewers don't have quite that amount. where you are seeing value right now? >> at the moment i think we're undergoing a bit of a reconsideration of a number of financial assets. so i think the priority for these days is stability and cap preservation until we reach i think more attractive levels than we have now. >> so -- where are you finding value though? what parts of the market? is a lot of stuff to invest around the world with $500

billion, jeff. >> i think the knee jerk reaction on the u.s. stock market to say well we're down 10%, 12% from the highs is that where the value is? i think that might be a better question to ask elsewhere. emerging market equities, for example, admittedly the fundamentals are threatened by strong dollar, by imminent fed tightening and so forth. i think the corrections there have restored essentially 2009 levels to a number of emerging market countries. we're finding for example, value in places like taiwan and korea that may have been punished too much for recent angst over china. >> so you're not worried about great currency wars, especially asia? >> certainly not a central case. and these things are fluid. we have to be alert to those things. i do think it's important that the chinese have taken some

action on the currency front. they had been dragged along with the dollar strength over the past 12 to 14 months. and i think the fact that the message seems to be enough is enough is an important one for global monetary dynamics. >> closer to home, you know, mom and pop sort of own verizon or at&t. those are two names you like. there is why i poo-pooed the china story altogether. you can make the argue bment china is a big deal. but the fact that verizon and at&t are down 5% this year, they have nothing to do with china. at all. except for maybe buying some cheaper components from that country. why do you think those types of names are being sold? >> i think they get tarnished with some ideas that are more macro in scope. they tend to be dividend payers and linked to bond market vulnerability. and i think all the things are inherently statistically modelable and to our eye they've

been punished well in excess of any vulnerability that interest rates or to overall market weakness. so without a strong thesis for idiosyncratic problems that those companies, there is value. there. >> the s&p 500 target is 2150. it's about 11% higher than the s&p 500 is right now. we still have three months to go in the year, jeff. how far toward december 31st do we get before you say i have to cut that target? >> yeah, i mean, we could interpret that target i think with too much precision. the theme behind that number to me is that there is a correction underway but that it ought to resolve itself as it tends to do with seasonal strength towards the end of the year. i think it's been thrown a little bit of a curve ball given that the fed did not do what i expected the fed to do which was to deliver a small hike along with some reassuring language

that that might be it for a while. that i think would be the central bank scenario most compatible with strength into year end. now we may be under a cloud of the guessing game wlaf to expect from the seb tral bank for the end of the year. it may push off that kind of recovery. but scheme theically, i think the idea is unless we have a recession in the united states, unless we have a real profit contraction, we're likely to see enough repricing in the course of the last few weeks, the next few weeks to establish an opportunity for a strong finish to the year. >> thank you, jeff. a real pleasure. thank you again. >> thank you so much. >> brie brian moynihan gets to keep both of his titles. coming up, we'll talk to a top banking analyst about whether the banks are a good place to park your money. stay tuned.

yesterday we brought that you exclusive on goldman sachs's new etfs. check out the glcs. it is down a little bit today. note, it is down less than the

peer. getting off to a less bad start than others. bank of america shareholders voting to allow brian moynihan to keep both the chairman and the ceo roles. shares not responding. the market is down. ceo roles. shares not responding, the market down, b of a down 1.5% with it. let's bring in dig bow spray with rafferty capital markets who i know will say that splitting those roles means i think technically squat to you, dick. how come? >> well, basically because i've been in this business close to 50 years, almost 50 years and never once in that 50 years has anyone ever told me they are going to buy or sell a given stock because of this issue. the ceo and chairman being together or apart. i guess there's something like 360 of the 500 companies in the s&p 500 where the two roles are together and i would guess it's less than the number of complaints about that than the figures you have on, you know, one hand.

so i don't know why issues like this have to get away -- get in the way of great stories. you know, banks sell money, all right? let me put on the this stock. basically bank of america has $1.1 ftrillion in deposits. that's up from what it was in 2008 and it's loan volume is down $45 billion. they are they have a huge amount of money to sell. merrill lynch was $2.5 trillion that have been invested with them in one fashion or another on which bank of america makes some concerns. tles he' no company in the united states which has as much common equity as bank of america, exxon doesn't have if, apple doesn't have it, facebook doesn't have it. bank of america has more than everyone. >> i have to ask you this because you aptly point out that moynihan did not win this vote overwhelmingly he got 85 do 90%.

isn't this a referendum on brian moynihan and his tenure. if you take a look at the bank stocks from the day he took over, january 1st, 2010, bank of america stock is up 12%. citi is up 63% and jpmorgan chase is up 75%. why do you like bank of america and broin moynihan so much begin his performance? >> if you go back to the numbers, some of the numbers that i just mentioned to you but i will throw you some more -- >> but as a shareholder doesn't it boil down to the returns? why is jpmorgan giving me 75% and brian moynihan 12% during his tenure? >> because they didn't own country wide credit. if they did they wouldn't have shown 75% return while bank of america showed a lower number. you have to stake a look at hoe deep the hole was that bank of america was in that they had to get out of which was not the situation at all at jpmorgan. this company has made over $70 billion in litigation penalties in the last few years.

this company was priegt at 45 to $47 billion a year to run the company because of the fines it was paying. this company will now cost less -- $4 billion less a quarter to run the business than it did a number of years ago. you know, when it company was taken over by brian moynihan it had something like $60 billion less in capital than it has today. the company -- the company was essentially bankrupt. the company should have gotten rid of country wide credit because it was a fraud, you know, to buy that company but they didn't get rid of it. so he came out of a deeper hole. >> we have 30 seconds, dick. is this your topic in the space? >> yes. yeah. it's selling at 30% discount to cash. >> it's tough because we're talking about cancer and a business and they are very different things, cancer and life and death obviously much more important on any level than talking business, but, dick, i can't let you go without at

least bringing us goldman sachs, the ceo announcing he has lymphoma. certainly curable and we wish him a speedy recovery and the best. we take a knew subtropical eye and look at goldman sachs. is there a bench there? does it change an investment thesis because of this nusz? >> there is a very deep bench but this is a big problem. it's a big problem because goldman sachs was understressed before this event. in other words, you know, about 18 months ago the company took a look at the financial industry and said where is it going to be five to ten years from now and where you should goldman sachs be in order to benefit from it? what they discovered was maybe goldman sachs was not positioned correctly. so they have made a certificate yeefs changes already, number one, they've completely changed their trading operations, number two, they've gotten involved in business development corporations, number three they're taking a look at their retail operations and they have a lot more changes that they want to put in place. so the net effect is the stress

of changing the business model which is what they've been going through over the last few quarters has been heightened by the stress of wondering and hoping that the ceo will be able to do his job. >> dick, we appreciate you coming on. thank you very much. coming up, a 17-year-old winner of the google science fair. stick around. hi my name is tom. i'm raph. my name is anne. i'm one of the real live attorneys you can talk to through legalzoom. don't let unanswered legal questions hold you up, because we're here,

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is the grand prize winner of the google science fair for her creation of a portable low cost diagnostic test for ebola and other infectious diseases and she joins us from san francisco. olivia, congratulations. how did you come up with this very important and temperature specific test whiskey? >> thank you so much. i actually came up with this test because i'm in a science research class at school so each student is supposed to do an independent project and i didn't really know what i wanted to do initially. i knew i wanted to have a simple solution for a complex problem and something that would help people and make a big impact, but i didn't really know what that was going to be. so my teacher told me just to look in the news and find something that you feel passionate about or outraged by. this was last fall so really the ebola outbreak was really what interested me and also how

quickly it was spreading and just destroying the areas that it was spreading in. so i wanted to find something that would limit the spread. so that's really how i began. >> you are a junior, you have a year left of high school. obviously very adept at science. are you going to be a scientist or is this literally just a side project for you? >> no. no. i definitely through doing it realized this is the direction i want to take in my life, but i also want to be a doctor because i just enjoy working with people and seeing the impact of things in the real world and giving people hope and listening to their stories and it's just so inspiring and interesting for me. >> you know, my producer said ask her where she's going to go to college and i thought she's probably too smart to go to college now, you have $50,000 in your pocket. are you going to go to school? you're obviously ready for the real world now. >> no. i definitely think i want to go to college. i mean, it's an amazing

experience. >> where are you going to go? >> i don't know. i'm only a junior. but i definitely want to look everywhere and just talk to so many people. through this fair i saw how many amazing kids there are and what ideas they have so i'm excited. >> olivia congratulations from all of us at cnbc. >> "closing bell" starts now. this is cnbc breaking news. market selloff. hi, everybody, welcome to the "closing bell," i'm kelly evans. we do have a selloff here at the new york stock exchange. >> another big selloff, all ten sectors inside the s&p 500 index are negative right now. commodities have fallen on new concerns over the slow down in china. that seems to be one of the big themes today, although we're hard pressed to come one a central theme for this selloff righ