they have to execute, but i think this guy is the right one for the job. >> jim cramer has been talking about a great quarter. >> analog devices. >> procter & gamble. sounds crazy, i think it goes up. >> large banks with the headwinds and trading is great. >> anything that brings down that name, you should buy it. >> thank you "power lunch" starts now. brace yourself for another wild ride as we head into the market close, then rallies down a 00 points, sinking again, and now we are higher once again this is haul in one day, folks the sudden volatility seems confusing, and it's a bit complicated. donnell worry, we have nearly 800 billion worth of advice, to help you navigate these choppy waters how much are the boo sheens and maybe popular etfs to blame for the incredible ride.

a lot of questions, we have answers. "power lunch" begins right now welcome to "power lunch. brian talk about the dow has all over the map then rallied up, down up, down up it could be the biggest com decrease back for you dow in more than seven years. the vix top 50 for the first time since august of 2015. right now it struck 36 check out some of the individual movers gm is rallies, lululemon recovering from early losses on news that the ceo is out investors taking a bite our dunkin', as you can see. tyler?

good afternoon, everybody. we begin, of course with a wild day on wall street bob pisani is watching all the action at the new york stock exchange hi, bob. >> hello, tyler, we are looking for a bottom we are looking for signs of a selling climb max, some kind of emotional catharsis, we may have had had it at the open the bottom was right there we opened 2593 on the s&p 500. we're at 2650. that's a better than almost 60-point move. that's pretty huge that was the lows at the open. we've had enorm on the volumes in exchange traded funds the spdr, and russell 2000 and triple qs 400% more in volume. that's a sign of people moving

things around. we've been talking about volatility we had our climb makes at the open the vix hit 49 at the open we drop downed to 36 right now that move i think is very important that we're getting more stability the cboe, which is very influenced by vix products, down a bit today. kbw had a note out that they come from vix options and if us. >> that is down. no down, but they are going to have their earnings out on friday finally what's driving the markets? we emphasized this volatility. it really was very important the market sell-off was not driven by any of the bosch and volatility was the big issue, as the market suddenly dropped, 20, 30, 40, 50, 100 points, nobody had protection

when they went toss it people who are market makers jacked the price up that's why the vick went through the roof our question is when will that bid subside a bit. we're starting to see signs of that, but no bottom yet. guys, back to you. >> bob, thank you see very much. some versus hit harder than others for a closer look than stocks that have been harder, let's go down to dominic chu, they slide and then recovery. >> you're making me field at least a bit nauseated, but investors have been probably feeling that way over the course of the past few days if you look at the s&p 500, in and of itself, again that one-year move is 15% to the up side, but it's the fear tail end of the chart that so many are focused on it has caused quite a bet of distress in the marketplace overall. we decided to look at the s&p

500 at some of the stocking 45rdist hit, so we looked at the 200-day moving average turns out that quite a few of them are actually elow their long-term trend lines. among the big names trading, believe it or not, share of apple are currently below that 200-day moving price also check out shares of coca-cola, mochg again below their 200-day price, and even another big one, johnson & johnson on the health care/pharmaceutical side, below its averaging as well. that had be something to watch at for the 52-week louse, even harter hit 50 of the s&p 500 has actually hit a 52-week low in trading today.

among those names, you know them, pg & e, also campbell soup, hershey, ford and general electric, all stocks one that realm that are at or near their 52-week lows guys, back over to you. >> thank you for the rundown, dom. three-year notes up for auction, rick santelli tracking the action what's the demand like, rick >> i tell you what, i was surprised. i gave the auction a c-plus. demand was a bit better than average. inflation potentially heating up, a trillion of supply, and much more in t-bill. this auction wasn't really exciting that's not a bad thing let's go through it quickly. $26 billion of three-year notes. $2 billion more than we usually do 2.28 was the yield at the dutch auction. that was exactly the bid cited

on one issue market. 3.0, three times exactly a little above average 9.7 on directs. also a bit above average dealers took a rather healthy amount the 40.5% 2.28, c-plus tomorrow we'll have, of course, 10s, then 30s, 66 billion in total. it really does underscore while all this has been going on, the treasury market has steady eddie. tyler, back to you. >> thank you very much, rick let's turn back to the stock markets. just moments ago our scott wapner spoke to carl icahn he told scott that the markets will bounce back from this slide and the u.s. still has great fundamentals, but he warns this market has become more dangerous, that's because there's too many people buys leveraged markets. he fears that the market has

been turned into a casino. gentlemen, welcome, good to have you both here. i want to get very swiftly to what people should do and how they should react to what seems to be good on in the markets right now amid st. all this volatility rob, let me get your reacto what carl eye sawn said, there's too much money in highly leveraged products, etfs while they can be positive, they can also pose dangers. >> yeah, for us we certainly don't look very much at levered products, especially for our clientele. we feel those probably belong in the hands of professional investor, exchaj traded funds, we're comfortable with they're a great way to get access to the market, so we wouldn't lay this at their hands. we would agree this is more of a technical sell-off driven by

some mispositions, difficulties for certainly funds. we're product more comfortable anyone environment we're cautious for the next couple days, but pretty constructive when we look at the long term. >> john, user thoughts i think back to prior crashes -- i don't mean tosay this was a crashes you but selloffs the common thread almost always leverage and derivative products. >> of course you can look back at his torrie and see the impact that leverage has. that's always a challenge on an intraday basis, but we think pullbacks are an opportunity to reassess, use any excess cash to apply to areas where you want to be overweight, also to rebalance bund towards targeted allocations.

we've had a very violent couple it's in the context of -- and c, corporate profitability is strong. >> rob, i want to pick up on a headline my friend read in the "wall street journal" this morning. the market wasn't tested, you were how do you feel about that >> market declines like this are always a test for every investor and a good test for advisers as well we learn a lot about our clients in these market declines i agree. >> what did you learn in the last two days, three, a week >> for me i think we have learned for those who have gotten a bit complacent about the market we have known quite some time that volatility has been quite low. we've seen a steady up trend in market, why it's certainly history here on a day over day basis, you we would say volatility should be normal in markets, an ebb and flow

they really need to think about their plan and saving for investing to ensure they can tolerate. >> if you felt sick yesterday, maybe you ought to rethink what you've got in your portfolio there was always leverage, but when it doesn't work, you know, you look at 1929, but there's usually a catalyst that ends up triggers the selling because of the leverage a lot of people lot this was interest rates i see that you think that the projected trading range for the ten-years yield will be 275 to 325. what do you think is going to happen to markets if that ten-year yield goes above 3% >> i think if the market reaction properly. in order to re -- it could be a sudden move.

i think what hashed was everyone was caught offgrad, and immediately people feared a new fed chair. but i -- we'll hear from jerome powell, and if investors get more comfortable with the idea that the fed will raise rates, it looks like fed funds future is in that as well anytime -- i think the market is more willing to absorb that. when you saw the sudden shift, that's when people got scared. i personally have been delighted with the way the bond market held up yesterday and today, we've actually steepened, and if you get something closer to 3%, we must be mindful as domestic investors, the attractive level that pose foss global investors when they have oopses, for example buying the japanese

government bond or maybe the german bund. while domestic investors may view the ten years expensive, global users use it as value. >> thank you very much rob, john, we appreciate it. cot wapner will join us in a couple minutes to talk more about what carl eye sawn said in his interview on "fast money" the last half hour. before you go to break there are 70 times more index properties than equities in the world. >> i believe it. >> 70. we've talked about in over the year the dow just lost nearly all of its triple-digit gains, folks, this is the kind of day we have, it's likely going to be like this the next couple hours. material, consumer discretionary bouncing back. up next, a closer look inside sectors that have been moving they markets we continue to follow your money

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well the nasdaq 100 off more than just 5% in the past few days josh lip ton looking at how some of the tech stocks have done. >> just two trading sessions friday and monday, the nasdaq

gave up 28% of its gain. today the tech-yessy gauge is flipping between gains and losses one name to watch, of course, would be apple fell below its support level yesterday. today that stock, though, moving higher, though still down more than 10% from the recent high, analyst says pointing out that two key suppliers, momentum and ams providing strong second dash faang looking stronger finally the semis, losers yesterday, but today check out skyworks and micron well in the grief. and micron preannouncing positive results guys, back to you. >> thank you for the rundown, josh meg tirrell joins us with a

deeper dive on what's going on there. >> health care has head -- and drug stocks in particular down more than the rest some of the hardest hit include regen ron, all allergan, and to bristol-myers one of the worst performing, down a second day as the market parses through from a readout we got yesterday morning. rbs analyst called out a note as having compelling values they're all in the green there of course there has been ansh buoying etfs like the edb to highs we haven't seen since 2015 as jeffrey's health care strategist points out. management teams have been saying thee reticent to do m & a with asset prices this level

coming up, one of the most powerful men on wall street known for dislikes regulation, is calling for some of the regulation for some products, a recap of carl icahn, coming up we've been preparing for this day. over the years, paul and i have met regularly with our ameriprise advisor.

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how are the big names playing this sell-off. carl icahn was on "halftime report", and what did he have to say? >> we always try to catch up with big market participants like the rest of us, carl icahn was watching yesterday's volatility and today's volatility in awe, and perhaps fear, stocks moving so much so fast, and trying to make sense of it all. >> i don't remember seeing a market with this kind of volatility in two weeks so i do think that this is just telling you something. it's a warning >> yeah, a warning that given some of the derivative products out there, that today's correction could one day, icahn said, become an earthquake

>> today you have to look at the leveraged etfs that are crazy. i have these index funds with leveraged etfs i don't see any difference between that and '29 i think this market will bounce back probably. you get thrill think panic thing, but one day this thing is just going to implode. >> icahn was on with us, what, in mid november, and said that the market had reached, in his words, a euphoric state, that it had, quote, run away and a big correction was likely. so this is not probably a big surprise to carl or many other big investors, especially at david rho that started this is a little bit -- the question is how long does it last?

how deep does it go? but icahn says this is not the big one if you are thinking. >> i wrote down major quotes, major storm coming i don't know if it's five years, five months, five days from now, had you said i don't know that but this is the rumbling before the quake. >> a few years ago he put out his danger ahead video he came a the network. i don't need to tell all of you, stock have virtually gone straight up since that warning, but the point he made in those moments, interesting to look at what he was talking about. assets bubbles, low interest rates, too many etfs and a bubble in passive investing, was he call precise at that moment no, but that's not exactly the point he was making. it was taking stock in where we

were, what's happening in the market and remembers that place of business this doesn't all end well. >> you've been involved in two famous fights with icahn -- not you, well, ackman, you have a book coming out. >> i do. >> larry fisk from blackrock, and remember those two guys, didn't he kind of get into had where icahn said you're creating weapons of mass destruction, and she med sudden up. >> they fully got into that. that was at delivering alpha 2 1/2 years ago, but there's one thing to have an etf, and wen to have an leveraged -- >> the issue is the leverage >> 1929 was leveraged. >> even blackrock is out saying there needs to be more regulation for the leveraged

products people don't know exactly how they work. if they say -- there's big investors and institution that got their shirts ripped off and their faces smacked in the last 24 hours as a result of how this thing traded, both the move, the velocity and inability to deal with it. >> this is why people care, and this is a bit wonky again an etf, we obviously know what that is an etn is also backed by the bank that issues it, correct so if there's a problem with a big etn, you start to get the sniffs of banks -- >> systemic risk. >> i'm trying to be real -- >> let's -- >> first of all are what are we talking about in this? the xib. how much money was in that >> 1.1 billion dollars, but we don't know the exact amount of

the leverage included in this. and for credit suisse that put it out, it's nothing i get it i think carl would agree, you know him better than i do, that these products, if they're that confusing, i'm not sure there's necessarily a need for them. >> what are they based on? >> it's not clear -- or you wouldn't have some of the big names investing in them. you can see what happens when the market psychology changes in the blink of an eye. people start running for the exits, or things changed on friday the jobs report seemed to change things wages rose, all of a sudden ear fearing inflation has run away >> so the volatility -- >> it triggers stuff

i think back when everyone had piled into mortgage-backed securities they are going to worked beautifully until they stopped working. the big brokerage houses with leveraged 40 times, 30 and 40 times, goldman sachs and -- >> some of them 90 some agencies 100. >>and there were products that are opaque, and often derivatives, and the common thread is leverage and derivatives. here it is again there may not be many individuals buying these gamma volatility triple leveraged etfs other than al michaels, maybe. >> that's just straight long -- >> but when they stop working, the systemic flow-through is violent. >> but did this stop working >> people were on the wrong side

of the trade >> but here's the thing. >> i think it is an important conversation, because yes, this instrument was, again, not a big deal, to your point, a billion bucks is not much. to carl it's pocket change, but i don't think most of america knew this type of product existed, and certainly didn't know that the unwinding of an obscure etn name they never heard of could cause the market to -- and the good thing is they probably weren't exposed to it so you're talking about very sophisticated professional investors, they're the ones who got hurt by the massive move and velocity in which it happened. mr. and mrs. america, were they overwhelmingly invested? i dot it. >> but it's so attractive, it doesn't matter they have won two national competitions. >> scott, thank you very much.

let's go to sue for a new update. thanks, ty here is what's hatching. a 6.4 earthquake struck near the coast of taiwan on late tuesday their time causing a hotel to collapse and forcing the closure of a nearby highway. an official is saying that some people are trapped in a building and another earthquake struck the same area on sunday. s. we have been trying to get a budget cap agreement for six months, and i would argue strongly the reason we do not have a budget cap agreement which affects these issues is ball thee holding government funding, particularly funding for our military hosage on completely unrelated i stems. an am track engineer has been ordered to stand trial on criminal charges for a 2015

train derailment in philadelphia a judge reinstated involuntary manslaughter and reckless endangerment trice another judge had thrown out the charges last year, ruling the evidence pointed to an accident and not negligence that's the news update this hour brian, i'll send it back to you. >> thank you very much, sue. when u.s. stocks sell off, the impact is felt around the world. seema mody is looking at a sea of red on the european wall. >> europe started 9 day down 3% in response to the sharp sell-off we saw in asia, but once the u.s. markets opened and started to rebound, europe came off the lows, though still clouting be low the 50 and 200-day levels, that technical traders pay attention to the indetention now down about

7% off its all-time high let's highlight the vehicle markets. germany, france, spain, the uk losing just about 2% in today ace trading, for the year german,is leading the decline, as financials in particular continue to underperform deutsche bank the big name there. that's currently make juny one of the worls you'll see in asia, china, hong kong, south korea are still higher for the year. here's what a lot of traders say. it's the story that's still pretty strong, on average so fair in the fourth quarter of 11%. you have 51% profits there still being hurt, guys, back to you.

>> thank you very much, seema. president trump has been tweeting about the on the government, and the stock market is higher. by 32% the white house saying about stocks, what is the white house in and out saying about stocks after the big sell-off that's coming up on "power lunch. what's critical thinking like? a basketball costs $14. what's team spirit worth? (cheers) what's it worth to talk to your mom? what's the value of a walk in the woods? the value of capital is to create, not just wealth, but things that matter. morgan stanley

feel that? that's the beat of global markets, the rhythm of the world. but to us, it's the pace of tomorrow. with ingenuity, technologies, and markets expertise we create the possible. and when you do that, you don't chase the pace of tomorrow. you set it. nasdaq. rewrite tomorrow.

let's get a check on this wild ride. the dow swinging between triple-digit gains and losses trading at about a 1,000-point range. apple, home depot leading the index, a staggering stat to tell you, about $4 trillion have been wiped out of the global markets in about eight days. utilities, real estate, energy the worst-performing, materials the best performers. all right. president trump has been commenting a lot about the stock market rally on the way up what is the administration

saying now kayla tausche spoke with steve mnuchin. >> he said despite the move, the administration does take used for the the secretary was appearing on capitol hill for the latest in a series of annual regulatory hearing, we caught up for him on his reache on the way in >> markets move in both directions and they're functioning very well. i'm going to my testimony. people should be focused on the long-term investment americans should focus on the stock market over the long term. the topic of regulation took a backseat to the turmoil. he did say the white house is monitoring the volatility and personally called market participants and got the green lights to note that the market

is currently funging normally, though he did say algorithmic trading did play a part. a year ago he said the white house is -- that the stock market is a barometer of their success, today he would only say that markets fluctuate and they continue to believe that the u.s. is a good long-term investment guys, back to you. >> that's the change you make when you have a year under your belt. did some of the president trump's policies result in an overheated market? let's bring in larry kudlow and ben white. friday the jobs report comes out and wages went up.

>> because they're worked about rising interest raids result. >> if i weren't the trurp team, i would say -- that's all there's to it. i don't really understand -- i think they're going to go through 3. but they get to 3 1/2, i don't know, but i wouldn't be surprised.

it's still a 4.0. the president has bragging about it, but what do you do when the market goes down? >> you let the treasury secretary put on the the statement he did my question is, where was this from the start presidents typically don't cheerlead the document as railroad track i don't think really did president obama said, i think stocks are kind of cheap they were, stocks went up, he at the same time about fundamentals of the economy are good. wore focused on middle-class wages, jobs, stuff like that, so president trump decided as to cheerlead. people were asked, is it your

fault? it's a fool's game he never should have played it i want to go to the wall and point out something. the dow did lose 175 points yesterday. that is unmistakesably true. it ranking the 9th. >> put friday and month together and see where that number is >> he missed a point that i added so much value, to gown down a bit -- >> maybe he'll do that later today. i don't think he's figured out is the --

>> there's so much good news out there. underscore that. the economy is fundamentally sound, and getting better. the tax cuts, the regulatory rollbacks, stuff we've been talking about for months i believe will continue to work. when long-term rates go up, it's not a problem in the longer term the economy is fundamentally sound. that's all you need to do. you said will people stop sake the stock market is not a --

>> first of all, i don't care if you -- i wasn't going at you directly. >> why doi say that? >> it's not the k34i obviously, but it is people's 401(k)s, retirement accounts, pension accounts, and if you look at the longtime horizon, they roughly match up it's both the long-term reflection of the economy, and it matters to people's lives. >> and you're not wrong. are benefiting enormously. it's helping them bail out their pension funds, which are terribly underfunded.

soar are soared in the latest report, but the economy is doing well it's coming from the investment side the dow has turned negative, going back to the idea where this is a day we're likely to get lots of flip-flops i want your thought. here comes this big tax cut. it's going to start showing up in my paycheck, but then they are three other things that may take some of the that talks cut away one is the possible of higher inflation. that's a kind of tax, right? >> oh, yes age you had third, the dollar is weakening. which means imported goods so talk to me about that

the dollar needs to hold in my judgment that's what takes out the inflair fears. they're expanding the economy's potential to grow, and that is not inflationary i don't great with the larry summers of the world on that point. i know that people disagree. growth by itself does not grow inflation. bad money does, that's why i focus so much on the dollar. i think the trump administration is not going to talk about the dollar, and i think that the federalreserve hardly ever talks about it if the economy is better, the dollars will get better, and that's a good thing, and eventually stocks will have a lot of value and go back up in my judgment. >> they probably will. >> buy the dip. >> buy the dip we don't know how much growth this would give us and will it offset the production. is that going to increase

interest rates will it slow the economy is? it may not we might have enough growth that it will balance it out >> ben, you're coming around. >> i didn't say you were right, but you might not be wrong. >> i think the impact on the debt and deficit is a problem. >> honest reporter >> got to stay this. >> larry, ben, appreciate it well, if you are a ceo right now, and your stock is down 8%, maybe 10% over a couple days, what do you do what's your message? the former ceo of mary's will join us to talk about that this is a big one, after his company results, it's a big dehere on cnbc, stick around it's all yours. wow! record time. at cognizant, we're helping today's leading life sciences companies go beyond developing prescriptions

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and don't forget about them. uh huh, sure. still yes! xfinity delivers gig speed to more homes than anyone. now you can get it, too. welcome to the party. volatile trading day after losing more than 1,000 points on the dow yesterday, are ceos, what are they doing today? let's bring in terry lungren, former ceo at macy's for insight on this and a bunch of other stuff. i wish we had a half hour with you. we don't i'll jump right in when you're the ceo of a company and your stock starts to fall, the markets starts to fall, what are you thinking, what are you doing, what's your reaction? take us inside the board room. >> of course, you're looking at it it would be naive to think we aren't but there isn't a lot generally you can do about it. what we're watching today is a lot of electronic trading moving

numbers and the market you check yourself in the mirror and say is my strategy sound am i going to get through it then you can sleep at night, regardless of the variations that take place. >> can we play you something that jim cramer said last night on his show and get your reaction >> sure. >> my advice to treasurers and cfos that are watching, call your guy don't go by rote, don't be a moron and say this is just another day. it isn't buy your stock tomorrow. into the artificial nature of these machines that have been known to destroy the market periodically, because the fundamentals are stronger than 2007 and 2008, i'm willing to stick my neck out and say do some buying. >> jamie dimon stepped in at one point and seemed to put a bottom in the market. what do you think of that? >> it depends on your situation, your balance sheet if part of your stwrrategy has

been to buy back stock, jump on these, if you believe in fundamentals you look at the unemployment rate, you mentioned earlier, the subject we have all been looking for is wage growth that's before all these companies said this is what i'm going to do with my tax benefit. i'm going to start working on improving the wages in my company. that's not even in effect yet. i think that's a very, very positive step. to me, that means more potential for consumption, which obviously drives our gdp so i just look at the fundame fundamentals as being pretty solid in my opinion. i think you have heard it from cramer you have also heard it from carl icahn is saying there's opportunities to buy here, and there probably is. >> retail had a pretty good holiday season that's, you know, consistent with what you were just saying consumer is doing pretty well. feeling better, feeling richer, willing to spend >> i also think, you know, i think people have missed that we have been going through two years of hell. you know, in retail.

>> sure. >> we haven't been sitting around saying, gee, i hope things are going to get better i hope consumers are going to start shopping again we have been aggressively changing the mix of what we are in terms of how we present ourselves to consumers my own case, my former case, by the way, i'm retired as of last week >> how does it feel? >> such a smile. >> not me. he's outstanding but what macy's has done and bloomingdale's has done in the last couple years. they were aggressive about closing stores we saw it, so two and a half years ago, we took aggressive actions. they closed 20% of their physical stores. that was the right thing to do they're already the fifth largest internet company in america. they already have that so getting the supply and demand right is key that hasn't been dut yet and that still has to work its way out. >> you did a lot of deleveraging a lot of companies borrowed a lot because money was so cheap you didn't have that choice, but what do you think the world is ready for right now if interest rates start going back up? >> i have been at this for a

while. i watched from the sideline. i was running neiman marcus at the sideline, but i watched from the sideline a healthy company taken over and go bankrupt within one year. highly leveraged then macy's bid for part of the federated stores, pay too much and ultimately went bankrupt i came back to federated and six months later, we bought macy's because they were bankrupt i have seen these highly leveraged balance sheets and it's a bad thing for retailers a hard thing to overcome it's something we're strong on >> hasn't gotten a lot of attention because the market collapse, but bon ton stores, filing for chapter 11 yesterday. sears, again, getting lost in the market headlines now a $2 stock >> just re-enforces my point about balance sheets >> is sears going to survive >> they have very challenging balance sheets >> is sears' balance sheet too challenging? >> we have to wait and see, but they have got to be acting more

like a consumer orienting focused business and focusing on the consumer that's what i would do i haven't seen that from my observation. >> you're passionate about the olympics why? where did this come from >> first, i'm passionate about anybody and anything that's the best in the world at what they do and it's on display in korea hereerse starting on friday night, and i'm very excited about it my wife is involved with the figure skating team. she was a skater, so she's very involved with the team i have gotten to know a lot of athletes i know shaun white, who just, i mean, talk about somebody whose back was against the wall, he wasn't going to make the team unless he scored 97 on his last run. he scores 100, a perfect run i love that. >> is he in his 50s now? >> he's 37 tyler, he's 37 >> but no quit in him. you know, same thing for some of our -- then you have the 18-year-old, the opposite, nathan chen, wow >> come on back. now that you're retired. >> not really retired.

>> i don't have as much time as you think. >> i know that, but nice to have you here >> the industrial down about 60 points right now oh, no, 100 points well, it has to update about 88, 85 points. down 560 points at the low, and up 350 at the high of the day. you can't afford to miss a minute of this the second hr ouof "power" begins right after this. (barry murrey) when you have a really traumatic injury, we have a short amount of time to get our patient to the hospital with good results. we call that the golden hour. evaluating patients remotely is where i think we have a potential to make a difference. (barry murrey) we would save a lot of lives if we could bring the doctor to the patient. verizon is racing to build the first and most powerful 5g network that will enable things like precision robotic surgery from thousands of miles away. as we get faster wireless connections,

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east i'm tyler mathisen here's what's on the menu for the second hour of "power lunch. you should buckle up, no matter what the dow trading in a nearly 1,000 point range today, top to bottom and in between. we have your strategy for riding this roller coaster. >> the fed's dilemma does the recent dilemma take one rate hike off the table. and the technical take, what the charts say lies ahead for these markets. "power lunch," hour number two, starts right now >> yeah, ty, what a day it's been the dow briefly dipping into correction before rebounding

right now, we are seeing the dow down, 70 points. now, of note, if we do end higher, this would be the biggest comeback for the dow and the s&p since all the way back in 2011. here's what's lagging in the market utilities, telecom, and real estate leading consumer discretionary, materials, and tech, largely in the green. take a look at the vix, getting a lot of attention lately. up again today it briefly topped 50 for the first time since 2015. some individual movers out there, trip adviser, sky works, s&p global, and micron leading the s&p 500. retailers in the green include tapestry, williams-sonoma and nordstrom. energy is a drag pioneer, conoco, baker hues all lagging. >> we're going to dig deeper into the crazy day what has driven the comeback, what continues to lag back >> as we take a look at that nearly 1,000-point range in the dow, about 930 odd points, as we

see the dow dip back towards negative territory over the last couple days, it has been volatile. we were down almost 600 points at one point yesterday as for looking at the stocks within the dow that have driven some of this comeback from that nearly 500 to 600 point drop earlier on today in that 900-point spread, take a look at these names. from a point perspective, just in the last couple minutes or so, we have taken another little leg lower on the markets let's adjust these by maybe five or ten points apiece however, generally speaking, you'll get the idea. boeing continues to be a big part of this overall story to the down side and up side. in today's action, it's at it from the lows of the day until now, about 107 points. maybe only about 95 to 98 points now, given the last few points in the dow lower home depot, right now about 75, 78 points of that total move was home depot alone united health group, 70 points goldm mman sachs, 60 to 65 poins and apple, adding about 40 to 45

points to the move also interesting to note that apple at one point today and maybe is right now below its 200 average day price. apple certainly a stock that a lot of folks are watching. >> thank you very much >> now let's head back downtown to the floor of the ncse with bob pisani and mike santoli. how come it's rational according to some when we go up 1,000 points in a week, but it seems irrational when we fall 1,000 points in the exact same timeframe? >> well, brian, i guess it's human nature good things we want to think are genuine and deserved bad things we want to look for a scapegoat, want to say maybe the rules are rigged against us. i also do think that the nature of markets is such that people, they go up a little slower than they come down i think enthusiasm spreads more slowly and less dramatically than panic and fear do. i also think you can't deny in this instance when we're talking about the market going down, an exacerbating factor and a big

one was this kind of mechanical foreselling related to these complicated derivative instruments, the volatility trade and all the rest of it it's one thing that stocks that go down, markets that go down a lot in a short period of time, immediately you look around for culprits >> i think we all became behavioral psychologists after the 2008 financial crash what we all learned from that is that the pain of a loss mentally in your head, the pain of a loss is far greater than the expectations of a gain so we sit here and suffer as the market drops and yet when the market is going up, we felt only mild pleasure i'm trying to emphasize, we have become psychologists, essentially, and that helps explain a lot of this. >> brian, i would add one other thing, which is when we were going up in january, a large part of it was everything that was right in front of our eyes the economy was good, corporate earnings were good, estimates were going up. it seems intuitive that the mark was doing what it's doing. now we have no change in the

fundamental backdrop of the economic news, yet the market has had this tough gut check i think that's another reason it seems unsettling >> what you were just talking about is at the heart of behavioral economics, why we feel pain more intensely than we feel pleasure when it comes to money. my friend in the fund manager, dan arbis sent me a note pointing to this he said i disagree with carl icahn. this feels more to him like 2011 than 2008. the economy and earnings are strong but that there are structural market issues at play here algorithms overrunning things this way bob, i know you study market structure intensely. is that -- does that feel right to you, that there's some fundamental issue with market structure that this points to? >> no. look, carl icahn arguing that we should throw more money to active management is not a surprise to me at all. the one -- the plain vanilla

etfs operate perfectly and there's no problems with them. the market has been functioning perfectly fine it's a little corner of the business, exchange traded notes around volatility products and some leverages and inverse products, it does trouble me we had a debate about this in the last two days. we see one product close i think you're going to see more regulatory scrutiny around the leverage and inverse products as well as the volatility products, and i, for one, welcome that for the rest of the market, no i do believe there are fundamental issues why the market's had problems and we identified them. we talked about the risk associated with high valuations, about inflation risk as well as the political risk in washington it's not incomprehensible why the market has been vacillating recently >> just to pick up on that, tyler, before this year, there was no year in the history of markets that had morale gorhythmic trading, more machine trading than last year, which was the calmest year in decades.

you can't have it both ways. oh, the algorithms are tracking the markets without volatility >> no 2% declines in 2017 at all, and 11 1% moves in the s&p in one year. >> when algorhythmic trading was incredibly intense good point, mike >> so the major average is down by as much as 8% since hitting their all-time highs last week let's give you some perspective. over the last year, the dow, nasdaq, and s&p are still up double digits. let's get to our market panel for advice on what to do with your money david is managing director with ankora advisers. >> hello >> hello and shannon is chief investment strategist with boston private wealth lady and gentlemen, good to have you here we had a lot of discussions. you just heard it about the technical nature of the selloff. was there foreselling because there were some people who were short volatility and then they got really hosed by the markets. but there was still one

fundamental change that happened in the last week shannon, we saw the ten-year yield rise very fast and stocks are driven by two things generally earnings and where interest rates are. could that not have been the key factor is that a warning about what could happen in the markets if interest rates keep rising >> i think it's basically a readjustment a reset of everything that we have been looking at if you look at the data that came out last friday, the wage growth was stronger than we anticipated. the fed has been telegraphing three interest rate hikes. what we as market participants looked at, we said well, if they were telegraphing 3 and we were on 2.5% on wage growth, is there an additional hike and how do we need to structure our portfolios to account for that. that's what we think is happening here a reset based on expectations, which is typical at this part in the cycle when there are changes, particularly in

underlying economic data >> that would suggest there are rational moves to some of the changes that we have seen in the market in the last couple days >> i think that, you know, from a price perspective, valuations were topping i think we had the best january that we had since 1997 i think we had a lot of flows into the equity market particularly in january. and i think honestly, as investors looked at the overall landscape, the breadth of this decline kind of across most sectors would show you that, you know, we're just moving the equity market down to a level that we think is more appropriate if we potentially have a tighter fed policy going into the second half of this year >> david, weigh in what do you think? >> well, it is interest rates. they went up higher than expected but it's really a combination of not just interest rates but inflation as long as inflation stays below 3.5%, good for stocks as long as the ten-year u.s. treasury stays below 4% i think good for stocks and

frankly we're too good at identifying the causes when the real questions i think are how deep can it go we get 10% corrections on average once a year. i think it's only a 1 in 5 chance that this turns into a bear market. it could last a couple more months it usually does. then importantly, what are you doing with your clients' money when it's the day after the holiday and stock prices are 10% to 15% on sale it's a good time to be a selective buyer. that simple. and that's what i have been doing. >> jason, listen, i'm going to give you a softball because you're an active fund manager. you heard mike and bob kind of defend the etf industry. i'm not knocking it, but i will say this i have been going through the data because i did a panel on this friday, ironically. the top ten large cap growth equity etfs in america which have hundreds of billions of dollars in assets of the ten, nine had the same

five stocks representing 25% of the entire market cap. they didn't get whacked. apple, amazon, facebook, microsoft, and google. home depot is in a couple, and microsoft. you get the point. does the etf market structure, in your mind, present a macro risk >> you know, that's a great question and a good observation. i think what really at the core of your question in that observation is you're describing the activity of the herd, right? there's a number of large institutional money managers that crowd into these large cap blue chip stocks, and then of course, when the first punch is thrown in the bar fight, you know, nobody really knows where it ends and it spirals from there. then trying to find a bottom and where it's going to stop and where buyers come in to kind of support the market is always a bit tricky finding the quote/unquote end of the bar fight is challenging i think the etf structure to

some degree plays a role in that i think it's overexaggerated in the conversation about markets, to be honest with you. i think certainly there's some machine trading that's at the heart of this. when over 50% of daily volume is involved with programmatic trading and algorithms, you have to understand there's going to be some, and for the most part, these are not emotional decisions. these are not human beings making the decisions they're looking at technical levels yesterday, we saw the 50-day moving average get pierced and then we had a waterfall down further in the market. you have understand there's going to be some element of machine trading there. i think etf structure does have some role, but probably not as much as people think >> something we debate a lot lately thank you, good to have you. david, jason, and shannon. >> quickly, as an active investor, it's a better environment for active managers. higher volatility, more separation of winners and losers >> the last word is yours. thanks again, guys here's what is coming up on "power lunch." will this week's losses mean

fewer rate hikes from the fed? we'll debate >> plus, could funds that bet on calmer markets backfire in a big way? we'll bring you the numbers. >> plus much more on the volatile market. not a calm market, as the major indexes try to claw back gains right now, the dow is down 42. all that and more coming up on "power." let's get started. show of hands.

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stock market volatility, rising interest rates. will the central bank change its course at all as a result? our senior economics reporter, there is no junior economics reporter, steve liesman is here. >> you completely deflated my title. tyler, markets believe the fed in response to the recent downdraft in stocks is somewhat less likely to hike three times this year, but it's made only a few tweaks in the outlook for the fed. take look at the probabilities and we'll explain how they're different. 77.5% probability of a march hike that was up near 90% still, a lot of folks think jay powell goes through with the first hike august now is the above 50% probability on the second hike that's 56% it had been june and then december, down below 50%. not sure why they got rid of the graphic so quickly there it is, back again. back below 50% for a december rate hike. that's the third hike, the swing hike that's how the market thinks about the fed.

how does the fed think about the market take a look at what i call the fed shock check list i think there's four things on that checklist the first two it does immediately. it wonders, is there danger for the banks, an effect on market functions? then broader, is there an economic effect, an effect on financial conditions here are my personal answers danger for banks none in this case. the fed thinks the banks are well capitalized is there an effect on market function no, the market seems to function well is there an economic effect? modest if bet, maybe a slight decline, maybe a slight bump to confidence finally, an impact on financial conditions a little bit when stocks go down in price, equity capital is more expensive. >> here's what i don't understand there's a lot of focus on the short end of the curve when you talk about the fed raising rates, that's short-term interest rates, right? but what spooked the market? it was the ten-year, the long

end, where they have also been active and less active will they start to worry about what's happening at the long end and start to think about whether or not they're really going to roll off as much of the qe as they used to >> i don't think the rolling off of qe is at least initially a swing factor for fed policy. i don't know if you remember, but i asked as incredulously as you just asked me, i asked that same question of janet yellen in a press conference where i said you mean to tell me if x, y, and z happens you don't change they want it to be on auto pilot. the story is it will adjust its rate policy to existing or current economic conditions and its change in the forecast and i think that one of the things we want to know, how does powell process the incoming stimulus from the tax cuts does he see it as inflationary does he believe the economy is going to be growing far above potential. >> hang right there.

we're going to bring in joe, chief economist for the americas at natixis, and a cnbc contributor. joe, you see two rate hikes this year is that a change in your view or why do you feel only two >> two mainly, tyler, because i don't see any inflation. the fed has undershot, look at the core pc deflater for seven years which would mean if they can really tune the tile dials and work like the man behind the curtain in the wizard of oz, they could run a 2.5% core pc deflater and end up where they would have been over that ens ensuing 14 year period they had inflation. they have plenty of room to allow inflation to move up i don't expect it to move up a whole lot. steve made a very good point about the tax bill that bill, in my opinion, the way it's structured, will not give a lot of demand side stimulus it will be supply side on the business front, and that will lead to higher productivity, higher wages, but no inflation

>> i just disagree with you, joe, in the first maybe year or year and a half. i think what we're going to see the first year and a half is essentially keynesian styles give workers new tools to boost productivity i think that story is a story for 2019 and later initially, what you have is the potential for a big stimulus to hit a full employment economy. i think it gets to what michelle was talking about, what happens to longer rates. that speaks to a higher long rate environment in the year ahead. >> i apologize for this inside baseball reference, but if you look at things like nondefense capital goods or the new orders component, the ism, those series accelerated dramatically before the tax bill was even put forward. and the cap x numbers have bib excellent the last three quarters i was bullish before the tax bill on cap x, i'm even more bullish. it's going to happen much sooner

than 2019. >> isn't it driven by a couple things here? it's not merely tax driven, though it is it's being driven by economic performance around the globe companies aren't going to add plant and equipment and big cap x unless they see end user demand >> but tyler, they don't have a choice the unemployment rate is 4.1%. if you don't invest in capital, you lose a market share of your business you have to raise prices and your margins are going to come under pressure >> i want to make one point, which is that in the world we live in today, i find it hard to think that there are going to be any supply constraints at all that could lead to the kind of inflation we had in the 1970s. it simply was not the same world. a very different world right now. >> there were so many price controls back then oil wasn't traded. >> you could get on the phone to a place in china if the place in china couldn't do it, you couldn't call to the place in vietnam you couldn't get on the phone to

bangladesh and ask them to do it, what areas in this world have potential bottlenecks that could really drive up prices >> labor >> final thought, joe. >> i want to ask steve a question i'm going to ask and answer it the core pc deflater was last at 2.5% in the fourth quarter of 1993 fed, these guys, they got to wake up. you have a disinflation problem. this is why i don't think the fed should be aggressive let the balance sheet run off. they should do the opposite. let the blasshealance sheet run quicker. >> they need to be more aggressive to put more in the pocket for the next downturn >> they're going to cause it if they hike too much >> thank you very much steve, joe, appreciate it. betting on calm markets was a pretty good bet. until it wasn't. right up about midday yesterday, as inverse volatility funds show that they are indeed a danger to

you and the entire market. but what are they? we're going to bring you that story coming up. plus, as we head to break, let's look at some of the big cap tech stocks on the move. we have a few in the green qualcomm, netflix, apple, amazon, microsoft. those are all the single biggest stocks in the biggest etfs shocr. wee ckig aer this.

barclays making a big call on volatility on stocks all the way back in december of 2014 this is what they wrote. i posted it on my facebook as well volatility is shortening via leveraged etps, and this is a cause for concern, especially because effective liquidity is thinner and managers of these products are required to buy vix as they go up, which could amplify volatility moves by the way, that was back in 2014 now, barclays writes we estimate that the current aum in this type of strategy is $305 billion, and they, managers, would likely need to decrease their leverage given the increase in expected volatility, although precise timing is difficult to ascertain, the

estimate is these funds would need to sell $225 billion worth of stocks over the next few days that's the same barclays credit analyst this morning who wrote that piece back in december of 2014 i'm not sure that he knew how right he might be. leslie pickard joining us now with more on this, the xiv, which i don't think anybody had heard of, except for you and eight other people, before yesterday. >> i had a bunch of hedge fund managers texting me, and it was one of those trades that really worked in the industry until it didn't a bet on calmer markets. the short volatility trade backfired with yesterday's spike in the vix that created a bloodbath for securities used to bet against volatility the one most discussed on wall street and beyond, the one i was getting all the text messages about, ticker xiv, the inverse of vix it's an exchange traded note, which moves in opposition to the vix, and just opened about a

half hour ago down about 94% the notes were issued by credit suisse, which announced this morning it would be winding down the etn by january 20th. credit suisse said the move would not materially impact their firm but another security had a similar fate ticker svxy. that's structured as an exchanged traded fund managed by pro share. it won't be liquidated but its value is under pressure today, down more than 84% blackrock put out a statement urging regulators to classify other exchange traded products differently than what they do, the plain vanilla etfs if anything, it certainly called more attention to etns and the risks they embody, guys. >> this is a big deal. and the hard part about the story, and tyler, we were talking about this before the show today, which is we want to explain things that our audience can understand we have a lot of smart viewers, but we may have a lot of new

viewers because what happened. and this is not an easy story to tell >> it's not because etns by nature aren't easy to tell >> they're mysterious and you don't know what's in them necessarily. >> i spent time yesterday after receiving the text messages reading through the 175-page prospectus >> think about that. 175 pages for one relatively small exchange traded note >> how small how much money are in these things >> this was about $1.2 billion before yesterday's aftermarket shock. so we saw it go from that to about $200 million or so >> the connection to the larger market is what so somebody's in this and because they're getting hammered, they're getting a margin call and they have to sell a winner or connect me to how this moves the dow industrial average >> a lot of hedge funds, they would short volatility and then buy equities on the dip. they saw those as a pair trade they would do in tantm when the short volatility trade didn't work anymore, they sold

the other equities >> it was all leveraged. the barclays note, and i give credit to that guy, and i called him today is this, barclays thinks there's $305 billion, michelle, tied into these strategies, and if we need to meet the liquidity demands, barclays thinks we need to sell $225 billion more worth of equities that's the power and pain of leverage >> the memo you just read waw from this morning. >> two memos the second part was from today the first part was from december 22nd of 2014 where they're like, hey, we're getting worried about these strategies and by the way, it only got bigger in the 2 1/2, 3 years since then >> it's important to note that this xiv strategy is not the only way you can short volatility the other etf we mentioned, not the only way hedge funds are shorting volatility in other ways >> cash equity >> so that $3 billion exposure

we have seen in those two securities is not emblematic of that entire trade. it's much, much larger that's really important to pay attention to >> clearly, the knxiv is the inverse of the vix, isn't it >> it is >> they turn it around >> not the roman numeral xiv >> a lot of traders going to need an iv after the last couple days >> thanks. >> to sue herera with your news update >> thank you, ty here's what's happening. secretary of state rex tillerson meeting with peru's president during his official tour through latin america. mr. tillerson thanked him for peru's support against north korea's nuclear program. >> we are committed and we appreciate the strong support that peru has given the united states and the international community in pushing back on north korea's nuclear weapons program. the recent sending home of diplomats from peru is a very

strong signal of peru's position >> a federal judge says there will be an anonymous jury at the trial of mexican drug lord joaquin "el chapo" guzman. he said he agrees with prosecutors, the measure is needed to quiet any fears that jurors have about being harassed or intimidated or harmed a new study suggests more children are affected by fetal alcohol syndrome than previously thought. researchers at the university of california san diego assessed more than 6,000 first graders across the u.s the number of children with the alcohol related disorder was up to five times higher than past estimates. you're up to date. that'she t news update this hour "power lunch" is back in two minutes time

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so we've had a very volatile day on wall street the dow jones industrial average trading in a range of 1,000 points it's gone higher again, higher by 43 points the s&p is lower by five, and the nasdaq is higher by 24 they have been all over the map. i will not say roller coaster because tyler does not like that cliche, so we won't use it consumer discretionary and materials are the bright spots real estate, utilities, they are the laggards >> and volatility has been the name of the game today

the dow and s&p have lost all of 2018's gains the range on the dow has been about 934 points so where do we stand right now let's bring in bill griffeth and matt, a floor trader with virtue financial. je gentlemen, take it away. >> what a roller coaster this has been, tyler. unbelievable you want me to interview matt? is that what we're doing here? >> go ahead. ask him a couple questions >> you know what i find interesting, there are a ton of video cameras all over the floor today. but the action was yesterday i mean, the first 20 minutes, there was action today >> there's still action. we have been up and down >> what do you think happens the rest of the day here >> i would like to see us have some higher lows and higher highs. if we can get that, we saw the market just move 100 points while we were talking. you can't really focus on the dow. that's not going to give you a good indiction let's focus more on the s&p. if we can get that to the positive side, that would be a good sign for tomorrow >> we have to focus on the vix

as well, which is now all the way back to 35 >> good luck with that you had ample opportunity to buy the vix when it was below 10 it was there forever we kept saying look at the vix, then it spiked everyone chased the same trade that's what happens when you see that everyone is going for the same exit, you get a market moving event. >> guys, i'm reminded most market breaks in the past have not been economically based. the crash of '87 was not the flash crash certainly was not. yesterday was not either this was a market mechanism. this was, you know, people standing near the exits as those leveraged volatility traders were trying to cover positions as the market got away from them, right? >> you know, we blamed it on rates. that was friday's move so the rates really haven't done anything but come in so the market should have rallied based on that. we saw the dollar today had a tremendous move. above 90, couldn't get through it that was going to be resistant that should be rallying if we're going to get higher rates. that's not rallying. there's a lot of different

things to look at in this. you have to be nimble and the market is telling you to be nimble when we're up and down over 20 times today. the market doesn't know what it's going to do >> gentlemen, do either of you happen to know, because i do not, how old the vix is? and how old it is as a tradeable product? >> i don't know. i think most of the studies i have seen go back to 1990. >> i was thinking about 30 years. >> about 30 years, i would guess. >> in and of itself, it is a synthetic product. >> absolutely. >> absolute derivative synthetic product. >> i'm glad you brought that up. i was thinking a lot about that after jim cramer made his comments and carl icahn added to that today i hope the s.e.c. is watching all of this and giving second thought to some of these leveraged products that have been allowed to come to light in the markets here yes, there is a need to hedge positions. >> sure. >> but leveraging it two and

three times, especially a market that is so vulnerable after such low volatility and low interest rates, it's especially vulnerable to this right now >> it has come up a lot. what are they going to do with these leveraged etns, et cetera. here's the thing they have been fighting leverage since 1929 right? everybody says, oh, wow. margins were too loose back then now we have to have tighter margin requirements, and they do, for example, when they started the bitcoin futures. they have very high margin requirements somebody always wants leverage when you squeeze leverage out here, somebody makes another product here so that those who love that are going to do that >> s.e.c. is always playing cat and mouse with wall street right? they come up with new products all the time it was programmed trading or portfolio insurance in the 1980s. the collateralized debt obligations leading to the financial crisis now you have this leveraged

volatility trading product here. >> no money down mortgages >> they sow the seeds of their own destruction. >> always playing catchup. we're never ahead of the game. that's what they needed to be. we want less regulation down here, but you want more regulation as far as leverage, obviously, this market is showing it there are signs of it cracking that was the fear of this, all the panic yesterday when the market just tipped over. and you hope that's not going to be the case going forward. hopefully we can get in front of this >> well, we're going to step aside and get ready for the top of the hour. who knows what happened. >> a roller coaster. >> all right thanks very much >> see you later >> let's talk technical. >> sit in the back car >> our next guest says we have a temporary top in the market and don't assume this is simply a correction let's bring in bill, partner and chief market strategist with bell curve trading hey, bill. >> good to see you, michelle >> give us your technical analysis, what are you looking at, the dow, the s&p, what >> all of them i think, michelle, there's a

really a number of key takeaways from the last couple days. number one, as you said, we have a temporary top in the market. and so i think the highs that we saw in late january, they're safe for at least a couple months secondly, we have been in this buy the dip mode really since the march 2009 lows. but more recently since the sell-off in early 2016 now you can buy the dip and sell the rally. there are going to be tremendous trading opportunities with this volatility but you have to know your ranges for us, that means in the s&p, 2500 to 2700 and the dow, we want to play 23,000 to 25,000 and in the nasdaq, 16300 to 6700 you want to stay on the wide, keep your position size small, and there's going to be great trading opportunities. lastly, don't be dismissive of this correction. a lot of people want to look at this and say this is the long overdue correction a good thing for the market.

all those things may end up being true, but in my opinion, that's a really naive and dangerous way to look at what's going on right now >> okay, so i think you sent over some charts i'm not sure if we have them ready or not but when i look at this chart you sent over, the s&p 500, and you put the ranges you suggested right there. you're suggesting that when the s&p gets down to 2475, meaning you think it could go there, that that's where you buy, and when it gets above that 2700 line, you sell it. is that simple >> right right. i think the ranges are wide, but that's a function of the volatility and so you don't want to get caught in the middle of these ranges you're going to end up getting chopped up keep your position size small and the s&p you want to buy around 2475 to 2500 and sell around 2700. and the dow, you know, it's basically 23,500 to 25,000 again, small position sizes, stay at the end of the ranges.

and the nasdaq 100, 6300 to 6700 >> got it. okay some advice for people who actually want to do some trading if you're not a long-term investor thanks, bill >> well, it is not just here in the united states. markets selling off from beijing to berlin. will global markets bounce back if we do, or do they have their own issues now the global debate coming up. well, it's earnings season once again. >>yeah. lot of tech companies are reporting today. and, how's it looking? >>i don't know. there's so many opinions out there, it's hard to make sense of it all. well, victor, do you have something for him? >>check this out. td ameritrade aggregates thousands of earnings estimates into a single data point. that way you can keep your eyes on the big picture.

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asian markets getting dragged down by the big selloff in u.s. stocks shanghai composite off more than 2% since friday. while the nikkei is down about 8% what is the risk of a global contagi contagion? joining us now is stephen roach, former morgan stanley asian chairman, currently a senior fellow at yale welcome. good as always to see you. we can point fingers at an unwinding of a levered inverse volatility trade as the proximate cause of yesterday's tumult but you point to some deeper, more structural issues that have you worried, particularly having

to do with monetary policy and how that may play out across the globe. explain. >> well, thanks for having me on the central banks of the major advanced economies have massively expanded their balance sheets since the crisis of '08 and '09. they have grown their balance sheets by about $8 trillion between 2008 and 2017. that's the u.s., ecb, and the bank of japan. over that same period, nominal gdp is up by $2 trillion, so that leaves by higher math, $6 trillion of excess liquidity that's being injected into markets, the starting asset prices across the spectrum and now, central banks are starting to move the other way led by the fed, followed eventually by the ecb and the boj.

so the sustenance of these liquidity driven markets is being sucked out as we speak >> in part, that expansion of balance sheets through the unconventional monetary policy and persistently low interest rates was driven to reflate economies, right in other words, to create some inflation. and now that some people in the market are beginning to see some of the incipient signs of inflation, like a 2.9% year over year wage growth that came out in the jobs report friday, they're getting what they were targeting maybe, right >> big maybe there i just was driving over to the studio here at yale. i think i heard steve liesman saying, yeah, you can get wage inflation, but what about supply chain driven cpi inflation he raised some, i think, well put skepticism on the likelihood that you'll see inflation.

so i'm with steve on this. i think inflation has been well below target for the last ten years, and is likely to remain below target so central banks, i think, will take take heed of that and be slow and reluctant to normalize that continues to feed the beast in terms of injecting a lot of liquidity into markets. >> one thing that does seem indisputable is that markets have come a heck of a long way, not just over the past 12 months you're still up 20-some percent in the dow, a little more for the nasdaq, 15% or more for the s&p. markets are up i'm sorry, steve, we're going to interrupt because president trump is speaking at the white house. >> without borders, we don't have a country so, would i shouut is it down or this issue i say yes. i don't know about our great representatives here, but i feel they may agree with me

>> thank you >> thank you, press. appreciate it. >> that was a live feed from the white house. that was that. what did you see >> maybe we missed it or we went to the tape a little late, but the wire is reporting he said, i'd love to see a shutdown if democrats refuse to back his immigration proposals. he's playing hard ball. >> i think we're going to go to a break, apologies to steven, whom we interrupted there. we'll have him back in the near future steve roche of yale.

marketing sealieing a volat trading day. you're sitting there watching, friday, that's bad monday, whoa, that's bad today, we're all over the place. what do you make of it >> i'm trying to buy low, sell high i don't know what the future

holds, so i buy when i can. >> are you buying today? >> i can't tell you. compliance. >> always blaming the lawyers. how about this, are you -- are you happy -- not about the market drop yesterday but about the fact that maybe valuations have become a little more reasonable >> she's nodding for people on the radio. >> yes, so the compliance people can't hear her so valuations look a little better to you? >> yes it's a good opportunity to take a look at what you want to buy >> fair enough and you are safe, kim. don't worry. boris, it's been insane the last couple of days today we may end with the dow up 100 or down 100. today was just as big a day. do you think this stuff is over? >> i almost didn't say stuff. >> i think it's over for now it's very natural for us to bounce back but i think long-term the party is definitely over. regime has changed we're no longer in a central bank easing environment. i think stocks will have a much

harder time climbing against higher yields and higher rates and that's would i think the selloff is nowhere near from done these kind of things don't have a one-day wonder they seem to have a continuation i'd be careful. >> deutsche bank said we could sell a few more hundred equities if we see volatilities continue to rise. >> kim, who may or may not be buying today, who likes valuations, and boris who thinks the pain is not done you can go to tradingnation.konks.com. check please is next >> announcer: and your trading nation stats of the day and a word from our sponsor. >> in rising, low volatility markets, short-term pullbacks can often represent great buying opportunities. picking exact tops and bottoms is a tricky game one approach is to consider waiting for the cosend consecutive up day after a pullback before putting money back into the market

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yesterday when volatility reached its peak tyler, you said, i think we're going to see 600 then we saw 800. little did we know it would be 1600 we're very volatile today. >> boeing and home depot, about 90 points from those two stocks. if you have a 737, fly it over to home depot. >> since melissa is not here today, i'll tune in a melissa. tune in tonight for "fast money"

where me and the traders will have more of a crazy day. >> another day of volatility there's yet today another 1,000-point range. >> and gaining steam in the last 15 minutes from basically flat to down to up 332. >> that means you got to watch the next hour. thanks for watching "power lunch". >> "closing bell" begins right now. women come to the "closing bell." i'm kelly evans. >> and i'm bill griffeth if we do a special tonight, it will be happy days are here again. after that historic day we saw on wall street, more volatility today and it's happening right now. the dow this morning, we saw a swing from bottom to top of roughly 900 points we were down 567 points. then suddenly up 367 points. now -- >> going up towards those levels. >> -- setting highs for the