desk doc. >> eqe it's a pennsylvania-based oil and natural gas play i bought it during the show. >> josh brown. >> add it to google this week. it's the only one of the faangs that i have, and i am also watching netflix very carefully. >> and we're all going to be watching apple as we get into next week. later next week on thursday. see how that is. dow's down 165 that does it for us. have a great weekend, everybody. "power" starts now. >> scott, thank you very much and welcome, everybody, to "power lunch." we are off the lows, as you see there. the dow down 163 points, but it is still, frankly, a brutally red october for your money we haven't seen this kind of financial pain since the financial crisis a decade ago, 2008 and tech is still the big drag today. is it time to fear this fall or buy? and firing on all cylinders, the economy is strong. gdp at 3.5%, but are there some big bumps in the road ahead? we will look inside the numbers and debate it. and countdown to christmas is all this volatility going to

keep shoppers off the internet and out of the stores? what will it mean for retailers? we'll take a look at that. "power lunch" begins right now welcome to "power lunch. i'm melissa lee. another sell-off on wall street, but we are well off the session lows the dow was down almost 540 points at its low, now down 133 or 0.5%, the s&p 500 down 21 the nasdaq is down 67 or almost a percent. again, the index that's being hit the hardest, hit by revenue misses and weaker-than-expected forecasts from amazon and alphabet those two stocks are taking it on the chin. check out amazon, it's down 7% or so. alphabet is down by just 0.33% today's drop also pushing the s&p 500 into correction territory. that means it's down 10% from its september highs. 76% of the stocks in the s&p are now in correction territory, and almost every stock is moving big, but check out these three this hour.

mohawk industries is down by more than 20%, a loss of $30 a share. the stock is on pace for its worst day ever, disappointing earnings and a disappointing outlook hitting mohawk and snap's looking to all-time lows following an earnings miss. colgate palmolive missed revenue estimates and is seeing higher costs. tyler? >> let's get right to the trading action this hour we've got a quintet of contributors here to tell you about. bob pisani on the floor of the new york stock exchange, steve liesman taking a deeper dive into latest read on the american economy, meg tirrell on the biotech beatdown courtney reagan will look at whether the crucial holiday season may be in trouble and we welcome "fast money" trader tim seymour, joining us for the next two hours. >> tyler. >> good to have you with us. lots to talk about let's begin with robert at the nyse bob? >> hello, tyler. you know, the important thing, we have had a 50-point rally in the s&p 500. i just want to put that up this would be extraordinary in that it's happened here and everybody's quite calm down here

at the new york stock exchange really quite interesting now, several things happened all at once around 11:00 eastern time let me tell you about that midday reversal. first thing we saw is the dollar remember, the dollar's been rallying for a couple of weeks now. the dollar started dropping. things started turning around with that. the vix was near 28 and just simply collapsed it went down 27, 26, 25, now it's 23 and change volatility has dropped the put-call ratio spiked up this is very, very high. a lot of people buying puts early on in the morning. that kind of high put call ratio a sign of a short-term bottom in the market that's exactly what happened and well, you throw all this together and the s&p's, let's call it a rally right now. several groups notably down 2%, 3% this morning. materials and energy are positive industrials are about to go positive banks are about to go positive consumer discretionary still getting way down there for a number of reasons, amazon among them speaking of amazon, watch amazon today, because amazon has exactly tracked the stock

market as it moves, the market moves. this happened yesterday with microsoft. that was the market. today i'm telling you to watch amaz amazon that's the market. i'm not trying to say it's not been an ugly month for technology stocks. we all know. but particularly semiconductors. there is some kind of cyclical downturn in the semiconductor market that's pretty clear. i'm not so sure about the other ones internet, of course, big momentum names, they get overbought, high pe ratios any sign of anything, they sell off. so that's not, perhaps, surprising just sorting through all this, going to occupy us for the next several days guys, back to you. >> thank you, bob. bob pisani at the nyse from a red october to the red-hot economy, steve liesman has a first look at third-quarter gdp and market-moving comments from a top fed official this morning. >> melissa, it was a stronger than expected gdp read this morning for the third quarter, but many wall street economists seeing an unusual number of negative signs inside the number bnp writing "consumer spending remains robust, but bixed

investment was notably week, possibly indicating an early end to tax cut induced investment and tighter monetary conditions beginning to bite" and barclays says personal consumption and government spending boosts growth but likely to be transit entry. we're looking for 3.3%, all the way to the right then you have a strong consumer spending number at 4%. kind of, melissa shaking her head i wish we could have the chart analysts up at the same time because their commentary is excellent. 4%, not less, but the 0.8% on the capex, it's supposed to be a capex-driven recovery because of the spending cuts, but it's not there. now take a look at the noise in the data on the next screen, and what you see is that the net trade, imports minus exports percent of gdp, 1.8% with an absolute surge in imports of 9%. what was that? maybe people getting underneath -- >> ahead -- >> right, and then a decline of 3.5% when it came to exports and

then inventories up 2.1%, because the imports went to the shelves. so maybe we've got to work that inventory off in the next quarter. this morning before the gdp number came out, the cleveland fed president said she expected growth to slow next year but remain above trend as a result, she says, the fed still has work to do. >> financial conditions are still accommodative. i think the economy is still growing above trend. i think the unemployment rate it at its lowest level since the late '60s, and i think inflation's at our target. so, that's a strong outlook and suggests that we probably need to be gradually thinking more about taking back some of the accommodation. >> growth 2.75% to 3%, in line with some economists who say growth peaked in the middle of 2018, but the question now for investors and i think one the market's wrestling with right now, how slow does it go from here >> i thought your conversation with mester was fascinating concerning how the fed used the markets and how the fed has

viewed what we have seen the last couple weeks, which has been gut wrenching for investors, but really orderly in the eyes of the fed. >> it's a very important way the fed looks at it -- is it orderly trade? and if it's not, then something might be needed from the central bank, but she sees it being orderly. and then you know, what they want to do is take a step back for a minute, because as i sort of asked yesterday on this show, which is, where do you set policy if you're for the fed and you set policy on october 3rd, when it was at an all-time high or today when it was down 500? you've got to watch the totality of the trade and the message from the market. >> well, these are data-dependent folks, though, and so, the strange thing about it is the fed is seemingly upgraded their outlook on the economy. they've certainly given us the sense that they could go from even being neutral to being interested in overshooting neutral at a time when nothing's getting stronger all those numbers you just quoted are rear-view looking. >> i have to say that i had some questions this morning on air about the gdp number when it first came out i was a little bit negative, but mostly positive, but i was very

surprised to see all the commentary from the wall street guys that say, you know what, this is not inside of it a good number because of the mix of growth. >> what was the inside number that was the most worrisome? >> that 0.8% on capex also. >> yeah, because you would expect with what the tax law did -- >> right, sure. >> -- in terms of immediate expensing of capital expenditures, you would have seen a run. >> let's be clear, though, tyler, you had a huge surge in the second quarter it's not be unusual for companies to take a break and come back and maybe come back with a stronger number in the fourth quarter where i am right now is agnostic on growth because i need to understand how this all shakes out. i don't understand how investment is going to work out and how the -- the investment's going to come up, consumer's going to come down, and i think all that noise from trade and inventory needs to work out so we have a clearer picture of what's really going on inside the economy. >> all right, steve, thanks. a big rebound in the market this hour, but amazon is still

struggling alphabet just turned positive. snap's still sitting near all-time lows. how worried should investors be about this tech wreck? let's bring in erin kessler, senior vice president of equity research at raymond james. aaron, great to have you with us let's deal with amazon first, since that seems to be the one really feeling it most sharply what are you paying for in amazon, if you see revenue slowing, and what should be its strongest quarter, the fourth quarter? >> yeah, so i mean, you have to dissect the quarter a little bit. you had operating income very strong in the quarter, advertising growth remains very strong, cloud growth remains above 40% with 31% margins the highest ever for the cloud business but to the concerned point, you have the core business with unit growth slowing about 15% they did have some tougher comps from last year, so it is a bit of a noisy number, but that is the concern today. you have 17% growth q-2, slowing about 15% in q-3 q-4's typically a tougher comp on unit sales as well, so it may even slow a little bit but overall, we still think

amazon can grow kind of 20%ish core growth longer term with, you have aws and advertising your higher margin businesses. we get to about a $2,000 price target on the low end, we think around $1,500. we're still staying with amazon, but clearly some worries from investors today. >> and the advertising revenues that you mentioned, the aws, that really helped that huge beat that we saw in operating margins in the third quarter and will help operating margins in the fourth but when it comes to the core business, aaron, i mean, that is still the core business, that's still the lion's share of the revenue. how concerned should we be that perhaps amazon, you know, may not have the dominant position as we do see retail in general in the markets do not so bad >> yeah. we still think amazon can grow above the market rate from an e-commerce perspective so, we still think e-commerce in the early innings, relatively, i'd say less than 20% online penetration if you exclude some of the nontraditional e-commerce categories but less than 20%. we still think that goes to 40%-plus longer term and within that, amazon's getting 50% of incremental

share. we don't think that stops, especially with prime adoption to your point, though, as more consumers get prime adoption, obviously, that adoption starts to slow. you're not going to be able to grow 25%, 30% forever, so we think growth will come down to the more high teens rate on the core commerce business, which we think is fine, but from the operating margin perspective, clearly, cloud advertising are going to be your margin drivers over the near term. >> hey, aaron, it's tim. i heard brian reference on that call that he's having trouble predicting the holiday period. for amazon, that to me is either concerning or i'm confused by that talk about that. it's their most important time of the year, their most important quarter. and yet, this is the guy that's supposed to be able to get you some insight into that >> yeah. so i mean, obviously, that was the concern for investors. and as we've said, historically, that has been a slower growth period for amazon in terms of just the comps being more difficult. i think it's a little early to predict the holiday season so far, we haven't seen any big macro concerns as we said, we think there's

some noise in that q-3 number, so we're still expecting decent q-4 numbers. clearly, the tax cuts should help, pretty much full employment right now so all those factors should be positive for amazon, but we'll have to watch it as we go along. >> it seems to me -- i mean, i realize -- i understand that the game in the market on any given day in reaction to a proffer report is all about the expectation -- did you meet it or beat it or not? number two, what did you say about the future so, i understand that. but as you look at these numbers, revenues were up 30% year over year, right? profits blew the doors off of what the expectations were, and yet, the market is reacting like it was a crap report but really, on a lot of operating -- >> that's a financial term, tyler. >> i almost used -- >> great term. >> -- the turner word there. but whatever talk me through that if i'm an owner of amazon now. am i worried about the business or am i happy with the way the

business is going? >> yeah, i wouldn't say you're worried, although clearly, expectations have been very high in amazon, the stock essentially doubled over the last year or so, so expectations, even though the stock's been down a little bit recently, still very high. and if you look at q-4, the guided conservative for q-4 in revenues and operating income, but if you look at the last three quarters, they've beaten operating income by roughly $1 billion each quarter, so we feel there's conservatism in that guidance we do expect the q-4 beat to continue here, mainly driven by aws and the advertising up side, which drives strong operating margins. but clearly, yeah, high expectations when you see the unit growth, which is a core concern for investors we've talked to, that unit growth deceleration, we think some of that starts to get easier going into 2019 from a comp perspective, but optically, that's looking a little negative right now. >> aaron, thanks very much we appreciate it. and from the tech wreck to the broader market sell-off, the question is where do we go from here let's bring in john tooey with usaa, and mike labella, a portfolio manager with qs

investors. welcome to both of you i guess the simple question, john, would be, you know, do you sense that we're getting to a point where the turmoil is being worked out, or do you have that kind of spidey sense >> well, we sense that this volatility fire is burning itself out we may not be at the end yet, but we're closer to the end than we are to the beginning, so it's time to take a deep breath and scavenge the market, because it's opened up a lot of interesting opportunities. >> so, mike labella, i see that you think it's time to take profits out of tech, which apparently, a lot of people have been doing, and move into more defensive, value-oriented sectors of the market, like what >> so many things, like utilities and consumer staples, which really have been unloved this year, up until this month you know, one of the things about this market correction is there's been a really large amount of sector dispersion,

things like technology down over 10% this month utilities are actually still positive for the month so, this is a real win for diversification. the problem is, after nine years of this rally, most investors are really underdiversified with these more defensive sectors >> mike, you know, they may be -- i'm talking about staples in particular -- they may be unloved in terms of the percentage losses, but on valuation terms, they are still very loved to the point where they are trading above the market multiple. do staples deserve that kind of premium to the overall markets at this point? >> yeah, i mean, looking at it from a forward perspective, that's certainly true. a trailing perspective, that's not quite true we still see some of them are trading at a discount. look, you can't be broad with this market. you have to look at it on a stock-by-stock basis and really take into consideration the earnings and dividend growth in these particular areas a lot of these staple companies come with some really strong dividend growth right now as well as a higher yield now, that's also been very

unloved this market. this month reminded why that's important. when growth starts to slip at this stage of the expansion, having that guaranteed 2% or 3% really brings in a lot more stability to the overall stock price. >> so, john, ultimately, this leads us to banks, i think, who are actually giving more capital back to investors, and yet, they've been crushed and so, we've maybe decided here that we can't be investing in the tech sector and in the qqqs and the big leadership what do you do with banks and industrials, places where they're paying you to be there for the first time, but frankly, this has been a challenging trade? >> i would say certainly with, we look at this closely, and we would say certainly, the banks look very attractive they are starting to price in a recession. and the banks, they're much better capitalized than they were before the financial crisis they're returning cash to shareholders yes, loan growth has been a little weak. yes, net interest margins with

the flattening yield curve have been a challenge, but the banks are in a very, very good position to grow slowly, return capital to shareholders and they trade at extremely attractive valuations after the recent sell-off. >> all right, gentlemen, we'll leave it there john toohey and mike labella, grateful for your time today. >> thank you. industrial stocks among the biggest culprits in th sell-off 3m united technologies and caterpillar, look at that, down 25% in just one month, the worst performer in the dow trade and tariffs weighing on those companies, but also higher material costs and the tight labor market we'll talk to a manufacturing ceo, next. but as industrials have struggled, utilities have been the best performing sector is a 3% dividend yield suddenly sexy >> huh. >> "power lunch" will be right back checkout is at 4pm. plenty of time to enjoy your ride. (bicycle bell sound) ♪ ♪

(bicycle bell sound) ♪ (bicycle bell sound) ♪ ♪ explore more with a guaranteed 4pm checkout at over 1,000 fine hotels and resorts. it's another way we've got your back. ♪ ♪ the platinum card from american express. don't live life without it.

industrials one of the worst performing sectors in the s&p 500, down 11% in just a month. this industry caught in the middle of trade turmoil as the president aims to bring manufacturing jobs back to the u.s. elon mowie is at a factory in

gibsonton, florida. >> this is one of the newest factories that builds parts for the big turbines used in power generation siemens is in germany and has about 15,000 workers here in the u.s., so this is a company that is sitting squarely in the intersection of the global economy. all of those broad narratives that have been driving some of the market volatility that we've seen -- trade, tariffs, a tight labor market, rates -- siemens is navigating through all of those dynamics and here to walk us through how they're handling it is lisa davis, ceo of siemens energy and also is chairwoman of siemens usa. lisa, let's get right to it. investors are really worried about some of the pricing pressures that are facing industrials because of the tariffs, because of those escalating trade tensions. where are you seeing that show up in your business? >> well, we're seeing that show up in our business really in the pricing that we have, both from our third-party suppliers and where we buy our raw materials and our supply chain but what we're doing to combat that is facilities like this, where we're investing in technology and innovation that helps us bring our costs down.

it helps us make our business more robust. this facility here will export globally, so these, the parts that are made here will go into turbines around the world, and that's what allows us to be more competitive in today's really difficult market. >> reporter: one of the key pieces of uncertainty that we hear from businesses is they're just not sure how long the tariffs and the trade war are going to last. how do you handle long-range planning in that environment >> well, i mean, we are in a business and we're a company that's been, obviously, in the u.s. for 160 years, so we've been through a lot of change in the marketplace, a lot of volatility we're in a very long-term business and so, what we focus on is what we can control, and what we can control is how we manage our supply chain, how we manage our business, investing in facilities like this, which, again, allow us to get our costs out and manage our own business, and that's what we can -- >> reporter: so, you're having to shift your supply chain because of the increasing cost pressures? >> well, it's a matter of how do we continue to optimize our supply chain i mean, obviously, we have facilities around the world.

our supply chains are very global and that's where we're very much a proponent of fair and open trade so that the supply chains can be optimized as much as possible this investment here will allow us to continue to compete on a very competitive basis in our supply chains globally as i said, these parts will go to markets around the world, including -- you've seen a lot lately with iraq, for example. as we work our road map in iraq, these parts will go into turbines that will go into power generation in that country as well >> reporter: but when we talk about escalating trade tensions as well, i mean, there were reports out there that the white house had put some pressure on the iraqi government in order to ensure that one of your competitors got a share of some of those contracts instead of you guys how do you handle some of those competing interests? >> well, you know, we compete in markets around the world, and we are used to, and we welcome competition. so, our focus, especially in iraq, which was the topic, our focus is really to make sure that we're doing what we can, implementing our road map, which

is focused on how do we really improve the energy system for the iraqi people, bring electricity to the people where they don't have it today the market is big enough, competing with our colleagues and other companies is what we do and what we do around the world. so, we welcome that. >> reporter: still finding a way to manage that global competition. >> we are, we are. and we're still very keen and r joining us >> thank you. >> reporter: send it back to you, melissa, at "power lunch." >> ylan, thank you stocks are down again today following yesterday's big gains but well off the lows of the session. the dow had been down nearly 550 points, now down about 144 much more on the markets straight ahead plus, a closer look at the big movers today as the issues affecting these companies are also what's been dragging down the entire markets "power lunch" will be right

back

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everything. i blew my ankle out and i got prescribed pain pills by my doctor. if making my detox public is gonna help somebody i'm all for it. i just wish i would've had a warning. welcome back to "power lunch. we've got a big recovery on wall street let's take a look at some individual movers, starting with flex that makes products for other companies be used to be flextronics, i believe it is down by 29%. nike is winding down its manufacturing deal with the company. the ceo says the two companies just couldn't make a deal. western digital's another one missing on earnings, giving weak guidance as it expects market conditions to remain difficult, including trade tensions with china. that stock is down 15%

and lastly, mohawk industries, wow, down 20%. the world's biggest flooring company disappointing earnings a host of reasons here -- fuel prices, raising transportation costs, tariffs, reducing imports to china, the housing drop caused by rising interest rates will hurt sales and earnings -- >> it's a long list. it keeps going. >> every single excuse out there hitting this particular company. >> yeah, and so, you've got software demand, you've got a terrible product mix, you've actually got higher input costs, and supposedly, if the housing market itself isn't doing so well, you do have at least a renovation market in home depot and consumers who actually throw a lot more money into their houses their demand shouldn't be falling off a cliff. and if i look at that chart, this stock peaked in january of 2018, well before we really knew we were going down this trade route. so, a lot of the pain that this company expressed in this quarter i think was out there. >> all right, folks, up next, we're going to go live to the floor of the new york stock exchange and get the traders' take on the sell-off plus, we will hear from an

economist who sides with the president over jay powell. he says powell and the fed need to stop this tightening and let the economy run. "power lunch" will be right back

hello, everyone. i'm sue herera here's your cnbc news update for this hour. the man arrested and charged in connection with package bombs sent to high-profile critics of the president has been identified as cesar sayoc jr., a 56-year-old male he is an aventura, florida, resident from new york with numerous previous arrests. officials say that they are still looking for more suspects. president trump commenting on the arrest, this before speaking at the young black leadership summit at the white house. >> we've carried out a far-reaching federal, state, and local investigation to find the person or persons responsible for these events

these terrorizing acts are despicable and have no place in our country. >> the suspect's van was confiscated by law enforcement officials at a business parking lot in plantation, florida its windows were covered with stickers of president trump and american flags he was transported to an unidentified, secure location. the department of justice will be holding a news conference at 2:30 p.m. eastern time we will monitor that for you and just moments ago, nbc news putting out a bulletin saying that megyn kelly is out at nbc the 9:00 a.m. hour of the "today" show will now be hosted by the other "today" show anchors. you're up to date. that's the news update this hour, melissa. i will send it back to you. >> all right, sue, thank you sue herera. a really volatile day on wall street. we are off session lows. the dow was down 540 points, now down about 235 or about 1% the nasdaq still getting the hardest, on track for its fourth straight losing week the nasdaq composite is down by

1.5% right now ty. just a few hours left to trade today's whipsaw market if you're over mind and close out a volatile week. o'neil securities director kenny volcari is joining us from the floor of the new york stock exchange i have a friend fond of saying the beatings will continue until morale improves. how long until morale improves, kenny? >> listen, and i've been saying it since the first breakdown last week, it's going to be a while, because there's been a lot of technical damage. so, until the market works its way, we're going to have volatile sessions, up one day, down another, back and forth, whip sawing all day. so, i think it's going to last until through the midterm elections, right because we've got the end of earnings next week, then you've got the whole speculation going into midterms elections, which is going to cause, you know, lots of chatter, lots of speculation about who's going to win, what it's going to mean, what sector's going to do well and which is not, so i think it

lasts until november 7th or 8th. >> that's interesting. we haven't heard much about the midterms in the recent commentary here. so, what was it that changed the mood >> what, today >> no, no, what changed the mood from october 3rd, where we were at an all-time high? i mean, a lot of the factors that everybody's talking about today, rising interest rates, china trade. >> right. >> so on and so on they were all there a month ago. >> and they're still all there, and they've actually been there. so it's a little bit confusing to a lot of people because we keep talking about the same thing. but the fact is, when the market started to come under pressure right at the very beginning of earnings season, you know, the day or two before, or actually as the market started to come under pressure, then what happened, there were the technical breaks in the market, which then added to the sell pressure because, as you know, a lot of the risk management software programs that are out there, the algorithms that are connected to it operate on a very specific, you know, rules set requirement, so when the

rules set, and in this case, technical levels of stocks and indexes get broken, then the rule set suggests that in order to protect the portfolio, you need to raise more cash, and you do that by selling more stock. and so, selling begets selling, then you start breaking more technical levels and then the selling begets more selling. now that we've broken down out of all three indexes, we've completely devastated all three in terms of the 50, 100 and 200, now it's thrashing around, which we've seen for the last week and a half, and you're going to continue to see until it starts to build a base here at the bottom look, today -- and i said it in my note this morning -- if we didn't hold wednesday's low, we're going to break right down. in fact, we didn't hold it, we broke right down, we made a new low today. and so, therefore, that now sets us up to test that low over the next couple of days. >> kenny, i feel your pain in fact, sounds like tyler's getting more beatings. so, you know, speaking of this technically oversold condition, qqqs haven't been through the 200-day since june of 2016 >> right. >> what do you make of that

technical breakdown in the context of a market that really has not seen this for a long time >> well, so, here's what i think is what's going to happen now, right? now that we've broken down, we've now entered into this phase where there's going to be a correction look, we've talked about it, the market had gotten ahead of itself european markets, asian markets, they're all underperforming all year we were way over here. and so, therefore, there had to be kind of this realization moment that either those markets needed to catch up or we needed to correct a little bit. so, honestly, i'm not surprised with this move at all. i'm surprised, i think, at the severity and the speed of it, but all that you can credit to the fact that they kicked in and the buy side disappeared and there's a void in prices so, i actually on the one hand think it's healthy i don't think it's going to be a complete disaster, but i think people need to strap in for a little bit and ride this out because i think it's going to be rocky for the next couple weeks. >> kenny p., smooth jazz from the floor of the new york stock exchange good to see you, man >> see ya. it is the worst october for stocks since the financial

crisis, despite data today showing economic growth slowed less than expected in the third quarter. is there something fundamentally wrong with the economy let's bring in joe lavorgna, the chief economist of the americas and the co-founder of the case-shiller index on home prices joe, i'll start with you do you have any theories on what went wrong with business investment >> yes it is partly a fact that rates are going up it is uncertainty around the midterms and probably a little bit to do with the tariffs, but i don't think a lot. most of this market correction is fed related kenny talked about october 3 or thereabouts is when the market moved lower. october 2nd, powell gave his talk in boston the market woke up to the fact the fed is more intent on raising rates. and when you looked at their forecast they gave us in september, they basically added a rate hike. so, to me, this is very simple it's all fed driven. >> you don't think the fed should raise beyond december, at least take a pause >> i wrote a piece for cnbc back in february saying the fed should stop at 2%, let the

balance sheet do the work. let's get some price discovery in markets let's try to steepen the curve it will be healthy for the banks, help take some of the air and steam out of the equity market but that's not their approach. >> professor schiller, you're one of the fathers of the case-shiller index the stock market tells us housing is terrible. the homebuilders have been bumping around lows. car sales, automakers are doing terribly also. we have this latest data point about a slowdown in business investment in the third quarter. are you concerned at all that perhaps there is a slowdown brewing? >> yeah, well, it's a mixed bag. i don't know if i can identify any clarity here consumer confidence has been strong, but on the other hand, i think it is possible that people are pulling back a little bit. they don't have the same desire to get a new house or new furniture or new car, and that -- you know, ultimately, when we say strong economy, i like to use instead the team

exuberant economy. and i think some of those things that joe lavorgna just mentioned are factors, and it's just also the over -- this boom has been going on for a long time and people are getting antsy and starting to pull back. whether it's a real correction or a bear market, i don't know >> what's happening in housing, professor shiller, as sales seem to be declining, as interest rates are rising, affordability becomes a lot tougher? i think a lot of people remember 2007 to really 2012, when it turned back up as a period when they lost money for the first time ever in this country on the value of their homes. >> right. >> do you expect that this time? >> right yeah, now, the housing -- the subprime crisis was a history-making event the up-and-down of home prices was the sharpest we've ever seen moreover, if you look at what people were saying at various points along that time, the word housing bubble suddenly entered

our vocabulary a lot of people thought in 2005-2006 that some disaster was coming, and that affects the psychology of the market if you look for the term housing bubble now, it's not much in evidence so, it's not the same mood at all. even though you could call it a bubble, because home prices have been going up now ever since 2012, but it's not the same. it's more placid you know, i don't expect a sharp turn in the housing market at this point >> okay. >> so, joe, based upon the housing market's concerns and headwinds, you're a guy who's -- those are great glasses. >> i left my contacts in the car, actually. >> i'm not coming at you i'm just pointing out -- >> a little bit, no, a little bit. >> you often look at this economy with rose-colored glasses at a time people were negative >> yes. >> but i hear you concerned a bit about the potential of consumption impact from lower housing prices, lower stock market, wealth effects. >> i am, because the fed is talking about real rates they're way too academic

real rates are something that exists in theory in principle, i don't believe they really do exist look at the housing market bob mentioned autos. that's telling you interest rates are biting, and yet, the fed keeps plodding along and if japan's taught us nothing, it's that you can have recessions with slow rates that's why everything is relative that's why i think the fed should back away and let the economy run hot. >> professor shiller, would you agree, say maybe the fed should take a pause, re-examine you yourself said it's been a mixed bag of late. >> right well, but maybe. i mean, i have to already stay awake in listening to new evidence, and there is new evidence that suggests maybe wait a while but on the whole, the fed policy i think is needed. we have the lowest unemployment rate since 1969. and you know what happened after that in 1969, we had runaway inflation. it got out of control. it was considered the worst problem facing the country so, there's also an argument for what powell is doing, which is

being proactive and preventing inflationary expectations from even getting started >> although -- >> even though at the moment it doesn't look that way, but -- >> just to follow up on what bob said, we also had a huge vietnam war build-up, and money supply was running at double-digit pace none of that's happening now, and it won't happen with the yield curve -- >> i hope so. >> -- flat yeah. >> joe lavorgna, thank you, and robert shiller with yale all right, to the bond market we go and rick santelli tracking the action at the cme hi, rick >> hi, tyler yeah, the treasureies are definitely starting to take notice of all this volatility. maybe it was because we breached unchanged on the year. look at one week of 10s. today seems to be the big day. if you open it up to the 8th of may, you can see that we now are trading under that key high of 3.11, but if you go to 30-year bonds, you can see when they broke out above 3.25, they're still well above 3.25, 10s to 30s spread has changed

30s are the best trading on the curve, only down three basis points all other maturities are down four to five basis points. finally, the dollar index. it really has been a stellar trade. if you look at a chart since august 1st, one thing should jump out at you. we were for a while above that mid-august high, and that high goes back to june of '17 that high was around 96.73 for a while, we were at 17-month highs. we've dipped below it a bit. but even at current levels, the dollar's having a stellar week melissa lee, back to you. >> rick santelli, thank you. up next, a closer look at two sectors hit hard in this recent sell-off. we'll tell you what's causing this biotech bust and why investors are getting bearish on retail at the most important time of the year for those companies. "power lunch" will be right ♪ back

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october has been a biotech bust, the ibb tracking that sector is down just this month meg tirrell is joining us now. >> it's been a tough month in addition to the broader market pressures, it's that time of year that biotech investors start to get a little nervous, election season. drugmakers are a popular political target and both major etfs, the ibb and the xpi, which is influenced by smaller and midsized companies, are down almost twice as much as the broader market this month. and while this is the worst october for the ibb since its inception in 2001, according to cnbc data, history shows us it's not unusual to see a bad biotech tape during october of an election year. what is unusual is that we're seeing such bad performance leading up to midterms it's usually presidential elections that crush the sector. the ibb says an average decline of more than 8% in october is

leading into presidential elections. so, what's going on this time? to quote cowan research, it's not hyperbole to say that this year's midterm elections are the most consequential for the health care sector in years, and the trump administration's increasing focus on drug pricing recently is an example of that negative political spotlight, guys, that the industry fears. >> all right, meg. thank you very much. >> thank you. switching now to retail, that sector holding up well in comparison, only down 9% this month, only 9%, but there are concerns about the economy heading into the most crucial part of the year courtney reagan joins us now hi, court. >> hi, ty. the xrt, the retail etf you're talking about, down almost 10% month to date, and that underperforms the s&p 500 but also puts it on pace for the worst month in more than eight years. retail names of all kinds -- e-commerce, homes, speciality, athletic, department stores, you name it, all of them pretty much selling off. some of the weakest retail names month-to-date, wayfair and dsw, down 20%

francesca, steve madden, michael kors, signet, they're all down 19%. amazon we talked about earlier, usually a winner, down 16% just since october 1st. but of course, we know really sliding heavily on what they reported yesterday there are some retail standouts. since october 1st, children's place up 13%, walmart and burlington stores up 5%, and nordstrom up 3%. it's actually the only department store in the green month-to-date. now, a lot of these retail names are selling off with the market because many actually have not reported their third quarter results yet, and even fewer have announced holiday strategies analysts, consultants, even ceos all expect the holiday season will be strong, which could be the shot that these stocks need to turn around and target ceo brian cornell told me he feels more ready than ever for this holiday season, and you might remember, last year's holiday season was actually unexpectedly very strong for target. so, we still have two very important, really three very important months to go because january's a big return season, so i wouldn't count retail out yet. >> all right, courtney, thank you. courtney reagan. well, tesla's bucking

today's down day the stock is up more than 5%, on top of a couple of days of strong gains already looks like oracle's larry ellison is a big believer. phil lebeau's got the details. hey, phil. >> melissa, thils the testimonial of the day, if you will, and it actually came yesterday afternoon of the day. the oracle analyst meeting, larry ellison was asked of the topic, he went onto say obviously tesla had a good day yesterday after posting a profit for the third quarter on wednesday afternoon. he says tesla has a lot of upside and as you take a look at shares of tesla, that upside continues today. this stock is up 30%, 30% this week now we just watched the larry ellison if you will where he talks about his believes in tesla of the second largest investment, his personal second largest investment in tesla.

he mocks a number of critics as well as reporters questioning the smarts of elon musk. it is an entertaining minutes or two if you get a chance to watch the oracle analyst meeting with larry ellison, vocally and clearly makes it obvious that he's a big fan of elon musk and tesla. >> tesla is running out of time in terms of meeting the sec deadline to name its dependent directors and chairman >> yeah. >> could larry ellison be a candidate? that would be an interesting kind of pick >> true. that would be interesting pick if he wanted to take that position remember it is not just for the chairman's position which is required to be an independent director but there is going to be two more board positions that's going to be opened. theoretically, they can look to him hey why don't you come on board, you are a big believer to us >> phil, what do you think of the cap? these numbers that came out were

extraordinary. is that off the table now? is that what the stocks have been rallying for? >> it is one reason why the stock is rallying and people truly buy into what elon musk is saying in terms of on the conference call. we are not going to raise capital in the fourth quarter or need to raise capital at all next year. everyone though th even though they have a big debt payment coming through, everyone with that payment, we should be close to breaking or if not posing a small profit >> phil lebeau joining us from chicago. >> all right, in a year is marked by rising interest rates, an unusual winner starting to emerge utilities share. the sector has out performed the broader index of s&p nearly 8% decline. are those stocks the new sexy? >> my goodness

i can't believe i said that. gregg gordon is a sexy man, gregg gordon good to have you with us >> pleasure to be here >> so you would think that utilities would go south when interest rates go north. why has that not been the case at this time >> well, you are right and if you look at the way they're trading verses the bond markets and i have a lot of different ways of looking at this going back all the way to the '70s they have in fact since early june, the group of stocks that are the most bond proxy-like in my universe and that are up 14.5% and the market is down 4.5% period. that's because they're pricing in frankly fears that we are going to go into a reception

prior periods leading up to recession in my model, they traded very, very expensive to where they should have been verses interest rates at the time because frankly the downside associated with being wrong on the utility stock the economy goes pair shape and the market collapses in comparison to what you lose in the market they are seen as highly defensive securities and they can trade expensive relative to the traditional bond of market relationships. >> give me two names you like the best >> well, i think if you are playing that rally and utilities, you sort of buy into the thesis and portfolio insurance and owning them. you don't want to trade stock at a high valuations. my favorite is first energy. they actually reported a solid quarter for today. the stock is selling off because people did not get precisely of what they want and the pace of

dividend growth. it is about to raise the dividend in the first quarter, 6% for the first time in five years that's got a low risk of distribution business. it should be trading all things equal given all utility stocks are valued today at at least $40 a share and trading under 37 >> give me one more name >> ppl it is a little bit of a complex company. it is 50% of its business in the u.s. 50% in the u.k it is extremely depressed on valuations because of concerns of what's going on in the business in u.k. its got a dividend yield of 5% you got a downside protection of ppo. >> in terms of market dynamic u utilitie utilities. you got a nice pop on this sentiment and slower growth and this bond proxy. that's the best you are going to

get here >> you know maybe part of it i am not going to dismiss that the shortage utilities have not been big if you look at the research product, one of this i thinks we do is we do surveys of our clients. maybe it is not short covering but investors are under weight of the group so there is performance chasing when you need exposure >> greg gordon, thank you. >> my pleasure october has been a big tech break. a major take out of the fang stock. google is doing the best down of only 9%. chip internet and shof waoftwar all down big do you need to seymour of the

world, coming up world, coming up >> the powerful backing of american express. don't do business without it. that's great

i am melissa lee, the dow is coming back 540 points lost

earlier today. who'll win out of the trading week that has been wild. he warned of a market lost inside the company on a titanic's path apple to the rescue. one analyst tells us why the company's result will be the market's make or break moment. all of that, plus so much volatility here at home, it is time to look at opportunity abroad we'll be talking with tim seymour, "power lunch" starts now. >> what a week it has been the second hour of "power," i am tyl tyler mathisen we are majorly off session lows right now as you see the dow industrials are just off 120 and s&p 500 about 1% lower and nasdaq as it has been here in

recent days. all 11 s&p sectors are lower today led by consumer discretionary real estate and staple big move coming into the fang stocks today amazon and alphabet both repo reported weaker than expected. alphabet had been down more than 5% at session lows right now it is off about 1% bad day for semistocks as well amd is continuing its steep decline and noun to 25% this week and 8% dip today. micron and nvidia and nxp is lower. melissa. >> we want to welcome back tim seymour and our fast money trader, he'll be with us for the rest of hour >> fantastic, what a way to spend a friday

>> full team coverage of today's volatile action. martha and bob pisani and josh lipton with a look of whethwithe bob, we'll start with you. >> an interesting afternoon, 11 :00, everything changed. s&p we were down big and now turn around straight up. 60 points in an hour and a half, that's something to see. the dollar, remember the dollar has been rallying the last couple of weeks. the dollar just nose dived right at the 7:00 or so. we saw the vix, it is moving to 28 it too just turned around and nose dive. we saw big move up in re show about 1.5 it went to crude oil which had been trending to the downside also rallied at 11:00 all the beaten up stuff started

moving up and the chinese stock. alibaba was down 4%. it is basically on the flat side today. you mention home builders and lennar, they all rally it rallied 7% since then autos, the whole autos sector rallied. gm was in the red and rallied around 11:00 and all the industrials rally. is that a new 52-week lows that was 120 or so at the bottom in the open, 125 now you can see the turn around that we are seeing. here is the question, we had a nice rally today is this good news or bad news? it depends on who you are calling to or talking to a lot of people are saying gee, they're trying to buy bottoms here that's not good. the sentiment is not enough for a true bottom coming in. the economy is actual pretty good and we got concerns of china and some concerns of the feds, overall things are pretty good that's not to say that's not

good enough for abbott her botte trajectory that's where the crux of the debate is. watch amazon, it tracked the market the whole day >> hit the top and it just moved off the highs with the s&p guys k ba guys, back to you. >> thank you very much a fast money trader, mr. grasso, it is good to have you with us >> it is the fast money take over >> oh. >> so i suppose it does not matter at all who's doing the selling but is the selling we have seen this month machines or people >> i think it is people programming machines to sell the market it is risk parody guys so quantitative i think it is pms. they're selling the market but

ultimately does it matter, ty? i don't think it does not matter i think levels matter. i do think the worse is not over yet. i think they'll slide. >> so, this little rally that we have seen from the lows today of more than 500 points you don't think that's a particular telling sign at all >> no, i think going into the week and people don't want to buy the market going into the week they want to sell the market going into the weekend you have buy backs coming bang into play but that's not going to help us today >> what would you forecast for the next two hours which have historically been -- >> we have been closing on the lows >> time testing. >> we'll test the lows and i would like to see us test the 25 or 32 lefvels i would like to see that in the next handful of days that's a real bottom today is not a real bottom i don't think you can say it is a real bottom until we have any conclusion of rates or trades. >> steve -- i heard you talk

about the sense that you feel pms need the chase and out performance at some point. they're going to race to the year end maybe an argument that could be made that hedge funds can prove they're out performing in a difficult performance by not chasing. how does it lineup >> i hope they could out perform, they are short and never out perform more than their longs if the markets are going down you will catch that chase. i don't know it is happening next week or after midterms. we need a real true bottom before that happens though >> all right, steve, thank you very much. steve grasso >> thanks guys despite it is the worse of october of major averages. we have not seen the market peaked yet

the global cio , scott minerd, great to have you with us. >> thank you, melissa. great to be on >> darkness to be struck by titanic under full steam why the change >> well, not a change. i made a comment back in august that it was a good time to sell based on seasonales that people were ignoring the risks in the market around italy and china and trade wars and, i think we are going to a classic seasonal adjustments and a correction here is healthy you know the tweet about the looming iceberg in the dark is about the fiscal drag that's going to come in 2020 and the

fact that the federal reserve will have to continue to raise rates and ultimately going to kill the bull market having said that, markets tend to continue to rise until after the fed's last rate increase and, you know i think the seasonals are starting to turn positive when we have the fall corrections, the market bottoms 50% of the time in october if it does not bottom in october, about 30% of the time in november. you see historical pe at 19, given a treasury rate of around three to three and a quarter that would leave us 15% to the upside >> up to 20% upside from here there about, i am curious withi that upside, where do you see the most upside?

would you go to the areas that had been struck down the most in the past month namely technology >> well, i don't know if i would be going to etechnology technology has had a phenomena run. look at amazon it is hard to know of a given moment go to the emerging markets, which is growing just as fast as amazon is trading at a 35-multiple. i think the place to go is some of the places that have not participated in the rally this year in the u.s. i think a lot of those companies are in the emerging market >> is there any concern, scott, there is this self-fulfilling cycles where china had some stumbles of the worries of trade war, those impact how emerging markets are perceived and vice versa. it is sort of this reenforcing circle of negativity when it come to the em trade because o f

the trade wars >> that's a great question and that's the concern you know i like to quote a lot, he says when should you invest it is when there is blood in the street there is a lot of blood. historically when you had these kinds of sell-off, the markets turn around and rallrally. i think the administration is deeply concerned about the behavior of the stock market here and, i think that it is probably going to soften in their position and make them willing to cut a deal with china and will get the first sign of the g-7 summit reasons will prevail in washington i think mr. trump is concerned about his favorite barometer that's the stock market and i think the policymakers are going to be sensitive to this.

>> scott, it is similtim seymouu are watching closely i agree with the argument. i guess my push back may be that in a higher rate environment or the question for you is where do you start pricing equities differently? i know we are around 3% again on the 10-yr but if we get back to 3. 3.25 or god forbids of 3.5 you thisnk things look attractiv except for the s&p >> if you take a look at the 16 times forward pe the fair market price for the market based on the model is some where around 5.5% 10-yr note even a move of 3.5% would leave stocks relatively cheap against bond you know i do believe capital has to find a home

we are coming into a period of time where lots of money is being put in pension funds by corporations and states and local government and this money is put in the their accounts in november and december, i think they're going to have to make a choice between stocks and bonds. the current discounted on stocks make them attractive >> what should investors should be prepared of in terms of decline? >> tyler, i think what we are looking at here is a retracement back to the highs that we saw in 2007 and, so if i am correct and markets go up another 15% or 20%, we are looking for a sell-off in the highs of the neighborhood of 40% or 50% and the data that we have given

however the corporate sector is and how over extended the corporations are and correlates that kind of sell-off. we think we are going to see a nasty bear market in the recession. >> and that looks like -- you talk about fiscal drag coming in 2020 would that be where you see ahead of that of a potential bear market beginning. >> i think you would probably expect the bare market to start in the second quarter of 2020. history shows, our view, tyler that the federal continues to raise rates through the end of 2019 they'll probably pause there history shows that it is about six months after the federal reserve begins to cut rate rates -- sorry, about six months that the federal reserve stop raising rates that equity starts to decline and the old adage of

sell away and go away may be the indicator to sell stocks in 2020 >> scott minerd. >> thank you so much >> thank you >> mistake on the ground there >> he hammered it on the ground. >> coming up tech is the big loser in today's session. we'll head down to the nasdaq for a look at what's leading the way back, plus at this spooky market, is giving you october-phobias, we'll give you mehe sckarndhe dead and we'll take a look at opportunities abroad with mr. seymour. that's all ahead on "power

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high-speed internet at home. i'm trying to do some homework here. so they're ready for anything. it has been a wreck for tech this week. the index began deep in the red. bertha coombs are following all the action >> we are seeing fewer than a handful of stocks trading positively we see a few more bouncing off their lows biotech have gone positive for just a second in about an hour ago and small cap is struggling to move up in positive territory as well. that has been part of what helped us. the thing that's dragging us down is you got big cap tech

names that produced really disappointmenting revenue lines. that's really what investors seem to be honing on here, revenue and the revenue outlook. that's the story for western digital and electronic health record company, amazon, of course and also alphabet as well which had moved into positive territory for a little bit amazon right now is providing about 48 points of downside negativeness it is just off of that bear market territory intel is the one bright spot in tech in terms of tech earnings it has produced a pretty good numbers and also put a pretty good outlook for top and bottom line intel is in bare market territory. chips have been in the area that have really been struggling and

the canarian and the coal line, it has been confirmed by a lot of stocks and earnings this week texas instrument and amd, all of these are in bare market territory. that's what we are struggle. amazon is the other factor if you got those two weighing on the nasdaq, we are not seeing it turn around any time soon. >> the chip had been down. phil lebeau we go now on a market flash on tesla. >> the department of justice specifically the fbi is quote, "deepening its investigation into tesla." this has to do something with the doj investigating with tesla. it acknowledges that it provided documents and cooperating with the department of justice, the fbi is comparing the company's statements about the production capability during early 2017 when they said look, we'll be ramping up modelling 3 production and this is what we are expecting to build by the end of the year.

basically they're saying whether or not the company made projection of the model three production knowing it would be impossible to meet those goals we reached out to tesla spokesperson and they responded whether or not the fbi is looking into or tesla made misleading statements. the company said they have been cooperating

through and as tesla claims this is what happens, they're not going to be able to meet those targets what they had been truth full and forthright all along. you can look at it and say well, okay, maybe their guidance is over liam bisly ambitious but i criminal it is completely different if

the fbi -- knowing they would be able to go into the production target two completely different things and that's what this investigation comes down to. >> proving a state of mind is a difficult thing to do. > >> phil, thanks. >> let's go back to the tech trade, nasdaq is down today and joining us now senior tech analyst at jeffery's >> did amazon's report deserve a 7% slap in the face? >> they missed the answer i yes long-term is a great franchise the story, the seale side got aggressive and the buy side got content. you are seeing it unwhine. long-term, this is a fantastic platform we had a lot of questions are bretts taking over from clicks we don't think it is happening something is wrong with the cloud. aws continues to grow of the mid

40% clip is the industry leader. their ad business is at $10 billion run rate all the metrics are looking good you are seeing a deceleration of growth and you got tougher comps. i think the story is changing from a revenue growth story to a profitable story amazon is demonstrating a better bottom line, too there is a lot of variations that's going on but ultimately the answer is yes, short term/long-term we are seeing a higher stock >> which of the two is criticizable factor? one was the revenue bit by half a billion dollars and the other was what they said about revenues in the fourth quarter as you look at those two things, can you separate them with one more important than the other explaining why the stock is down so much? >> it is the bigger issue in the

fourth quarter the third quarter the u.s. over perform, both at the top and bottom line. clearly you will see more variation and that was the big variable for us. i think if it was back to the guy that historically been conservative, i think everyone is noted there is a sale across the board and if you look across snap and alphabet and all the company that's reported, tlhere is as minor deceleration that's inevitable given how big the numbers are. there is no cliff dive you are just seeing a modern slow down. >> that's the big problem. it is a growth company that's pressured extraordinary growth it demands growth to continue and not to decelerate. i am not saying your approach is insane i do think investors are saying hey, aws has been growing at an

enormous clip and you have seen a lot of competition in that space and the top line used to be a place where people cared less about profitability and they gave you profitability and here we are. >> yeah, i think it is settling in if you look at google, i thought it had a clean print and that stock is off with a small deceleration with our view, google is in a better position and it is definitely not as crowded as amazon there are other names that we are focusing on investors on today and you use the opportunity to let amazon to settle in. i don't think anything is changed of the long-term if you look at the multiples, it is not crazy loo you are looking at some of the parts and you can get to higher lef levels we don't disagree. google is the one that we like and we'll be buying here >> brent hill is with jeffries

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welcome back to "power lunch. check out the nasdaq getting slammed once again today down nearly 2% on track for its worse month since november of 2008 todd gordon is here to talk about what may be the next move. todd, take us through the qqq, the nasdaq 100 etf tchlt where do you think it settles out. >> sure, michael this is the going to define where we see the 2% lows the scale over here, we have a $60 move from 80 from compares to 200 on a percent change is very different let's go to the next one which is correct if you go to cnbc's chart, you will see that.

it brings the trend line closer and that's key we are supported and the up trend is intact. this is the weekly chart keep in mind as we get down to the daily, there it is right here the support level that must hold in my opinion and this is the weekly, we went all the way back in 2008 is right around $150 what's going to happen is it is going to correspond with the intersection of the trend line this is your must hold line here do it here but also define the risk below that ten year up trend. >> erin, on a fundamental basis, are these companies what you want to own? >> these are still strong fundamentals but a lot of these companies are having slower growth forecasted for next year. one thing we are seeing is investors are getting used to

resetting valuations and interest rates and environments. one of this i thinks we are looking at is valuation for the nasdaq we are getting close to earnings which is one of the major breaking points for the nasdaq we could see a downside of 4% here before we see the past five years where investors start to jump in. it may not be the time to get into yet but it still may be healthy. >> seeing like the technical and fundamental buy points are not too far below the current level. appreciate it. for more trading nation or follow us on tweet @trading nation >> tyler, back to you.

the next guest says the president needs to take aim at the real reasons why rates are going up more "power lunch" straight ahead. now, a word from our sponsor from "trading nation." >> using limit orders will ensure that you don't pay too much for the stocks that you buy or get too little for the one you sell markets tend to gap up during volatile markets i am a family man.

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that simplify your experience. my name is mike, i'm in product development at comcast. we're working to make things simple, easy and awesome. i am sue herrera, here is your update at this hour the man is arrested and charged in connection of packaged bombs has been identified as cesarce cesar sayoc. nbc says the megyn kelly's

show has been cancelled. >> rescuers searching the dead sea area for survivors of flash flood and they found the body of the 12-year-old girl raising the death toll to 19 the body was recovered after middle school students and teachers visiting the hot springs in the area were swept away by floods police arrested the man trying to steal the magna carter the man trying to snatch the glass case in salisbury cathedral. you are up to date that's the news update back to you, melissa >> sue herrera the great debate marches on this morning on "squawk box. loretta mester making her case why the feds are on the right path i think the economy is still growing above trend and unemployment rate is at the l lowest levels since the la

late '50s. that's a strong outlook and suggesting that we need to think more of taking back of the combination. >> is she right? is the out look as strong as many thinks. our david rosenberg and we are joined byron isana, cnbc's contributor as well. is she right is mester right? >> in some sense she's right i think there is a bit that in the sense that the only interest rate that the fed really controls is the over night rate. the fed does not control five-year bond yield or ten-year bond yield it controls the over night rate. but, what really strikes me is that the question comes back to is the fed right is the fed screwing things up and nobody talks about the real reason why interest rates out

towards the middle and long-term part of the bond curve comes down fiscal policy this is a pbeauty of going to high school and the reality that every action has an equal reaction why would anybody think that we can stimulate fiscal policy to the extent that we'll run trillion dollars deficits of unemployment rate. it is interesting that the whole narrative now is on jay powell and loretta mester on the fed. if you are going to increase the bonds to fund these fiscal deficits, you will have the reaction of interest rates and no matter what the fed does or does not do. nobody talks about this. it is not always about the fed, it is about fiscal policy and the dramatic stimulus at this late stage of the cycle at a time when we are at fully

employment >> perfect take it apart for us, ron. >> david is saying the issuance of trillion dollars bond means si issuers are going to have the pay more that price is the interest rate. >> of course, as david noted that he'll go back to econ 101 the fed does control long interest rates in as far as quantitative program is driving down by bonds. now there are net sette sel down by bonds. now there are net sette seers. they are pushing supplies in the marketplace and all things being equal and pushing rates higher we have a global economy we had the financial hiccups along the way. >> you both identify other slugs of reasons why >> chinese selling >> why interest rates are going up

>> what if, if the feds draw so much attention, why does it draw that much attention with respect to what it means of other rates out to curve >> a lot of other rates, and short term rates so the cost of capital for business will go up automatically if the fed normalizes interest rates policies if you have a lot of debt that's short term in nature or adjustable rate debts in nature. also for business more broadly speaking you also have the possibility that we are at peak growth and peak earnings and higher rates and making it that much harder to grow. >> david, getting back to the fact that fiscal policy is your argument for why we are here and we are going to double the amount of treasury than we issue last year. what should the fed be doing should they be more aggressive or less here >> i don't think they are being aggressive at all.

their raising rates a few times a year we have a situation where most inflations -- let's look today at the broadest measure of inflation there is it is called the gdp deflator? what is it running at in the united states year over year at 2.3% where is it today at 2.25% we are complaining of the fed which is keeping the fund rate as we are sitting here below the total inflation rate of the economy and this is all about the fed. what's miraculous when you think about it despite the fact we have a 3.7% unemployment rate and wage growth is accelerating. every single measure that i can see is above 2%. what is the fed actually getting wrong right now? i respect the fact that when you look at the details through the gdp numbers today, they are pretty soft. this is a fed that stayed dependant and forecast dependant.

i think it is going to take a lot to get them off their k caden cadence. there is no sense of funding it. they have not done anything wrong. they have done their job, maintaining their interest rates and their mandate is not to target some levels of the s&p 500, nasdaq or any others. they're doing their job and they should continue to do it without any criticism. >> david, good to see you. >> david rosenberg and ron insana >> it is tough to know where to put your money to work tim seymour is here to break down the global hot spots, that's two-minutes away. stay with us going to tell you about exciting plans available to anyone with medicare. many plans provide broad coverage and still may save you money on monthly premiums and prescription drugs. these are affordable, all-in-one plans that help pay for doctor

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intel, walgreens and travelers among the ones leading. on the other side of the break, we'll go hunng wtiith opportunities abroad with tim seymour, stay with us on "power lunch. prices,

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want to "seymour of the world" of your portfolio tim seymour is here with us right now. he'll be straightforward >> no games. >> let's do it >> china >> buy or sell >> china is a hold

>> china is in the position to stimulate create again china was tighten their company. the g-20 meeting may or may not be an issue. get back to valuations i think there are some extraordinary value in china an outlook to buy, 10 cent in alibaba and the two megacap of the tech names that i think if you look at the multiples of a ratio of 9 this is for both of them both traded about 18.5 times in 2020 how much they are growing relative to themselves and the group is attractive. significantly cheaper to the other mega cap names in the world. let's go to brazil here? >> let's buy it. i don't know if you are aware while the rest of the world have been melting down in october

brazil is up by 13% in dollar terms or locally the dynamic here is this remidss me of a little bit in brazil looks like he's actually the market friendly at least the ma friendly guy than we expected. it reminds me when was coming to power in 2002. i actually think that the brazilian banks and some of the resource names which used to be the trade were not the trade are looking interesting yet again. >> italy >> italy is not so easy. let's just -- i will sell it out right. i think if i look around while trade is the biggest overhang i think structural issues continue to dominate. we heard the italian banks hit over is a time they need to get recapped i think the politics in southern

europe aren't going to get better a growth scare hits that part of the world harder than anybody. >> what about m-- >> we'll talk about that next friday still ahead, the iphone 10r officially on sale we'lte y wtherppl llouhe ale can lead tech out of the mud let's get started. show of hands. who wants customizable options chains? ones that make it fast and easy to analyze and take action? how about some of the lowest options fees? are you raising your hand? good then it's time for power e*trade the platform, price and service that gives you the edge you need. alright one quick game of rock, paper, scissors. 1, 2, 3, go.

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find out more and get out of line today. let's take a look at the markets. closing in on a 2% slide and a 2.2% decline for the nasdaq composite as we head into that last hour of trading which has been a very bumpy hour indeed in recent weeks we'll switch to a stock that a lot of people will be watching apple's latest incarnation with the iphone 10r officially now on sale the stock has fallen with the rest of the sector it is down 4% this month but can next week's earnings turn the tide for the stock and maybe even for the tech trade. this is supposed to be pretty dog gone good, josh.

>> so the 10r is officially available. it is right here it starts at $749. it has a 6.1 inch lcd display. face id advanced camera system and greater battery life as you mentioned, the stock is down today and also down month to date. what is interesting is where is tim cook today you can see pictures of him there. the stock is under pressure but not as interesting as other names which are a lot harder apple up about 30% year to date. looking ahead what becomes important next week is apple's big earnings report. some of the themes in trends traitors will look for for one did the iphone 10 continue to sell well? it was the company's top seller

and we'll look for early demand signs and trends in the new phones, the 10s and how they compare today previous cycles. they will make a b line, the big holiday corridor it gives you the first sign of how it may play out over the next 12 months >> thank you very much so can a strong earnings report, we have the biggest apple bull ton streets dan, how bullish are you about this new 10r phone as opposed to the priceyer one it sounds like it does -- it quacks like the same duck pretty much it is a little smaller but 250, hundreds of bucks cheaper. >> yeah. it is really about thescreen

china demand will be key it is what apple is looking for. >> any concern about the mix tilting more towards the r and bringing margins down? >> yeah. i think if you look through in terms of what they look like i think asps could be 15 to 20% above expectations through the next few quarters. in our opinion that asp, we think it could be the one-two bunch to see not just strong earnings but significant guidance >> are there too many skews right now for apple? some feel that the consumer at

this point is a little confused. >> look, i mean last year was a massive ds appointment they realized what they need to go after it is really ability china even though last night was a major black eye i think they could sofrt take this baton. in terms of this it was not an earnings reporter where we'll get any sort of good visibility period, right? >> yeah. >> when you look at this it is really about china demand. you do not see a stock go higher

if they don't par tis paint. >> is this the price point that would unlock chien in for them >> in our opinion isit >> i think they really go in 2019 >> all right we'll go to sue with breaking news >> thank you u.s. attorney general sessions announced the charges that are being levied against the suspect who was arrested earlier this morning there were five charges. some of the one that is carry the most would be threats against former presidents. the suspect faces cumulatively up to 58 years in prison and the fbi director ray is talking at

this point he says it was using dna e6d which was evident on some of the packages he says there may be more packages out there >> all right thanks >> thank you tim thank you. see you tonight. >> and closing bell starts right now. >> hello thanks for joining us on closing bell let's get to where we stand on this final trading hour of the week the dow rebounding from the