>> charter, cable company. >> below 86 this morning, approaching 95 now >> more stocks continue to creep into the green that does it for us, thanks for watching, power starts now welcome to power lunch another major selloff, we're off the lows as they've just been discussing here is the slowing growth sparking concerns about the trade tip, between the united states and china is a tech cold war and harsh market winter brewing. oil tanking right now what about russia a way for the blessing of putin and putin's oil minister we're live the american economy, rate hikes and more

it is a must see interview with jamie dimon, it starts right now. >> welcome to power lunch, i'm dominick chew. we are balancing like tyler said, the dow plunging more than 780 points at its low. the 10% drop or more, the nasdaq pushing further into a 10 of the 11 s&p 500 sectors in the red led by financials, energy and materials. seven of those sectors down by 10% or more. boeing, the biggest drag on the dow. having more than 100 points on those losses, and oil prices sliding, having their biggest monthly drop in over a decade. much more on that trade ahead. bonds on the move as well.

10-year treasury note hitting their lowest levels in more than three months >> hello, everybody. we're all over this major market selloff deirdre bosa in san francisco. brian sullivan with the d.c. reaction to tech ceo's meeting at the white house let's get started with bob and mike at the new york stock exchange. what are you watching right now? >> we were down at 26 or 30 something earlier. we plunged almost 30 points in the s&p, two things i saw happen, one is europe closed we had some comments from the head -- mr. bostic says, we're within shouting distance of neutral.

remember, caplin just came on also i think this is an important move we've been seeing here from the fed. >> the market has pulled some rate hikes out of next year. i think that's one element of it, we also had that kind of soft test of those lows that we hit after thanksgiving, also, it seemed to make sense to me, if you didn't get a lot of that follow-up selling in the morning, themarket is going to try to pull itself into this position it's not rushing in one direction, when you have that jobs print right ahead >> we did go right at 26.31, that was the november low closing low, that's a very important technical level, if we drop below that the technicians are going to scream. one other quick comment we had a

legendary hedge fund trader on earlier. when you have concerns about tariffs and oversupply in the oil market it's a lot to deal with. and i think there's plenty of signs the economy is slowing we've seen small caps at new lows, wait a minute. defensive stocks are at the market leaders these are all traditional signs of slower economy. just because we're not slow now, we're trying to look out 6 to 12 months that's why i think the markets are having problems, we don't need to blame the machines >> if you look at the comeback made by the nasdaq, they have been pounded a lot in the last couple months. >> mike and bob, thank you so

much let's put some of those points that mike and bob talked about in graphical perspective for you. you heard bob mention that level, that was the low. we came right within that level, 26.32 and balanced from there, that's an important level, it represents the lows of that recent market pull back that we saw in october 27.61 remains the average for the dow and s&p 500. let's take a look at the bond side of things we saw a pull back at one point for the 10-year government note treasury note the reason why we're seeing some of that action play out. 2.96%, that is the 200 day yield. we're going to watch that and see if there's any selling pressure as well

also perhaps by some technical reasons as well. we'll get into a little bit more of that later in the show. >> we've run through some of those staggering stats, let's get some perspective from david cats jason, whehe is a senior equity specialist, welcome, i'm going to start with you you say the next 10% move in stocks will be higher, not lower, you think the majority of the pull back has run its course, and stocks should be higher and meaningfully so over the next 6 to 12 months what makes you feel that way >> investors should have perspective there's lots of news out there, some of it good, that's being ignored that's what the focus has been

the economy is actually -- well it's slowing, it's pretty good, valuations for the market, there are a lot of great businesses. it's difficult if not impossible to figure out the market we think if you have a 3 to 12 month in stocks it's going to be higher if trump realizes trade is a problem for the economy and the stock market, he might do an about face and try to solve the situation in china if that's the case, we think things are pretty good let's pick apart a couple things david just said there. last year they paid attention. this year it feels like the market is ignoring the good news and paying attention only to the bad and also, what he concluded with, and that is that the fate of the market largely depends on

an about face by a president who is very rarely indicated a willingness to make an about face >> it reminds me of being a suffering mets fan the market, we have a lead essentially, the backdrop fundamentals on earnings for economics is quite good. given some of the challenges we face, whether it's trade, investors are skeptical. our view is that we're not in recession airy territory for the next year. but the market is pricing that in it gives us a view that today is a good equity point. i would say that with the expectation that volatility is here to stay for the future. >> your thoughts here, wrap it up for us, i'm not saying we're

done, but what are your reactions to what you heard? >> if you look at the fundamentals of this, whether it's the economy, record corporate earnings, low interest rates that are now lower than they were before we had the scare in october and earlier this year, when we pushed through 3% inflation in check, valuation now under 15 times next year's earnings you back up the tax cut, you back up some of the things that have driven the market, we think that's a decent earnings rate that is achievable you put all that together, it seems that a case can be made that we're oversold, as long as the fundamentals hold in, that's going to be a garden variety fundamental. >> that's incremental positives, trade will be on the forefront

of a lot of folks minds over the next couple months, and we'll see what happens there on balance, it looks pretty good >> investors maybe need to prepare to have the guts of a rodeo cowboy, where are you looking right now to position yourself you don't like staples >> no, i think the defensive bond proxy sectors are overpriced given what the earnings picture are for those companies. with that said, we have reallocated some of the volatility toward health care, some product companies that have durable earnings growth. stocks that have gotten bit up in this volatility we also like communication services there have been areas of media and entertainment that have sold off. we've taken advantage of some of that to buy franchises we think are durable. >> specific names? >> netflix and disney are two names we initiated in the last month.

what are the things we've noticed, is that when we did make a run, trying to get a little bit of ground back, it was the netflix, it was the alphabets, it was some of those stocks, amazons that moved higher are there signs in the marketplace that we're looking for. certain stocks, that would signal there is an appetite to get back into the marketplace and put some of those shopping lists to work? >> we don't see those signs yet, what we do know is you can get these great businesses marked down 20%, we like some of the names that were just mentioned, facebook has been creamed, cbs cvs, goldman sachs is at a great price. we don't see the signs that anything's turning yet, by the time people see the signs that these stocks have bottomed out,

they're going to be 10% higher the easy money has been made, there's never easy money to be made, the time to buy them is when it's difficult, when they're up 10 or 15%, you feel better >> a lot better off doing something or doing nothing right now? >> i think it depends on your time horizon, if you're a long term investor and you're fully invested and you have sound asset application p.m. have you a financial plan, our guidance is, do nothing stick with that. ride the ups and downs, stay the course, you're probably going to be fine. it never makes sense in our review or rarely makes sense to make short term decisions with long term money. however, if you're sitting on extra cash or if your dollar cost averaging or waiting for a correction or pull back. i'm not calling the bottom here, i think there are a lot of businesses as david said out there that are trading at discounts to their intrinsic value, probably makes sense to put money to work. >> gentlemen, thank you very much

>> jason wear and grant bug man. oil is tumbling once again today, barely staying above $50 a barrel brian sullivan joins us live from vienna, the site of the big opec meeting, what's the takeaway >> the takeaway is take out apparently here they're at the liechtenstein palace they're all inside there having cocktails and hopefully working on some kind of a deal no deal. the market was expecting a production cut some people got cocky and said, they probably have the deal worked out, they're just going to put on a show russia comes in tomorrow, everything is buttoned up, not the case the market reacted to that, not only do we not get a zeal, we didn't get a press conference, which is only the second time in the history of these meetings, in 30 years that there has not been a press conference, even just to say there's not a deal

they literally just said, they vanished, and they came here tomorrow is when russia shows up, and the bottom line is this, russia is not a member of opec the reality is that russia is now getting closer and closer, if not to opec, certainly to saudi arabia, and the way it's going to work tomorrow is this, no doubt opec has a production cut deal in mind russia produces 11 million barrels of oil a day they're going to show their cut out to the russians, the russians are going to bless it or not alexander novak will then make a phone call to one vladimir putin who will call the two major oil companies in russia, see if they agree, everyone we talked to said that's going to happen. it's not going to happen opec, the saudis and putin in that triangle. if it's under 1.2, 1.1 million

barrels per day, look for the market to react negatively tomorrow if it's bold and over a million and a half, everyone we talked to said the oil market may come up a huge selloff on wall street right now, the dow is under 500 points 29 of the 30 stocks are lower. boeing accounted for more than 100 points of these losses just on its own united health, apple, jpmorgan big drags as well. speaking of, jamie dimon will be coming up moments from now, we're going to be asking him about the markets, economy and trade tensions we're going to dive deeper into the source of the new tensions the rearst of a top chinese executive. power lunch will be back after this break till be here to help me make smart choices? well, with your finances that is. we had nothing to do with that tie. voya. helping you to and through retirement.

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...well almost anything. leave no room behind with xfi pods. simple. easy. awesome. click or visit a retail store today. the dow is down 470 points, major international intrigue, aggravating tensions between the u.s. and china today the ceo facing possible extradition to the united states we have full coverage on this story on what happened the reaction from washington, d.c., and following that big

meeting of tech ceo's, let's start with you >> here's what we know so far. he was arrested saturday in vancouver, while in transit, she's being sought for extradition, this is reportedly related to violating u.s. sanctions, we got the first report of the arrest, and china was swift to condemn it, the embassy in canada and the country's finance minister demanding her immediate release. china should be fully prepared for an escalation in a trade war. here's where it gets even more complex guys she's the daughter of its founder, who is a former people's liberation army officer

huawei is the pride of china's public sector. the number two smart phone maker. it's reached across the world from asia to africa and europe, not in the u.s. many. >> this effectively is the equivalent of china arresting the cfo of apple >> you could make that comparison if the ceo of apple was under scrutiny for close ties to washington thank you very much. >> how this could affect a tenuous relationship with china. let's bring in ylan. >> the trump administration knew about this abefore that critical dinner between president trump and president xi telling npr, i knew in advance,

this is something we get in the justice department so that raises questions about whether the u.s. was really negotiating in good faith at that dinner. meanwhile, we are getting strong comments from mark warner. this is a reminder, that we need to take serious the risk of doing business with huawei many we have tried to get reaction from tech executives as they arrived here to meet with members of the administration. they are all here today. so far, they have all declined to comment but it is telling that among the members within the trump administration they'll be meeting with is robert highser this administration is serious about its hard stance with china.

the meeting is expected to wrap up in the next few minutes let's bring in a cnbc con trab uniter. i want to start with you, jeff how serious do you think the threat for retaliation is for america's tech companies and tech executives. >> i think the possibility is quite high up until now, china has responded to american actions by retaliating in measured ways this is an aggressive measure that has unfortunate timing. every american firm that does

business in china is vulnerable because chinese laws are extremely vague, people in order to do business have to work in that murky regulatory environment. and the chinese can crack down easily, because those laws are vague and they can interpret them the way they want >> i'm sure you heard john bolton knew ahead of time the arrest was happening does this cast negotiations on the u.s. part whether they can go in and be honest operators and in trade talks with china? >> that fact alone is suspicious this case dates back at least to 2011, when the commerce department was investigating zte. they found a memo that outlined expectations by a company that is clearly huawei.

they subpoena ed huawei. this case doesn't come to a surprise to anyone i think there's a lot more to this story that we yet don't know >> if we take john bolton at his words that they knew ahead of time let's talk about what the united states needs to see from china at this point and when we're going to see details about huawei's cfo >> it looks like this is going to end up in the eastern district it's unclear what those next steps are as far as the negotiations, they -- it seems to be they knew about this days ago, and still made positive rumblings about we need to come to an agreement and we're going

to follow through, there would be some sort of agreement that this won't derail that agreement. this won't be the last incident and this is going to be the last incident on china's part probably investors don't like this they don't like the idea that this isn't going to get solved. hang on, it's going to be a bumpy ride the united states government will be happy to see a disenhang elling of the ecosystems this is one step in that direction. >> what do you expect china's next move will be with respect to the cfo of huawei would they potentially find some charge on which to pull in some american executive who is working in china or in transit through

there? >> i would imagine they're almost certainly talking to the head of the canadian government about not extraditing this executive. if it happens, i think retaliation is highly likely, and chinese pass practice is to retaliate in a way the chinese would be able to retaliate if they choose to do so however, up until now, the chinese trade war has been to maintain the status quo. if they retaliate in that way, things will get out of control >> it's important to note that we've heard some conciliatory comments coming out of the commerce department. they're going to start these meetings on. we have to wait to see how some of this shakes out gentlemen, thank you for that.

>> stocks plummeting, trade tensions taking a brand new twist over the night, and the fed may be backing off a little bit onrait hike moves because of fears of a slowing economy great time to talk to jaime dimon. he will join our becky quick becky? >> we're joined by jaime dimon jaime thank you so much for taking the time to do this >> we have a lot of things to talk about, i want to talk about the business roundtable, but because of the chaos in the markets, i want to start there is this a real situation a fear factor or is it a factual factor >> it's a little of both we have the strong american economy.

ceo's say the order books are good they're still hiring people, unemployment may hit 3.3% this year that's all good you have a bunch of geo political stuff the one that's what's going on the fat tail trade war you wouldn't think about that a year ago how bad could it get that is the added thing. and is it recession airy i personally think it doesn't tell you at all. there's something we all see, the actual facts on the ground, you have growth in america we know the imf 3.7% this year >> the fear factor, the idea of

the trade war. would you call it a trade war? >> it's still a trade skirmish, how bad can it get you have to. >> when you say people are pricing it in, you're talking traders or ceo's >> you're having -- a lot of people mention it being an issue, it's a minor issue for most companies it's a big issue nor some. they have to change the byline those things are causing uncertainty. >> the required companies, it's 3, 4, 5. they're worried about it, thinking about it, and it's affecting price a little bit it's the uncertainty, when you create uncertainty like this, and with potential tariffs

-- >> okay, these are pretty complicated thoughts, we have 90 days to come up with a solution, where do you think we stand in 90 days. >> the likely outcome is that they make enough progress in '90 days, actual progress, you look at the chinese, they're actually allowing some companies to buy industries, talk about making actual immediate changes when they had their press release buying things and changing they acknowledge that ip's are an issue to try to make -- fix ip's, they do that, my guess is, at the end of 90 days, they'll get extended more i think it's too complicated to do that. it creates another cliff you have to wait for 90 days to see what it means. >> that's not good for markets i am hoping works, these important issues get resolved.

>> you're hoping, are you expecting that they will. >> i give it a higher chance, 60% versus 40. >> the risk is always if something goes south we arrested the lady from huawei what does that mean. the rumors now, i heard they arrested some americans in china and that kind of stuff is just -- >> if you looked at the situation -- i was reading through it this morning and trying to figure it out. it was done by the southern district in new york, to me it didn't seem like it was a direct correlation with trade talks >> there is a good chance the white house had no idea it was taking place >> if that's the case, is the market over reacting >> it's possible, yes. >> you haven't heard one way or the other? >> just reading the tea leaves >> i don't know.

>> i want to talk to you about the fed, you mentioned the fed raising rates at this point. that's been a huge part of the factor that's made business leaders, especially traders nervous. this morning the market was betting there's only a 73% chance that they even go this month in december, up to this point that had been 100% baked in what do you think? should they -- >> based on what you see in the economy, because you have a long league >> the risk of the fed doing it too much too fast. there's also a risk of doing too little too slow. it's easy for people who own assets, the fact is, a strong economy, normalizing rates is a good thing my guess is, the feds are looking at data right up to the last minute, and they probably will do december i don't think the fed should be over reacting that the stock market went up or down possible geo political events. normalizing is a good thing, the world will be much happier if

america is growing and rates are going up a little bit. i think they'll probably stay on course, and people are going to just -- there's speculation. >> you have a very good idea of what's happening in home mortgages because of all the mortgages you make there some of the areas that people say, look, things are weakening there, is that because rates are going up, or is there something else >> it's not weakening, car loans are being made, 17 million cars being sold, it's humming along home mortgages mostly because rates are going up, the option justice spreads are going up a little bit it's a little more expensive to get a home we have restricted credit to a lot of buyers because of all the mortgage origination securitization purchasing rules and stuff like that.

it just reduces the cost of mortgages to a bunch of people, and opens up people who get mortgage mortgages. >> we still don't have security seven years after the crisis it would be great to reduce the cost -- >> you say securitization, everyone thinks we're going back to what caused the problems. >> that's not the way to think remember the buyers are a top notch professional too it just allows institution made mortgages to have another way to sell them. a cheaper way, and it makes it cheaper for the individual the credit box is more -- with all the litigation after the crisis, and all those things, a lot of banks and nonbanks don't go right up to the limit of fannie mae and freddie mac, they put overlays a tighter appraisal and more

preserved appraisal, income. that hurts lower income and that home value between 200,000 and 250,000. that would be a good day to make those more available there's always a solution to issues and -- obviously rates going up, reduce mortgages in american history, there are a lot of times when rates are going up, home prices continue to modestly go up and the economy continues to grow. >> there are people looking for bubbles everywhere, inflated asset classes because of the aren't rates have been so low for so long, and one place that investors have been nervous about recently is corporate credit are there problems with the corporate credit market? >> no, i think people are -- we don't -- the corporate credit market in 2007, the underrated bridge book on the street, 480 billion. there are no seives, no bad coo's no, sub prime to speak of,

much less leveraging the banking system and the nonbank system. you look at leveraged loans, yeah you have to leverage loans, it's a normal way to run businesses many the banks own 100 billion or something the term b loans are predominantly owned by nonbanks. they look to be okay too there is more of it, you know, i think if you looked at the bauble anywhere it would be in government bonds we're way too suppressed now for the better part of eight years you don't want to find out that we have inflation and we have to sell $1.8 trillion, between the government of 1.2 trillion and the government plans to sell x 600. i wouldn't be a buyer of government bonds i think it should already be at 4% the economy is going at 2.5 or 3. >> you can say it's being artificially held down, can you

say, if we compare that to the german tenure, that's going to act as gravity on u.s. tenure rates too. >> for the countries have different growth rates and different currency curves and stuff like that, because they're different doesn't mean -- >> in this case, you're right. that's also because the ecb is buying bonds >> when i say suppress, i mean globally suppress. >> can we talk about what's going on out here. >> let's switch to that, and start with the jobs report, it's coming out tomorrow. you announced an initiative at jpmorgan today, to take $6 million and put it on job training here in the d.c. area it's something you've been doing around the country and the globe. >> what are you seeing in terms of these jobs? >> 7 million people looking for jobs, more people -- this what

we're doing here, jpmorgan is a microcosm around the world what i'm about to say is, at the ground level, they're doing what we're doing here, here it's $6 million over 3 to 5 years, to help high schoolkids get certifications so they can get the technology jobs which are right leer amazon coming and people like us expanding. the jobs are here. we do this in detroit, indianapolis the 100 different things we do, and now that brt is doing 11 test kitchens. we have a bunch of the mayors and stuff. apprenticeships, high school, community college. college. it could be anything like that that gets kids well paying great

jobs this will work, but it's got to be done by government and business it can't be done against government so businesses need to help the government and vice versa. >> what do you do from government >> here it's all about high-tech. >> a lot of the jobs around the world will be high-tech related jobs >> what do you need from government it's hard to do it without the corporations, you need to tell me exactly what you need >> here's an apprenticeship program that works in denver, the high schoolkids 30% go to college, just because you go to a job doesn't mean you can't go to college in 12th grade, you spend three days a week there. you get paid while you're there. you learn how to operate machine tools, you get credit, when you get out, you already have a well

paying job a local business helped train you. allow very quick certifications, we can't go through six years of getting things certified a lot of government programs have money that can help get these things accelerated around the country. >> what happened >> i'll give you another one innovation is infrastructure, what have we done in america we put a man in the moon in eight years. 12 years to get the permits to build the bridge. >> how did this nation of ours become so bureaucratic, the extra costs and uncertainty. >> what happens when they reduce that to four years innovate them. the internet, the health services, the moon program, huge innovation around it our r&d was five times china

today it's equal to china. you look at r&d and expenditures they're like 70 or 80% of it that is what drives jobs and productivity growth. the huge expenditures. you have boeing, drones, ai around driverless cars, this is going to be unbelievable for america going-forward this is the vrt trying to make a real effort to prove society. >> do you feel like you have a willing partner in the government right now, are they listening? >> yeah, you have to -- the administration, yes much they want to get infrastructure done. the guidelines for businesses have competitive tax systems and then when you go around the country another important point, some of the stuff we see is state and local. you know, just almost like this

endless corruption to get permits to build something or something like that, so one of the things all of us do is work with local governments some of these things are fabulous new orleans. i mean, he's not there any more, some are so political and bureaucratic and backwards amazon looking at cities, brings out -- if you want to become -- you want to attract good jobs, therefore, you need schools infrastructure, arts, all those things that make it attractive competitive tax system, local business, if local governments are hostile to business, it's not going to lap. >> the two have to work together to have a successful society. >> is that why you signed up for another year

>> yes >> we're trying to get policy groups -- it's shared success, inclusive capitalism. >> we get society doing better education. society we have to -- be more -- obviously, far more jobs available. and so i think like the brt, the chamber of commerce have to do that the ceo's and brt's have done an exceptional job. today we're rolling out innovation policies, today we're rolling out privacy policies the privacy group did an unbelievable job laying out data privacy. i think that's unbelievable. we don't always all start at the same point. >> you do it before the regulators do it. >> help inform smart regulation, that's great for consumers, great for businesses, so

understand your requirement, your compliance. >> i want to go back to something you said earlier you made comments about what you see in terms of a recession being out there. you could see a recession happening in 2020. do you see that, or is it just beyond -- >> you always ask that question, and no one knows i'm simply saying that there are a lot of things happening, that may come together in the wrong way. it's possible -- we've had 20% growth over 10 years, should have been 40%. that anemic growth is expenditures, we need enough high paying jobs, people didn't have opportunity it's not the tail end of the cycle, but it's possible the acceleration we're seeing is traditional for the last third of the cycle

it's possible we have three years left, and with more jobs and more wages, you still -- catholic expenditures are still up, by the way >> is there a different report at different places? >> they're still up year over year a lot of these companies, what's the media effect some people raise wages, some open another factory or two, but the real effect is the cumulative retention of capitol redeployed uses in the united states for the rest of our lives. that's the real effect >> and there are officials i meet with all the time you made it much tougher for us to compete with american companies. they understand that someone who can will build a plant here or build their company, when before they definitely would have put it somewhere else the notion that somehow having uncompetitive taxes is good for our country is a crazy notion.

i love people to call me up, i don't understand how they understand it's a good idea to have returns -- the world is at 40%, they came down to an average 20 about we stayed at 40 all that means, the average returns are twice as good if you had an opportunity to put a plant or a company overseas sometimes. why would you want to create that environment the business roundtable supports the earning of tax credit. i want to get more income to lower paid people. most ceo's do. mark sutton showed us today all the things, all these companies are doing the ceo is thinkin about all the wonderful things people are doing >> these are. >> things, i think the american public should know about them. i think steve burke should put what we're talking about here on

nbc morning news, nightly news to educate the american public about why good business is good for the country. >> i appreciate your time, and you always have a platform here on cnbc. >> thank you very much >> business roundtable all day we have many more ceo lineups coming up. we have randall stevenson joining us a little later today. and doug mcmillan. tyler, back to you >> i was going to tell everybody that you just did >> we appreciate the amount of time he just spent with us very generous with his time always, and a very provocative and insightful fellow. >> he's making a lot of headlines? >> yes, is he. >> we're going to get analysis on the other side of this break. we're still down pretty biong the day. we're all over it, stay with us.

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we're going to get straight to deirdre bosa with an update on huawei. >> reuters first reporting the u.s. investigation into huawei includes accusations of bank

fraud and sanctions violations, citing sources familiar with the probe, they siit focuses on huawei's banking relationship with hsbc and they used the bank to make illegal transactions involving iran the stock tumbled on that news we will update if we hear back, but the stock has recovered somewhat because in the last few minutes, we got different headlines from dow jones, quoting sources saying that hsbc is not a target of the huawei investigation and the bank flagged suspicious huawei transactions to the prosecutors. a lot of developments. this is moving pretty fast we have the hearing of the company's cfo tomorrow in canada we're following everything closely and we'll let you know >> we're still seeing the headlines so perhaps, deirdre, a whistleblower situation. we'll follow this closely. thank you for that >> jpmorgan's ceo jamie dimon speaking with becky quick moments ago, saying we have a

strong american economy and that the facts tell us we still have growth ahead he also says the fed will probably stay the course with rate hikes let's get some reaction to that big interview with jpmorgan chase ceo jamie dimon. we have the president of global strategie strategies, also, peter, chief investment officer with the blakely advisory group thank you for being here one of the things i thought was interesting about jamie dimon's comments was his notion that government bonds and maybe even specifically treasuries could be in a bubble-type situation peter, we'll start with you. are u.s. government bonds in a bubble-like situation? >> well, bonds globally. i mean, negative yielding bonds overseas, that's the epitome of a bubble because you're quickly trying to flip it to somebody else so because we price off what goes on around the world, yeah, sovereign bonds is where the bubble is. the importance of what he said is that sovereign bond yields

are the risk-free rate if the bubble unwinds and risk-free rates go higher, let's going to affect the pricing of everything else that is dependent on the risk-free rate, whether it's equities, corporate bonds, or any other asset class that is priced at a premium to the risk-free rate >> so we have seen a lot of buying, especially in longer term u.s. government debt over the course of the last few weeks. just in the last seven or eight days alone is it correct for investors and traders to go long u.s. government debt at these levels in the market? >> i would answer your question, and before that, dom, i would say in terms of whether government bonds are in a bubble, i would say definitely they are not you're seeing a situation where inflationary expectations are coming down with oil prices being lower. global growth is coming down equity prospects are worsening, so what could be more rational than going into risk-free or low-risk bonds you see that taking place in

u.s. treasuries. you see the german bulls, the ten-year obligations, with 57 basis points at the beginning of october, we're at 23 basis points german bonds also in a bubble? you cannot say that any asset class whose movement you do not like is in a bubble. second point, in terms of what is happening with treasuries, your question, dom, i would say yes, there is going to be 2 .85, 2.86 on the ten-year, the yield on the ten-year is way too high given where they should be so yes, keep on buying >> they are at 2.87 now. recently, they were at 3.2%. they have come down roughly a half a point what do you expect they're going to do? you seem to be concerned about a bubble bursting, which would suggest rates would go back up >> i think the bond yields we saw in the summer 2016 after brexit are yields that we'll

never see again in our lifetime. and that a bear market in the bond market began two years ago. it's going to play out over a long period of time, but i think we're in the process >> this is a pause in the bear market to me, a german ten-year when inflation is above 2%, that's not irrational pricing when the ecb at the peak of their purchases was buying seven times net issuance, that creates a bubble >> in terms of you talked about 3.2 moving down to 2.86. you're not going to get the 4% that jamie dimon was looking for any time in the near future. more likely, you're going to see the ten-year move to a 2.50 or lower. and so if that is the case, 2.85 cannot be a bubble, can it >> no. >> and i think that is where i think the markets are. >> if that's how it plays out, the bubble will inflate more, if a bubble it is >> yeah, i just want to point out right now we're down just

380 points on the dow. we were down as much as 780, almost 800 at one point. can we talk about the stock side not just because we're talking stocks, but the idea of risk in the marketplace. is this a place where we can say maybe people should step in and buy because things have gotten so beaten up >> one of the reasons we're bouncing is because the market is beginning to get details on why this woman was detained. up until ten minutes, we heard absolutely nothing other than iran sanctions there was no comment from the administration whatsoever. from a technical standpoint, at the lows today, for the second day in a row, down volume more than 90% of volume that's usually a very short-term sign of capitulation that could mark a short-term bottom and i emphasize short term >> give me time-owo things that december 19th the fed decides not to increase and powell says at the press conference he's going to cut rates in 2019

then yes, i would say equities have a rally coming, but neither has happened i can't become optimistic without that >> thank you for joining us today. >> thank you very much stocks are down, but staging a bit of a comeback, as dom mentioned. the dow losses cut basically in half so what will happen in the volatile 2:00 p.m. hour? stay tuned to find out "power lunch" continues right tethafr is

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welcome back and welcome to the second hour of "power lunch. four big story we're watching, first stocks in a sell-off mode for a second consecutive day, but not consecutive because obviously the markets were closed yesterday way off session lows right now the dow had been down 784 points, weighing on stocks right now, fears of trade tensions rising after the arrest of huawei's cfo, increasing concerns about a slowing economy contributing as well, and oil sliding with the opec meeting in full swing over in vienna. i'm tyler mathisen along with kelly evans. >> hello >> we're delighting to have you. >> thank you for having me

>> this is what we're going to call the virginia takeover of "power lunch" because kelly and i are from virginia. >> and we're not going to be shy about it >> the old dominion reigns in the 2:00 hour. >> let's kick it off with the market sell-off. well off the lows. should we call it the jamie dimon rebound yet? all three averages down. the dow now down less than 300 points, s&p down, nasdaq only two tenth of a percent negative. some of the major components have turned positive 9 of 11 lower at last check, that included energy, financials, and materials. in the dow, boeing, jpm, and dow down we spoke with becky quick about china exposure chesapeake, conoco range resources the worst performers in the sector, and headlines as well from the iranians talking about how the saudis and emrotes

have to bear the brunt of any cuts, that there was an agreement that there is tension in the room, but crude is well off the lows this morning as well with less than 3% drop. let's get more from bob pisani bob. >> hello 40 points off the lows in the s&p. i want to show you an important technical level we hit at 11:30. 2632 that was the old closing low, november low right after thanksgiving and you drop below that, big technical problem. but there we were at 2632. we hit it, we were found we bounced off it. why do we come off the lows? several things happened. a reversal at the european close. we have mr. bostick at the atlanta fed talking about interest rates, within shouting distance of neutral. huh, that echoes mr. kaplan this morning. that certainly was a positive. remember, the dow was down 1500 points in the last two days at that bottom at 11:30 eastern time due for some kind of bounce. but it doesn't feel like a bottom yet we have a lot of new lows out

there, a lot of lows particularly in industrial stocks put up the new low list. morgan stanley, goldman sachs, a lot of banks at 52-week lows and oil names. halliburton, schlumberger, all of those at 52-week lows four issues ailing them and only one of them are looking better the fed and rates, better tone there, particularly from bostick and kaplan, but oil supply and demand, you heard a moments ago, the opec meeting unresolved. how about the tariff trade issue? that's worse how about the economic slowdown? we don't know what's going on. that's unresolved. by the way, people debating whether there's a slowing economy. the market has been sending hints for a while now. we have small caps at new lows defensive stocks as market leaders. we have banks at lows versus recent interest rate sensitive stocks we have copper underperforming gold all of these folks are indications of a slowdown,

historic indications of slower economic -- we don't know how much slower economic conditions are going to happen, but these have been signals. the market isn't engaged in some fantasy about a slowdown, those have been clear leading indicators in the past about slower market events right now, though, holding on. we're 400 points away from our lows of the day. back to you. >> thank you very much and that move has been significant, moving back from those lows earlier other big news on the day, dallas fed president robert kaplan hinting a december rate hike may not be so certain after all. he spoke to steve liesman earlier, and steve joins us from washington with the details. >> markets are rethinking the short and long term outlook for the feds on worries about trade, interest rates bob told you all the things on the mind of the market here's how robert kaplan in our exclusive cnbc interview this morning answered the question about whether the fed would hike in december.

>> we ought to be very gradual and patient here inflation, in my judgment, isn't running away from us there's a good possibility, and i'm very attuned to the possibility if not the probability that the economy is going to look very different in the first half of 2019 than it does today because fiscal stimulus is waning and we have raised rates eight times over the last two and a half, three years. i think all that means we ought to shorten up on our assessments and be willing to be very patient. >> so not a direct answer, but kapl kaplan, who had been dovish, it appears he's more cautious about hiking rates bostick also sounding a little bit dovish there here's the probabilities december, sufficient%. the reason that's not lower is because of the bounceback that bob pisani was talking about it had been in the 70% range it bounced back, still well below monday we can't get to 50% for the

first rate hike of 2019 in june, and we don't barely have a second hike being priced in for what had been october. the concern over the economy is about the future, but so far, the current data has been pretty strong we have some this morning and we'll get the big jobs report tomorrow take a look. the cnbc rapid update, still 2.8% all these fears about economic slowdown in the fourth quarter hasn't really budged at all. still running well above what's considered to be trend pay roll is a touch light, but still 179 in adp, coming in above expectation, nonmanufacturing, that's the service sector being strong. factory orders are a bit below, the trade deficit a bit wider. we have jobs tomorrow, we'll watch closely about wages and unemployment now, one little technical note powell could technically because he now has press conferences in all of the remaining, all of the future fed meetings, he could pause in december and hike in

january. that's the new world we live in. >> i'm glad you highlighted it, the data this morning, the services data was very strong. >> outstanding >> if you ignore the stock market, why are we even talking about the fed backing off? >> i don't know, but it reminds me of that movie where the people thought the russians were going to send nuclear bombs and they went into the bomb shelters for 50 years and they were wrong that there was an actual attack. it seems like that's where people are more comfortable, in the bomb shelter looking at the current data, there's no reason to run that way. it's pretty good, the new orders data inside the ism was good now, i will say we have a little bit of disappointment on the business spending side of things i'm not sure what's happening there. they revised that down again the tax cuts are not -- do not have appeared to work in the third quarter, and not working in the fourth quarter, and there's a lot of doubt about how they're going to work next year for corporations >> we talked about that, the

jobless claims steve, thank you steve liesman in washington today. >> the other big news maker is jamie dimon, the jpmorgan ceo speaking exclusively with becky quick moments ago, weighing in on the market turmoil, the state of the economy, and more >> it's a confluence of two things we still have a strong american economy. they say the order books are good, consumer balances are good, the economy is growing, wages are going up, they're still hiring people. unemployment may hit 3.3% this year that's all good. on the other side, you have geopolitical stuff, oil, brexit, but i think the one that's probably roiling the markets the most is trade. the issue about trade is not just a direct effect, it's the indirect effect, how bad is it going to get what can go wrong? and of course, that fat tale of a trade war. take 100 companies, it's three, four, five another five will tell you they're worried about it, and they're thinking about it, and it's affecting prices a little bit, but the bulk say it doesn't

affect them. it's the uncertainty when you create uncertainty like this, with potential tariffs and doubling down and 90-day timelines, you get roiled markets. the added thing, rates are going up is it recessionary i think the yield curve doesn't tell you that at all, but that's the thought, maybe you'll have a recession. we all see in the actual facts on the ground, you still have growth in america. the fact is a strong economy, normalizing rates is a good thing. so my guess is the fed's been looking at data to the last minute and they probably will do december >> all right, so is mr. dimon right and is the economy still in good shape? is the trade war a major driver of the market volatility what's going on? to explain it all, joe, chief economist with nutixs. let's get things out of the way first here, joe. mr. dimon seemed very cautious to put a stake in the ground either one way or another about

the possibility of a recession toward the end of the interview, he said i don't know, basically. what do you think over the next two years? likely, more likely than not, less likely? >> it depends. and that sounds like a very much an economic response, tyler. it will rest on the fed. if the fed continues to hike, they think further gradual, but if further gradual means three hikes next year and another one in 2020, then we'll have a recession in 2020 if not sooner. it depends on the fed. the data look really good right now, but that's always the case until they don't look good that happened back in '07. so really, tyler, it depends on the fed. the trade war, i'm not worried about that >> but david, the mumblings and rumblings, and they're really declarations out of the fed in recent days. plus, what the futures markets are telling us about the likelihood of multiple rate hikes next year would suggest that those likelihoods of three or more hikes over the next 12

months is receding >> tyler, i think what i heard from president kaplan talking to steve liesman earlier was the most constructive thing i have heard all day. what he said or inferred was if the economy slows down next year, as the tax cuts fade, they're more likely to pause to me, that's the important part we keep hearing the economy is strong, the economy is strong, but the fed has to pause those two don't go together. if the economy continues to grow, if inflation goes up, the fed has to continue to raise rates, so yes, i agree that a likelihood of a recession is really a function of the fed continues to raise rates, but the fed's decision is going to be data dependent. that's based on economic growth in 2019. >> joe, i understand, it's been a long expansion already it seems like we're due, frankly. but if there are people jumping out of the stock market because they say better safe than sorry, what happens if they're out for two or three years, if they miss out on a 30% or 40% rally from

here why should people bother trying to market time even with those concerns about when the cycle ends >> i mean, there's been a recession every day decade in the u.s. since 1860. this is a long cycle so people are worried. but kelly, you had nine years in a row with dividends the s&p is up nine years in a row. that's been the result of extraordinary and unconventional and unprecedented monetary ease. and we're normalizing rates or trying to, and the markets are having, you know, a tantrum on that the problem becomes without inflation moving up, and with growth still historically weak, can the economy ithstand from sentiment standpoint much weaker stock markets? i would say yes, if growth were stronger it's not, but if the fed continues to hike rates, we'll hurt the economy next year, and my fear is the fed is way too academic and policymakers for the most part, not kaplan, but many on the board are too

academic and very driven by this keynesian philips curve mindset that low unemployment causes inflation. >> let's turn and try to round third base and bring it home with investing ideas where would you be putting money now given your predictions about where the economy and the markets may head in the face of potentially some rising interest rates, in the face of slowing corporate profit growth? >> sure. the market is likely to rebound from the levels we have hit here the trade issue has probably become overblown it's created a lot of volatility we think there's likely to be a rebound from here. we don't see the market going back to all-time highs we don't think we're back in that environment where you buy the dip and the market takes off again. we think what we're going to see is much more volatility going forward. normal, but much higher in the past couple years. however, long-term investors who have a good plan and a good strategy should continue to average into the market because over time stocks are going to deliver the best returns but today, i would be defensive.

if you're going to invest today and you don't really have a good plan and you're trying to make a quick buck, you need to stay defensive and i think that's the best place to be for now >> keith meister said this morning, you have to do what you do if you're a trader, trade. if you're not, if you're watching your 401(k) plan, don't try to trade at times like now thank you both and still ahead, wuway's cfo detained on the same day the u.s. and china sat down to negotiate on trade and apparently had this big breakthrough what does it mean now? new headlines on huawei dropping moments ago. we'll talk about how it could impact the trade talks >> plus, the opec meeting in full swing as oil continues its slide. what investors need to hear from the cartel to turn things around, and what the cartel needs to hear from russia to figure out its next move >> and 600 points up, sick00 points down. a look at what's contributing to these wild market swings owgonyerwhe. "per lunch" is back in two

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making a comeback after this morning's sell-off bertha coombs is following the moves. >> we have a mixed market particularly when it comes to tech shifts and hardware have been leading the declines while the communications sector at times has actually edged above the even line, as we're seeing right now apple is the biggest drag, giving up all of the week's early gains, as its camera lens maker is the latest supplier to suffer slowing demand. a report at such, but bucking the trends are the fang names. netflix was the first to turn around, providing a bit of tech leadership, and then an upgrade of chinese gaming platform netty's which is helping those names buck the trends today. the gaming group has really beaten down all of them in bear market, ea and activision this morning bouncing off new lows. >> thank you we'll keep a close eye into the close. the relationship between the u.s. and china just got more complicated. the cfo of huawei arrested in canada and facing possible

extradition to the u.s deirdre bosa is live with what we know at this hour deirdre. >> hey, kelly. well, we have even more conflicting developments in this saga in the last hour, reuters reported that the u.s. investigation into the chinese tech giant includes accusations of bank fraud and sanctions violations, citing sources familiar with the probe, that report says it focuses on huawei's banking relationship with hsbc and it allegedly used the bank to make illegal transactions involving iran. shortly after those headlines, a dow jones report saying something else, that hsbc is not a target of a huawei investigation and that the bank actually flagged suspicious huawei transactions to prosecutors. hsbc shares in the u.s., they dipped on the reuters report and then they recovered a few minutes later on the dow jones headlines. now, weighing on the broader markets, their cfo remains in custody in canada, awaiting a bail hearing tomorrow. huawei and alleged sanctions violations has been an ongoing

issue, but meng's arrest has thrown an unexpected threat into trade talks. it's still unclear what her role may or may not have been but she could represent a tipping point in the china/u.s. relationship because meng also happens to be the daughter of huawei's founder and she's seen as a possible successor, huawei, meanwhile, is the pride of china's private sector and growing global reach. guys >> that's why we're hearing this talk about whether a tech cold war is brewing between the u.s. and china. you don't want to put it too strongly, but are we now talking about, you know, the clock going back on a decade-plus worth of progress >> well, huawei is certainly caught in the cross hairs of this, if you want to call it a tech cold war. the trade war. we already have been hearing reports that the u.s., washington, has been putting pressure on allies to stop using huawei equipment because it represents a securities concern. huawei, of course, the equipment

is already banned here in the united states. and as i mentioned, this company is really the pride of china citizens feel proprietary proud that a chinese company has become so big, has become leader in its field this is the number two smartphone manufacturer, the number one supplier of telecom equipment around the world so there is a lot at stake here for china. we saw something similar with zte over the summer. on sanctions but remember, zte is a much smaller company than huawei, so strategically, it's important, but not as important as huawei is to china. >> what is the government's stake in huawei, if any, do you know >> it is unclear some would argue that every large enterprise in china has some connection to the government, but here's where it gets a little complex, if you will meng, who was arrested, is the daughter of the huawei founder the huawei founder is a former officer with the people's liberation army. that is the tie right there that some folks like to say ties huawei very closely to the

chinese government, but they're very careful about that. he has been photographed with chinese president xi jinping, but there's nothing official and the company would probably argue it operates independently. >> thank very much >> one bright spot in today's sell-off, home builders trading higher markets betting a december rate hike is less of a sure thing than a few weeks ago, and diana olek is following the story for us >> there's nothing more important to housing than mortga mortgageerates, and rates are falling dramatically, look at the average rate on the hurt-year fixed in the past week, down 21 basis points to 4.73%. that's the lowest in two months and down from a high of 5.05% at the start of november. all this according to mortgage news daily that's a savings of about $70 a month for a buyer taking out a $300 mortgage. and that is why the builders are happy today. the home construction etf in the green, and big jumps for big

builders like lennar, and the ceo pointing squarely at rising rates. if you want to see surprising reaction from mortgage lenders today, that story just went up on cnbc.com. back to you. >> quickly, people have been talking about the weakness in housing. at the top of the show, we were saying show us where the weakness in the economy is or is it just in the markets they say look, housing is weak here's my question to you, is it weak because rates are higher and are rates higher because the economy looked better? >> it actually is a combination of rates and very high home prices we had a shortage of homes for sale over the last two years that created bidding wars which pushed prices up higher than they should have gone, but when you add the rising mortgage rates to that, it pushed affordability to the limit are home prices still high, are they gaining yes, but the gains are shrinking. supply is coming back on if mortgage rates were to fall back, you would see more buyers coming into the market >> diana, thank you very much. >> meanwhile, boeing shares have

been grounded lately and now they're on pace for the first negative quarter since 2016. what could get this stock flying again. we'll debate that. as we head to the break, take a look at financials, which are getting hit hard today, as they have been quite often. all in the red today pie sizable percentages. hey, what are you guys doing here? we've been helping you prepare and invest for retirement since day one. why would we leave now? because i'm retired now. so? we're voya. we stay with you to and through retirement... with solutions to help provide income throughout. so you'll still be here to help me make smart choices? well, with your finances that is. we had nothing to do with that, uh, tie. or the suit. or the shirt.

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welcome back to "power lunch. i'm mike santoli it's time for trading nation boeing tanking today as trade uncertainties continue to weigh on the company the ceo sitting down with becky quick earlier today and discussing the recent market volatility >> what you see is some local volatility again in the market because of some trade uncertainty. and we're hopeful coming out of the g-20 summit that we're on the path to finding a trade agreement with the china that's productive for both the u.s. and china. its an important marketplace for us >> given that uncertainty, how

should you trade boeing now? joined my matt milley and stacey gilbert to talk about just that. matt, this quasi-such a leader going into the market highs this year down pretty significantly from those highs. where do you think it is set up right now? >> well, definitely become more concerned about the stock recently you mentioned how it was such a great leader the problem is the vast majority of gains came in the first two weeks of the year. then it's been kind of stuck in a range lately, so it's been kind of dead money for almost 11 months now more importantly, the range has been a wide one. and it's actually formed what's called a broadening top. and the problem with broadening tops, they're very rare and some people call them megaphone patterns they're very rare and they usual signal a top for the stock if we break below the lower end, it will be a big concern for the stock. having said that, that low or the lower end of that range, or of that pattern is down 300 or a

little below, that's still 10% below where it's trading now we can't get too concerned about the stock yet, but again, unless we get something better coming on the trade front, this is something that is becoming more of an issue on a technical basis. >> yeah, stacey, obviously, a lot of issues surrounding boeing, not just the uncertainty on trade, but just the fact it's cyclical industrial capital goods company, sometimes is in doubt because of a slowdown fear where do you think this one sits in terms of investor positioning and incentive? >> i think the ceo hit the nail on the head when he's talking about it in terms of volatility. that's what's changed most aggressively in this stock if we think about the positioning, we're not seeing buyers looking for a rebound or buyers of protective puts concerned about the downside we see them all, buying everything they're basically buying volatility just to put that in perspective, what does buying volatility mean if we were to look over the last two years, the likelihood boeing would be up or down basically 40% over a one-year period was

implied in the market at roughly 5% it's now almost seven times as likely that's how the volatility number has changed. a 40% move up or down, it's basically a deviation that was expected to happen almost 33% of the time the change of the trade tensions, the comments, the overall shift in a risk in the marketplace has dramatically changed the risk profile to what boeing shares can move and i think that's what investors should be aware of if they're thinking of trading options, just be aware they're expensive relative to history. you might consider spreads directionally, right now, nobody really has a clue. >> wow, yeah, those are wild swings both in fact and implied in the options for a $190 billion market cap company thanks a lot for the perspective there, stacey and matt and for more trading nation, head to our website or follow us on twitter @tradingnation. now to sue herera for a cnbc news update.

>> hello, everyone here's what's happening. president george h.w. bush's casket was loaded on to a special funeral train, which will carry him to his final resting place in college station, texas it is the eighth funeral train in u.s. history, and the first since dwightizer hower's body traveled from washington to kansas 49 years ago. a bit earlier, 1200 people packed a houston church for his final service. in which longtime friend james baker delivered an emotional eulogy >> yes, he had the courage of a warrior. but when the time came for prudence, he always maintained the greater courage of a peacemaker >> in an address to parliament, french prime minister promising exceptional security measures for protests planned in paris and around the country on saturday this amid fears that radicals will take advantage of the movement to -- the moment,

rather, to create chaos. struggling movie ticket surface moviepass will offer consumers various levels of access to the latest films starting in january, it's unveiling a new three-tiered pricing plan the prices will depend on where you live which probably means new york city and the tristate area is going to be expensive. that's the news update this hour back to ou, kelly. >> sue, thank you very much. >> and tyler, quick, going back to 89,000 french police are expected across the country this weekend. the eiffel tower is going to be closed on saturday >> the ongoing protests largely over a fuel tax, right a fuel tax, which has now been put in advance, but the french do demonstrate >> they do, and they have pushed them to delay it by six months it sounds like this weekend could get i hope not too violent. >> real government crisis for macron really puts him on the back foot >> we'll watch that one closely. >> coming up, the oil slide

continues. will we get any production cut, and if so, is it enough to stem the bleeding brian sullivan live at that meeting with more for us brian. >> yeah, by the way, kelly, that tax is 6.5 euro cents per liter. i think that's about 20 cents per gallon, and the ministers having dinner and maybe trying to hammer out a deal opec, day one, no deal, total failure. will the meeting's success ride in the hands of one mr. vladimir putin? staying up late, brieving the cold she's going to join us here when "power lunch" rolls on right after this break >> and now the latest from tradingnation.cnbc.com >> technicians often look to wedge patterns as catalysts for stocks a bullish ledge occurred in an up trend and consist said of two converging trend lines slanting downward a break of the upper trend line is considered a bullish signal conversely, a bearish wedge

consists in a down trej and consists of two coerngnvgi lines pointing upwards a break of the lower trend line is considered a bearish signal i am a family man.

i am a techie dad. i believe the best technology should feel effortless. like magic. at comcast, it's my job to develop, apps and tools 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. welcome back to "power lunch. let's get a check on the markets today. the dow well off session lows

but it's taken a move lower since we have begun the hour we're down 442 points. i believe briefly we were down 400. nasdaq still the outperformer, interestingly enough, given all we're talking about. on that point, canada's prime minister has just said they had a few days advance notice that the huawei cfo would be arrested in vancouver which spurred the risk off attitude we're seeing globally, and eantime, some of the big movers in retail we're keeping an eye on, bucking the trend and going the other way. rh, restoration hardware, kroger, under armour all higher. you have children's place and fossil all down big, and semis stocks are getting hit big nvidia right behind lam, still down less than 4%. >> the oil market closing for the day.

let's check in with jackie at the commodities desk >> oil prices closing around $51 and change, sliding after no affirmative decision out of the opec meeting in vienna looks like a cut, just not as deep as the market was looking for. we're not 100% shire where does it put us oversupply very telling there that $50 has been tested. if the cut is confirmed that it's less than a million barrels, that $50 milestone is likely to be breached, and also, the stock pressure isn't helping the oil trade. >> that's for sure thank you. let's get more on the opec meeting where oil goes from here brian sullivan is in vienna with huh lima croft >> hey, tonight, if somebody says, hey, when's the last time the opec meeting ended without a press conference you can say today, and it's onl happened once in the last 30 years. we're staying late, like 32

degrees and raining out here thank you. really appreciate it what was your takeaway from today. a very unusual day a very tough day for the opec minister it started on a gloomy note. there are real concerns, can you can get everybody to the table a number of key countries, libya, nigeria, venezuela, iran, they want exemptions so right now, we're not even sure we're going to get a deal do i think a deal is likely? i think a deal is likely and i think at the 11th hour, vladimir putin comes in and saves the day. >> what if we don't get a deal >> if we don't get a deal, we sell off and sell off hard that's after the message apparently that's going around to the ministers saying essentially if we do not do this, we'll see oil prices really plummet again do you want to be looking at the 40s. that's basically what is sort of driving collective action, the fear of going lower. >> the thing about you is as a former cia analyst, you said something interesting. you didn't say alexander novak

saves the day. by the way, he's the russian energy minister. he'll be here. putin is not here. why did you say putin saves the day? >> there really is a perception that really there are two leaders that matter. actually not the oil ministers it's crown princehammed bin salm salman, and putin. we could add trump, but ultimately, i think it has to come down to vladimir putin. at the g-20, it was vladimir putin and mohammed bin salman with their bromance hand shake that insured we might get a deal >> go back in, talk to the ministers. get them to make a deal so we have something to talk about tomorrow think about this, tyler. is it just me, or does every story now seem to come back to vladimir putin doesn't matter the topic, the subject matter, it just comes back to putin. >> his tentacles do seem to be everywhere these days. thank you very much. >> i would say we're putin on the ritz

>> that's very good. >> i'm sorry >> i knew i could count on you >> long day. that's too many virginians one, two, three. great to see you get some sleep >> coming up, billionaire investor lee cooperman said they're running wild on wall street, but are they really what's contributing to the massive swings we'll debate that next look at the s&p sector heat map. we talked about hoemd builders real estate the only sector in the green right now, but the industrials are off their lows significantly. still, though, down 418 points we'll be right back.

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welcome back to another wild day of trading on wall street. there are some arguing that algorhythmic trading and quant funds are making it worse. >> i think your next guest ought to be somebody from the s.e.c. to explain why they have sat back calmly, quietly, without saying anything, and allowing these algorhythmic trend following models to wreak havoc with what has been up to now the best capital market in the

world. >> what impact is it having on the market joining us, larry mcdonald, along with our own leslie picker welcome to you both. larry, blame the algos for this week >> in a bull market when the vix, the volatility index is around 10, 11, 12, the algos will depress volatility because they keep the market in a narrow range. we saw that all of last year now, the beast in the market, that serpent in the market that's driven by the machines, when you breach certain technical levels and there's a number of high-profile stocks, especially fangs, that have violated traditional technical levels that are extremely important historically, when you have that, the selling is compounded, since thanksgiving, we had a 7% move up in the futures. and then a 6% move down. that's a 14% swing in a week and a half, that's highly unnatural >> leslie, are people on wall

street saying the same thing >> i think there's an important variable that we need to explain that comes between, that's liquidity. we're in a new regime as it portends to liquidity. so the machines have been there, but we didn't see the wild price swings because there was so much liquidity in the system. now that isn't the case as much. that's why you're seeing swings both to the upside, swings to the downside, and if there's anything that these quant funds, these algorhythmic trading entities need, they're characterized by leverage and expected price pads, rules they code into their programs that can dictate where the trading occurs and so in this environment where there's less liquidity, you have a rule change that they then, if they're programmed to drive 40 miles per hour down the road and make a turn at 40 miles per hour, suddenly, they're required to make it at 70 miles per hour and they might fall off a cliff as a result. >> let's bring in gregory

zuckerman. he writes extensively on the quant funds. good to see you again. i don't know whether you heard the quote from lee cooperman basically suggesting that the s.e.c. has been derelict in its duty to supervise the capital markets. do you agree with that do the quant funds need more regulation is this a genie that can be put back in the bottle, or does it need to be >> i'm always a fan or more regulation, to some extent, but i think we're kind of looking for someone to blame when the market was soaring hundreds of points a day, i don't remember mr. cooperman or other people pointing the finger at these quants. not that i'm here to defend them, necessarily, but let's keep it in perspective here. they buy and they also sell. >> well, larry, that's one thing that i think about as well, which is whether it's humans programming the machines or whatever the reasons behind it might be, shouldn't other investors who are looking at this then welcome the

opportunity because these price distortions mean they can get better value >> yes, well, a couple years ago, back in 2011-'12, we created our capitulation model to take advantage of this. the reason is traditional capitulation in certain sectors, all it be the oil names in recent weeks, these capitulation processes that used to take a week or two are now taking a day or hours and so things get dramatically oversold, so we look for breaches of those technical levels, of those key technical levels in our capitulation model. we look for that, accelerated capitulation on the breaks, and you want to take advantage of it, absolutely we're buyers here of the oil names, the xle, the oih, the xop. and you can get fantastic trading and investment opportunities because once again, as you have been pointing out, the machines oversell >> leslie, when you see a day like today, where the market, the dow is down 800 points at

one point, now it's back down 507 points, but at one point, it had come 500 points off its lows, is there any explanation other than that the quants are doing this >> according to jpmorgan, computers dictate 60% of equity trading, which means computers, that's both in all sorts of algorhythmic trading, dictate 60%. by a majority, they're responsible for what we're seeing in the market on top of that, you have quants trading on top of that, you have computers on top of computers in many ways. when you start to see moves like this, and that's why you get people like lee cooperman on, stan druckenmiller has been outspokep about their role in the markets. it's balls ecause it can often e the markets in ways that don't

balance with their markets based on the fundamentals and all the different accounting metrics they're looking at, oftentimes these computer systems can move the markets in a way that doesn't necessarily match up with what they're projecting >> with what they are projecting >> i guess the question is trading is as old as time but trading by computers is newer. does that mean that they are different? >> it is a different world you look at the biggest and best investors today, the traditional research-driven times of people. they are all underperforming it's a new world and there's more date that and coming faster and you need to digest it all. they are looking for people to blame i would argue. we have had a market as it has grown in size. we are blaming them for the volatility i don't remember thanking them for this over the last few

years. what's important to remember here is that nchgs continues to grow and fly at a much faster pace that is why we are shifting to more of a style. it is also a reflection of behavioral economics we all realize we panic much too often. we sell and buy. that's why we kind of shifted to using more of a modelsystem. >> and the lower it goes the more people will be focused on those machines and what's driving them >> thank you all right. the dow is down about 500 points right now. boeing is the biggest loser. we have names that could be bargains power lunch returns in two minutes. of your finance business. and so if someone tries to breach your firewall in london & you start to panic... don't. because your cto says we've got allies on the outside... ...& security algorithms on the inside...

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it has been a wild trading day. stocks have been yoyoing now they are down 358. the dow tumbled more than 780 points

points earlier let's bring in john wiener tell me what number one is and why. >> sure. thanks for having me >> so first that's couple of them i picked a couple of different ones for us because there's a lot of opportunity and different ways first one, paypal. last time i looked before i left for the studio it was down 9% today. well, companies aren't down 9% in a day there's something going on in the trading but paypal has seen the venmo operation increase on an annualized basis.

that's extraordinary growth. they added 9 million new subscribers last quarter it generated about $3.5 billion in cash flow that's buying into the future. >> that's one. >> we got to get through the next two real fast ibm. >> okay. quick phrase >> okay. so ibm, they bought red hat. think it's a catalyst, 5.2% dividend yield probe a good time to get your feet wet and get paid for it >> third one is black stone. put me alongside the smartest guys ton street. they have 95 billion in free crash. they will find ways of making the client money i want to bet with them. >> thank you >> my plearesu >> okay. and more on today's selloff is straight ahead. (toni vo) 'twas the night before christma,

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get your fill of business. i guess the category was television show names. get your fill of business in the afternoon. poufr place. >> you say it would have got you a thousand dollars >> nobody got power lunch right.

>> i saw a category about business the answer was the dow jones nobody got that one either >> thank you for watching power lunch everybody. >> nice to have you here >> thanks for having me. closing bell starts right now. good afternoon >> let's get to what we have been focused on. the dow and s&p seeing their biggest two-day drop the dow is down 800 points at the low currently trading well off those lows it is down 340 points, 320 at the moment the high of the day was down 290. down 340 we are down nearly 800 point