systematic problems. i said short it. boy, was i right >> down 13% since then i want to thank you very much jeffrey gundlach for having us back out here. nice to visit with you once again. maybe we'll be back next year. >> maybe the bills will make the playoffs >> there's hope for everybody. that does it for us. i'll send it back to our headquarters "power lunch" begins right now >> great stuff, scott. i'm kelly evans. what a wild monday investors gearing up for a crucial week and everybody sounding off on the fed today. the white house. telling policymakers not to raise rates. plus goldman sachs is dropping again that sock down 40% from its recent highs deep in a bear market and the latest headlines about a criminal investigation adding to the selling pressure today we'll talk about what's hide for the goldman and the other banks. one year ago bitcoin hit an all

time high of almost $20,000. it's plunged 80% since then. is crypto done for good? "power lunch" starts right now and welcome to "power lunch" i'm melissa lee. a volatile day on wall street. we're headed lower once again. the dow was down 300 points. we're now down 270 s&p 500 did touch its lowest level since february on an intraday basis right now we're just off four points off session loss. health care is the worst performing sectors back on the ruling of the obamacare. etf thanks it for its worst month since february consumer discretionary a big loser. mattel and amazon leading declines >> let's get straight into trading action this hour bob pisani is on the floor of the new york stock exchange. >> very poor sentiment still the dominant theme down

here let's look at the s&p. these technical levels become very important we had a poor open we dropped right below the december 10th lows then we started rallying the important thing is some groups had a tough time recently led the way back apple, the market leader started positive look at apple, a nice move there for apple. about 12:00 apple too began to lose some steam and, obviously, gundlach was talking fairly negative about the markets that didn't help overall we had a nice little bounce and attempted rally in the banks new 52 week lows across the board. they rallied in the middle of the day and now basically flat etf today. oil despite the fact that oil was sitting around the $50 level, oil stocks attempted an early rally. that certainly was nice, value

attempt. chevron went positive again just a roll over for the market after about noon eastern time you would think this would be a good day for things like defense names like consumer staples or reits. they started positive to flat. now down 2.8%. no particular news other than positive comments from morgan stanley. we emphasizesed all day lower loss and lower highs this is why we keep talking about these technicals when traders aren't sure about the fundamentals, they turn to texas and technicals aren't helping much >> not very hopeful on that front. >> no. not at all again when you start breaking below prior loss that you had, when you keep that downward trend line intact like that, nothing positive comes out of

it the technicians say stay away and they don't argue jumping back in because there's no sign of a bottom at this point. >> negative headlines have been driving this recent leg lower but it's still to point to some good news. are the market becoming immune to it. rick santelli is taking a look >> it seems over the last couple of months the market has basically just not absorbed or acted on what you could construe as good news goes back to october, the buy whack window is open you would think that a market concerned about economic growth in the u.s. next year might have takensome hard very strong retail sales all these pretty good data points in the here and now when the market does not react in the way you expect to seasonal factors and the data what does it mean? some people say it means it's bear market action we don't know if it will flower into something deeper in terms

of a downturn or longer lasting but it gets us to the point much deciding how much is priced in, how much bad is priced in if the good is not having an effect some analysis of where the market is trading valuation wise suggests we're pricing out any earnings growth for 2019 for the s&p 500 or veryminimal a lot of this comes down sentiment. bob was talking technicals that leaves you when are we washed out when do we see people capitulate sentiment shows it being extremely negative we're back to early 2016 levels in times of bearishness. but that sets the scene for a possible recovery, doesn't necessarily mean that any bit of good news that comes along is going to sprout things it will be interesting finally to see how the market reacts if we get as expected a

dovish hike from the fed or no rate hike it's another bit of positive news or potential positive catalyst people are pointing to. let's get to don chu now >> we do want to note over the course of the past few minutes the russell 2000 small cap index has pulled back by 20% from its recent record highs back on august 31st. now that condition that pull back of 20% is what some traders refer to in their own language as perhaps a bear market or bear market territory it's something to watch here as small caps have been an outperformer on trade fear, concerns of domestically focused company like a small cap might outperform but it does catch some traders eyes and we're watching that action play out this afternoon >> thank you so much fed policymakers are meeting this week on interest rates and president trump and the white house are piling on the pressure

for the fed not to hike. today it was economic adviser speaking here on cnbc. eamon javers has more. is there a sense that navarro, there's a push here to back up the president and put pressure on the fed >> the president on twitter this morning had this to say. working the refs in terms of the fed saying incredible with a strong dollar and no inflation the outside world blowing up around us. paris is burning and china way down the fed is even considering yet another interest rate hike take the victory, capital v for sfrirk the presiden-- victory, president. >> predominant factor hands down and at the top of the list is federal reserve policy donald trump's instincts are always right on this and months ago he started pointing out that the fed was going too far too

fast right now we have zero inflation for all practical purposes, so on wednesday the only argument i hear for the fed to raise rates now is if somehow they have to exert their independence from the white house. now this is a bad argument i think what the fed should do is simply do what it says it's going to do, which is look at the data >> so kelly, there you hear peter navarro saying the president's instincts are always right on this and amplifying the point that the president made on twitter it's about inflation i don't get any indication that the president is doing this in private, that is directly with jay powell at the fed on the phone or in person the sense i get the president is doing all of this in a very public way on twitter and as you saw through his aides out on television >> why do it in private when you have the biggest pulpit out

there. >> a big mega phone. >> it would be much more significant if that were the case the point you're making the president is out there tweeting about it, which seems kind of shocking to those of us how it would have been under the obama years but it's not like he's trying to actually push powell not to do this in private which would be a bigger deal >> we don't get any indication he's issuing any direct orders or anything like that to the fed chair, not that the fed chair would take that. that could come ply indicate that sense that the fed might feel it needs to show its independence and be defiant of the white house and they might have their back up about all this public pressure we'll see how that plays out psychologically as well as economically >> in the last hour jeff gundlach speaking on the "halftime report" joining the president and saying fed

shouldn't raise rates. so it's not just the white house. >> not at all. many voices are now out and saying that. kelly, thank you very much they call jeffrey gundlach the bond king but he has plenty to say about the stock market as well and that's where we began our conversation in light of all the volatility that's taken place. i asked him whether this is a correction or something worse like a longer bear market. he >> i mean, people like this definition of 20% down as a bear market but that's, obviously, very arbitrary i've been around for over 35 years in this business and i've seen a number of bear markets. it's more about how you lead into it, how it develops, how the sentiment changes. i think we've had pretty much all of the surveyabvariables tht characterize a bear market >> it was a week ago where jeffrey gundlach that said the fed was on a suicide mission the president was twisting yet

again today that the fed should not raise interest rates this week there was an op-ed in the "wall street journal" about that fact. >> no, i don't think they should the bond market is basically saying, you know, fed you've got no way should be raising the interest rates look at the two, three, four, five year yield curve which is flat at 270. that's corroborative of maybe a hike but basically saying that in the year 2019 you'll have a cut, this big, a cut that's what's priced in and in 2020 another cut. >> of course we talked about the other risks that exist as well whether it's over in europe or the current trade war with china which jeffrey gundlach thinks will get worse you know he's fairly bearish on thing when you ask him his best idea for 2019 and his answer is capital preservation

guys, back to you. >> that would have been a good idea for 2018 too. >> 2018 has been terrible across the board. he mentioned how the volatility index, the vix has remained extremely low. why is that concerning to him. is that a sign that maybe capitulation is not, in fact, near >> it was very interesting when he talked about the volatility index which is in the 20s, low 20s or thereabouts today, melissa. he talked about it spiking up into the 40s, almost a double from where it is today, which you have to believe if that happened the stock market may not look quite like it does at this very moment, that it would look far, far worse. he talked about the fact that he does expect the loss, the february lows to be taken out on the s&p. we're about 50 or so point away

from that but he says that's probably coming, and you can almost bet if that comes or something worse he might get that vix he's talking about above 40 >> i know he's talking about in saying passive investing is a mania. go with active management. look, we had even the "journal" talking about the problems with this index investing push and i don't know about you i'm all in so when i hear gundlach talking about this a bubble and a mania and he doesn't have any ideas about how to solve it i take notice >> look, you add jeffrey gundlach's voice about the so-called bubble in passive investing and all of this money that has flown into etfs over the years and what's going to happen as that money gets pulled back out of the market, whether it exacerbates some of the selling, some of the liquidity

issues that exists go back several years, carl icahn talk about passive investing and etfs and famous exchange he had with larry fink over that issue. it's something to keep an eye on >> if that's not what we're supposed to do i don't know if investors have any other idea. this is the major conclusion of the last quarter century great stuff. thank you for bringing that to us jeff gundlach said we're in a bear market and the fed shouldn't raise rates. he is right? is he wrong? what doe it mean for your investments. we'll get some advice up next on "power lunch".

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yippiekiyay. ♪ mom. ♪ welcome back let's get straight for a news alert own netflix. >> netflix announced it hired chaning dungy. she will work closely with other big greators that netflix has hired. she joins from abc entertainment group where she ran that business for the last three years as network president

she was leaving abc, now we understand why as she's joining netflix. this is really a big hire as netflix faces new competition from disney, dungey's former employer as well as at&t as they both work to launch their direct to consumer streaming services next year. disney shares down.7%. >> it sounds impressive for netflix. >> it's interesting. we've seen netflix hire these big creators that worked with dungey and netflix bringing over that leadership in dungey. netflix is doubling down, committing to creating this sort of tv style premium network content and it seems like she's a natural fit for them considering some of the other content creators they've hired >> thank you bo stocks are dropping once again u.s. market on pace for their

worse december since 1980. you heard jeff gundlach saying the fed should not raise rates this week but he's sure this is a bear market. he is right? let's bring in jordan waxman and the head of global multi-assets with usaa investments. let's start off with you do you agree with gundlach because gundlach said the fed does not raise rates it's because the economy is weak. >> we're certainly at a risk of a bear market as he talked about. the fed, what's going to happen this week is more or less baked in depends on what the message is after the hike and if it's a message, just like it was in early 2016, we could be off to the races again and enjoy a value led rally like we saw in 2016. what do the markets want to see a dovish hike?

is that a sell the news event? >> you already sold the news the markets are discounting what i would say is bad news, right economic slow down in china. europe united states. the markets, stock market and bond market are discounting slow growth in these economies coming forward and the fed is looking at who is in the malls and how much they are spending and say we have to raise rates because the demand for goods and services is high >> every where you look people have come to a conclusion we're heading to a recession "new york times" style section five things that could go wrong next year. >> market hit bottom >> when the chatter gets really high wasn't it george soros who said something markets are always discounting bad news so you're discounting the inevitable look for the alternative look for what's not being priced in the markets it seems the chatter, everything on the news today is about the volatility of the market and the

markets are hitting new lows and ate crescendo pace sounds like a bell is ringing now like the bell was ringing when there was fear for missing out on bitcoin at 20,000 a year ago. >> if we look at the numbers this norngs empire manufacturing index, regional manufacturing index, the reading was very bad but at the same time the employment gauge was way up. again are people sort of talking themselves into a downturn even while there are signs the economy is quite strong. >> on the consumer side and employment side still very strong the corporate side they are taking a cautionary approach i think that's because corporations are seeing what's happening globally globally the world is slowing down we just haven't slowed down as much there's a risk we slow down as well if the fed pauses we may get a temporary read but we have to be mindful what's going on a global basis. no man is an island unto itself

so no country is an island unto itself we're still interconnected with the financial connectivity. because of that we can't avoid a slow down if the rest of the world is continuing to slow down central bank tightening is very important. thank you very much. stocks are pretty much at session lows right now with the s&p 500 at 2567. >> we're down 300 something in the dow this morning just beneath that level right now we'll tell you what millionaires are going their money in 2019. probably not bitcoin we'll look at the stunning fall is in then and see if 2019 is the year it can rebound.

rebekkah: opioids has taken everything and everyone i've ever loved away from me. 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" 2018 hasn't been great for nashts only the nasdaq is positive for the year with fevers an economic slow down on the horizon is 2019 another year of loss what are millionaires doing with their money? >> truth be told million narrows own 85% of the stock what they decide and how they are feeling can move markets

right now they are pretty optimistic about the economy and stock market the biggest athlete to their wealth is washington we polled people with 1 million or more. 40% of millionaires feel the economy will be asstrong next yearer and another 28% says it will be even better. most say s&p will be up about 5% next year. a quarter millionaires say it will be negative next year the biggest risk to the economy and their wealth government dysfunction fold by the stock market the rich are also bullish on giving that's a good thing. most will give the same or even more this year as they did in 2017 but they are more likely to move because of those new tax changes. 12% of those worth 5 million or more said they have considered of moving from a high tax state to a low tax state now like a lot of americans millionaires view the economy increasingly through a political lens 41% of republican millionaires

say the economy will be better next year. only 8% of democrats >> i'm surprised only 12% considered moving. >> so far we've seen sort of a trickle, but we could see it increase next year as people write those tax checks in april. >> unless you have so many houses they can switch their residency so easily. no need to move. >> thank you lots of worries about an economic slow down persist lots of talk about a recession and whether it's coming next year we'll hear what ceos are saying. low unemployment is great? what if parts of the economy can't find workers at wt'haeng ght at wt'haeng ght now.

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. hello, everybody i'm sue herrera. here's your cnbc news update six people died and 129 others injured in a fire that broke out in a hospital in mumbai, india as financial and entertainment

capital. it was believed to have been caused by an electrical short circuit. it took ten fire engines to bring that fire under control while 15 ambulances rushed the injured to other hospitals british prime minister theresa may says the delayed vote in parliament on the brexit deal between her government and the european union will be held the week of january 14th >> but i can confirm today that we intend to return to the meaningful debate the week commencing 7th of january and hold the vote the following week >> everybody get ready to say aw chicago bears left tackle proposing to his girlfriend at the conclusion of the division clinching win over green bay packers on sunday. he pulled out the ring after getting down on one knee at the center of soldier field which was shown on the jumbotron she immediately said yes congratulations all around that's the news update this hour, guys

back to you. >> won the game and won a fiancee. let's get a check on markets. we were close to hitting session lows moments ago the dow was down now we're off only at 256. the u.s. markets are on pace for their worst december since 1980. we're down by 29 points right now, 1.1% the decline. one stock we're watching, msg shares are rallying. the owner hinting he would sell the seam for a bona fide offer >> i'm reading about this right now. he said didn't have an offer over 5 billion but couldn't turn it down. how about the housing market more signs ever weakness home builder sentiment following to the lowest level in three and a half years pretty steep back-to-back declines >> reporter: that's right. the expectation of that the drop in mortgage rates recently would

boost builder confidence a little but that didn't happen. homeowner scene meant dropped four points in december to 56 the lowest level since may 2015 and a steep drop from 74, just one year ago this according to the national association of home builders now anything above 50 is still considered positive sentiment but this is all about affordability which is very weak despite the pull back in mortgage rates home prices are just too high. randy noel said we're hearing from builders consumer demand kpichts but that customers are hesitating to make a purchase because of rising home costs current sales conditions fell the most down six points sales expectations or the next six months dropped four points buyer traffic fell two points. regionally sentiment fell hardest in the northeast and west where home prices are the highest but down across nation tomorrow we get the latest read on housing starts which have been very weak for the last

several months back to you. >> so home builders not feeling too confident. neither are ceos new ceo survey shows business conditions at their lowest point in more than two years >> so according to a chief executive groups monthly survey of hundreds of chief executives across america in varying size companies and varying industries, we do have the lowest levels of ceo confidence going all the way back to october of 2016 on the eve of the presidential election back then now if you take a look at this drop month over month, the biggest month over month drop in ceo confidence, all of this year and we're now down from hitting a high earlier this year back in january around 16% lower in terms of their reading on ceo confidence and economic conditions one year out. the big concerns, no surprise. the usual suspects check out a cooling economy. late cycle fears that's a big deal.

rising interest rates. we'll put that in the fed bucket that discussion very relevant with the fed meeting trade and tariffs focusing specifically what's happening with chinese and current levels of corporate debt what janet yellen has echoed concerns about there's less optimism on capital expenditures only around 53% of ceos say they will spend more on cap x next year less optimistic on revenue increases. if you want to look for some of the positives. we still do see optimism on rising profits they are optimistic on future hiring 57% say they will add to their workforce next year. that's actually a tick up higher than it was the previous month a lot of sentiment cross currents but generally speaking

ceo confidence is at the lowest level since october of 2016. back over to you >> we'll talk more about that hiring in just a moment. take a look on what's going on in the stock market. the dow is down 332 points fresh session low about a 1% drop people are looking for key levels he was inned in tolding the 23,533 mark. that was the march lows >> february loss are much more in the cards we'll be watching that one very closely as the week progresses >> it's been a tricky session back and forth dow is down 330 points hiring data is strong. new analysis by the conference board showing a reversal in a decades long trend in job market companies are now having a more difficult time finding blue collar workers than white collar ones the chief economist of north

america for the conference board. welcome to you i mean have you ever seen something like this before >> no. this is truly a unique thing nothing like that happened in recent decades so that's something -- >> you said to put it bluntly simply not enough people in the labor force willing to work in blew collar jobs is that because people don't want to do this type of work or still people on the sidelines who aren't quite tempted in by the wages? >> it's probably both. i think it's a supply and demand issue. so on the one hand we've seen very large increase in the share of young people who are getting a b. a. and people with a b. a. don't want to take those jobs. also on the supply side there's a very large increase in the last decade or two of people without a b. a. degree who is on disability that further shrinks the availability of blue collar workers. but demand for those jobs

increase you have more demand and less supply and you get a shortage. >> what do you model to be that tipping point that increased wage that will lure people into the workforce. is it that some of these people can't return that they are victims of the opioid crisis, for instance and it doesn't matter what the wage will be he can't rejoin the workforce? >> higher wages will bring in more people but there's some structural reasons that will prevent participation rate of reaching the prior crisis levels i think just by getting more people from the sidelines we would not -- it wouldn't be sufficient to solve this problem. >> thank you very much we're hitting fresh session lows stock market is down 350 points even health care, you mentioned the opioid crisis a moment ago that was formal lei a stalwart between johnson & johnson's decline friday and today and drug distributors after "60

minutes" opioid report last night. >> the ruling that aca is unconstitutional is hitting the in surers and health care services that attracts health care overall is 22% let's move on to the bond market checking in with rick santelli hi thank you. you know there's a lot of conflicting issues but the two biggies are the fed meeting and potential rate increase. on going balance sheet reduction pitted against the big trade issues of the day. they are taking their toll drifting, but still treasury, parallel shift, down three basis points if you look at early november start to the hyg etf it's thrashing here trying to make a base. that gives credence to the story of interest rates at a level

that should be supportive, unless, of course, more depressed news regarding the future of the economy is obviously what's going on with the fed should take a turn for the worse and the psyche of investors. dollar index, still holding 97 handle still basically dancing around the top of the range over the last 18 months or so and the euro versus the dollar a different take since october 1st. sideway, sideways, sideways. this is at a time when many are losing confidence in big policy decisions of the ecb dollar is strong that affects in many ways not as volatile >> rick santelli, thank you. goldman sachs lower once again today trading at its lowest level in more than two years company facing potential of massive fines relating to the malaysia scandal how big of an issue is this for goldman? the markets there heading lower. we're close the session on the

ayw down 1.3%. st with us

. welcome back familiar story markets near session lows dismal quarter for banks goldman fearing even worse goldman is down 26%. today more bad news for the bank malaysia filing criminal charges against i want related to the 1mdb scandal jeff hart is joining us. jeff, goldman is trading back to where it was basically when president trump was elected before it went on a huge run how deep do these problems go for goldman? >> i don't think it's a whole lot more serious than what's priced into the stock now. a little evidence of that is today with the headlines the

stock is down but not down much compared to previous with goldman there's three issues causing them to underperform in the last few months one, look all the banks, especially the capital markets centered banks are facing investor concern that 2019 may not be as good people had hoped on economy and capital markets that's hurting the whole group take to it goldman they specifically have some uncertainty around this 1mdb the settlement will be manageable but we don't know that until the settlement comes. the stock is cheap and bad things priced in you have to do a bit of a waiting game and figure out when you get some resolution so the stock can back up its under performance. >> your recommending that investors buy goldman sachs. it has been a frustrating trade and in a year in which you would think that the banks would do very well the banks have underperformed the markets what is the case going forward in a year where the head winds

may being a greater? >> yeah. as i look at the banks under performing here, i'm recommending to be a selective buyer. that's leading towards the large cap banks where you get the advantage of scale, get really good balance sheets and you get some exposure to capital markets. i would argue in a slowing interest rate tail wind but decent economic growth environment opportunity owning brokers more than banks. that should play into goldman sachs hands. we have a buy on it here i like goldman at 170. the caveat is it won't get up tomorrow we have to get resolution on 1mdb and strategic overview, new review that the ceo is doing in the first quarter. may be a bit of a waiting game but i think good things may come for those who wait for goldman sachs. >> do you see any credit issues, anything related to credit issues in europe to cause the group to trade lower

i know different parts of the group are different but they are basically trading all lower. they are trading as if there's something wrong. and that's what i hear when i talk to investors. something wrong with the banks we just don't know what is it. >> that's kind of driving the cautious like people may think they are oversold but nobody wants to get in until you get more certainty you got some potentially yield curve. historically a bad sign. there are things to be concerned about. we look bottoms up, kind of looking at the banks and what are we seeing? we're not seeing problems in credit no problems in credit. interest rate tail winds may be slowing but we're still set for even one morphed hike. interest rate tail wind. i don't see anything in the fundamentals that say there's going to be a problem in 2019. outside of the pace of growth, the momentum may be slowing. i think we'll still see earnings growth for the banks next year but not as fast as we saw it

this year. >> we just got a statement from jake stewart center members of the malaysia government and 1mdb lied to goldman sachs, outside counsel and others about the use of proceeds from these transactions this does seem like it's becoming a bigger and bigger issue for goldman to resolve, jeff and the shareholders are clearly expressing some concern relative to how the rest of the sector is trading. so what is the biggest concern for investors? how deep could this go what happens if the u.s. gets involved how big of potential exposure are we talking about >> i don't think -- i don't get the impression investors are concerned about a whole lot worse. a lot of bad things are already priced in. it's important to point out what we got this morning was charges from the malaysian department not the department of justice. as i one it there's been no conversation back and forth between goldman and malaysia,

goldman hasn't necessarily seen the complaint yet, they just saw the prerelease there's a lot of unknowns here it's a long stretch away from saying we got something from malaysia therefore we'll seat something from the doj the doj would be much more concerning they are looking into it and checking but i think whatever kind of settlement we wine up coming out with and there's going be some monetary penalty paid, when you look at a 22, 23 billion dollar market cap decline which doubled all its peers that bad news is priced in >> jeff, thank you jeff hart. it has been one of the biggest market stories of the year the incredible decline in the price of bitcoin down more than 80% since hitting a peak one year ago today. is the bottom in will the story of 2019 be the bitcoin bounce crypto is down across the board. another down day for johnson & johnson, down 11%. we'll get an analyst take on

this stock.

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a year ago today bitcoin's price peaked at a little over 19,000 ending a year of crypt omania but has fallen a long way since then sitting just above 3,400 today that's an 82% decline. and according to bitcoin has lost more than $2 billion since last year. has bitcoin finally bottomed joining us is brian kelly. >> hey, melissa, good to be here >> store value and a means of transaction. those two things didn't really come true in 2018. so, what is the thesis, the bull case right now >> i think for me the bull case and investment case is that everything you can say is wrong with bitcoin is going to get fixed. similar to with the internet when it was super slow and you had dial-up internet and people didn't want to shop online and all those things as the technology progressed it

got higher and a better adoption rate the bull case is it has to get better and you have to have an adoption rate. cnbc.com had a dprgreat article. 8% of americans have invested in bitcoin. roughly 10% that threshold rate where you get adoption we're just punching up against that >> the internet did not change or turn on a dime or go higher in a year. what is the time frame and talk to me about how you have been trading bitcoin. i know you get hate twitter. but you, i'm sure, have gotten a lot of it because people think you're advocating and holding on straight through and that hasn't been the case. >> that hasn't been the case first of all, i started talking about bitcoin in 2013 when it was as low as $250 but, second of all, i've always said 1% to 5% of your portfolio should be allocated to risk because this is the riskiest thing that you can do with your

money. at my firm we run a long short edge fund and a long and short-term basis at any given time, we can be sure and doesn't mean we don't like it any more we need to trade the markets we have >> i don't know if you can quantify this, as a percentage of time this year, how often have you been long and short bitcoin and what is your directional stance right now >> directionally right now we're about neutral. probably a net short position on at this point in time. but i think we're getting closer to the bottom and we have the preconditions of the bottom and the mania that we had last year. you're seeing that reflected here in a pessimism. so, the preconditions are there. wouldn't surprise me if we popped down to 2,900 on bitcoin. before we bought them, that's what i'm looking at the next level. 28% does that help or hurt the convincing of institutional investors to get in this space

>> i would have thought it hurt it but from the phone calls we're having, institutions are look, okay, this has gone through a bear market and didn't go away and we need to get exposure. bitcoin has done this about three times since inception. 2012-2013 and now 2017-2018. it is subject to these cycles. >> what is the break even right now for bitcoin? are we below that? >> it depends, right 5,900 was the high break even. that's why when you saw bitcoin below 6,000 a cascade of sellers and a lot of minors selling out. it appear nos now around 3,000 the break even and that's dependent on what your electricity costs are. if you're up in canada and getting 2 cents a mega watt hour, you might be okay at these levels

>> thank you >> thank you for having me >> brian kelly capital >> bitcoin the white house putting pressure on jay powell and the feds saying don't raise rates at this week's meeting and what if they decide not to hike on wednesday? what would the markets do? we will be all over the fed, the white house and your money when the second hour of "power lunch" continues after this duncan just protected his family

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i'm melissa lee, here's what's on the menu we'll talk market expectations, prepping your portfolio and what the president is saying right now. plus, it has been a rough year for gold, oil, copper can they turn it around in 2019? goldmian sachs head of economy will be here with a look ahead. a look at an american icon unravelled and burned out. johnson & johnson down, again, after posting its worse day since 2002 on friday is a selloff overdone. we have a bear debate ahead. "power lunch" starts right now welcome to "power lunch" everybody i'm kelly evans. stocks are falling again today we just hit session lows down in the past half hour we're pretty much there.

look at how similar the declines are percentage wise for all the major averages down 1.5% term of sectors. materials are outperforming today. health care and consumer discretionary 2.4% boeing, travelers a couple dow winners for you. but just barely in positive territory right now. while johnson & johnson is now down another 4.5% after the big drop friday. american express also down 3.5%. the consumer names are weak today. harley davidson and tiffany at multi-year lows and took energy names down with it like marathon, pioneer and pillip 66 amid one-year lows worries about the u.s. economy, will the fed raise interest rates or will they pause? jeffrey telling our scott wapner

what they should do. >> are you saying the fed shouldn't raise interest rates this week? >> i don't really think that's the main thrust of my idea this week, yeah, i think they should raise it this week. >> you think they should >> i don't think they should the bond market is basically saying, fed, you have no way you should be raising interest rates. >> steve liesman joins us here with the latest. steve? >> let me stipulate. i'm not saying jeffrey gundlach is wrong the only thing i'm saying is the market is not yet at the point of pricing hike for december and rate cuts for next year. it is, however, pricing in fewer hikes than it was and they expect the fed to do the same. oxford economics saying fed common kaentary indicates that y are having a rethink how much rethinking or how much

rethought because they've probably done it already here's the outlook of the fed from their last thing. work with me on this >> a lot of numbers on there >> fewer than two hikes. four officials at two hikes in next year. assuming they go up in december. four with four hikes and one with five hikes in there >> i don't know why they bother doing this it's like a coin toss. >> i can't do this, but i expect the whole chart to move to the left the average there is three i think we'll get away with an average of two and maybe even a little bit less. >> less. >> that would be a big move. that would be a big rethink. instead it is just a rethink >> from very d-- >> okay. and you think two is moving to two is priced down come on. >> i think, i think equity

investors are saying two and they're only saying the back half they're not expecting anything in the front half. that's way up in the air when you're talking about a year from now >> one way to put this, melissa, this is really jerome powell's first big test as chairman until now, he has followed the script from his predecessor. raised rates with the approval of markets now, he has to resolve the dile dilemma. here's what we got strong economic data on the one hand a market and a president screaming no more hikes and a weakening global and domestic outlook not necessarily in the global outlook here's the best, but not the only bet which melissa just gave it away. a dest hike followed by a hike when the data makes it obvious it needs to hike and in that situation doesn't bring the market kicking and screaming along. i think that's the way -- >> we're down almost 400 points right now. >> because i said that >> you never know. >> it's priced in. >> not just the white house and not just gundlach.

they shouldn't be draining the balance sheet and tightening and raising rates at the same time >> tightening twice. why am i combining words today >> i agree with that not enough discussion about the effect we surveyed for it last time we did the fed survey and markets see it right now at an equivalent of 35 basis point hike so, between 22 and 50 and add that on top. next year is the first year of the full balance sheet reduction. get up to the max level. do you know what the level is? >> if i had to guess $50 billion. >> no, a month it would $600 billion reduction. now, remember, there's 3.9 on trillion dolla trillion there so it's not that big a deal. you would have a bigger sheet than you did before the crisis

>> okay, we're only going to hike once or twice >> can they pull that back >> can i tell you what real capitulation by the fed? >> meaning >> it's more than no more hikes. i've asked them why you don't adjust the balance sheet reduction to the current economic outlook and they have said they want this to be on auto pilot they don't want to make the balance sheet a factor when they make that change, then the fed will truly have capitulated. >> is that a forecast on your part >> i think it's something they have to consider i believe it's something that some in the leadership of the fed have thought about but they don't want to say this publicly because they've been so dead fast on this idea that we're not letting the balance sheet be part of the discussion. i think it has to be >> economic effect you can't deny that. >> not only that

i think they point this out. you can't have raised all this qe money, raised the balance sheet so much arguing when you did it it was to help the economy and then there is one, there is one argument that allows and i'll just give it to you real quick >> real quick. >> a dollar of securities point in a panic has a much bigger effect than a dollar sold not in a panic if markets are liquid. not one for one. but it's not zero either >> $600 billion. >> talk about a balance sheet. >> thank you >> my pleasure >> the president and his economic advisors not pulling any punches when it comes to the fed. they made it clear the feds shouldn't raise rates. >> the president began his day tweeting that the fed shouldn't raise interest rates and peter novaro his top trade adviser had some words, too. here's what he said earlier today. >> on wednesday, the only argue

i'm hearing for the fed to raise rates now is that somehow they have to exert their independence from the white house now, this is a bad argument. i think what the fed should do is simply do what it says it's going to do, which is look at the data >> so, novaro there suggesting that the fed doesn't need to demonstrate it's independent from the white house and go ahead and raise rates. total and in complete agreement with his boss, president trump, who is arguing the same thing today. we'll see if any of that has any impact at the folks over at the fed on wednesday >> thank you, eamon javers let's get to bob pisani at the stock e chanxchange. we're 32 points off. >> 2,600 used to be the floor and 2600 is now the ceiling. we failed there. kind of nice attempt at the rally and didn't work down to

essentially 400 points here's something that is important happening today. so utilities hit 52-week highs and i find that hard to believe they did a short while ago look at the biggest loser today. utility stocks down 2%, 3% even 5%. another big winner this year has been real estate investment trust. they had two-week highs and s&p 500 regrouped. but doesn't matter what you're looking at look at simon property group in the malls and boston property in the office and space and everything is down 3%, 4%. selling stocks that are done essentially well here. rallies have failed again today. so, we had a nice little attempt to rally in the bank stocks. we had jpmorgan go positive in the middle of the day and you see what happened here they sold into it flat for a nice attempt here. so, the one chance for a rally this week, maybe it's the fed. you heard steve lay out the odds very well for you. on average we're talking about

most traders expecting rate hikes. if you average out what he was showing you and now expected one rate hike. here's the problem the markets already sort of priced this in a lot of the bears call me up and say, bob, we all knew this all it did was confirm this. why do you think the market is going to rally on that a lot of bulls hoping that will, indeed, happen what is moving the markets, the big three things we talk about tariffs and trade. positive headlines in the last week fewer rate hikes and positive comments and seized by the lower growth narrative and all three are connected but it can't get out of the way because it's obsessed with the slower growth narrative here lower lows and lower highs i've been showing this chart all day long there's your chart for the quarter since we began in the early part of october. buyers aren't interested right now. not that we're getting really heavy volume today the volume is about average today. you are getting a buyer's

strike we tried to buy on bottoms we tried to buy oversold commissioners and, frankly, it's not really working so, let's just sort of step back here and figure out what's going on that's what we got here, an o old-fashioned buying guide speaking to scott wapner earlier today saying the fed should not raise rates this weekend. wells fargo out saying 61 of investors say the fed should not continue to raise rate 48% say a rate hike would be bad for the economy. are they right let's bring in brian head of the strategy at wells fargo institute and welcome to you both amanda, you say here all i want for christmas is a fed pause don't they always throw a tantrum about rate hikes the fed should have just done it anywhere ye anyway years ago >> no, i don't think the market gets this fixated on fed

meetings and fed rate hikes. i think this is a particularly unusual one. we've gone from a market that basically could do no wrong earlier in the year to now a market that can do no right. negative sentiment is pervasive and becomes a self-fulfilling prophe prophecy in the absence of strong fundamentals to point to in the short run, all eyes are on the fed meeting. i really think that a fed pause, not necessarily this week, but into 2019 really could be the shot in the arm that the market needs to move higher >> probably be a shot in the arm, brian, no doubt but maybe you can tell us a little bit about the mid-'90s. a time when there was concern about the economy slowing. i think in '95 or '96 the fed cut rates and the cycle went on for years. what if the u.s. economy is strong and all the forecasts of gloom and doom are wrong and the fed makes an error by pausing? >> that's always a risk.

what is always interesting in the survey that you mentioned is that a lot of investors want the fed to stop hiking rates at the same time, almost 70% of investors are very concerned about inflation. so, they're kind of counter counterintuiti counterintuitive maybe the fed shouldn't pause or looking to take a siesta here in terms of rate hikes. so, these are a lot of the things the fed has to counterbalance and the fed tends to move relatively slowly. so, i do think more data dependent. and i think they will open up some options but i don't look for a wholesale change in terms of their message to the markets. the chairman powell had an opportunity week or two ago in speaking if he was going to make a significant wholesale change >> amanda, what should one's portfolio look like at this point? in today's action it looked like investors were selling winter, it looks like people are looking

for capital preservation right now. what are you recommending to investors? >> well, actually, we're not headed down a path of purely capital preservation i mean, we think there's still a lot of opportunity left in this market we think 2019 can be a pretty strong year. you know, not a 2017 year. but, you know, mid-single digit growth and a yield on top of that not a bad outcome. so, we're not running for the exits at all we're literally just trying to get portfolios prepared as we, you know, step towards the later innings of the cycle so, we're looking for pockets of opportunity and emerging markets, actually. this could be a once in a lifetime buying opportunity. we also like global inf infrastructure to stay invested and dial back the volatility profile. we also think in fixed income dialing back exposure to high yield and even leverage loans at this point in the cycle does make some prudent sense. we're making changes at the

margin not wholesale charges >> brian >> i would agree with most of those recommendations. we do look at opportunities for upside in risk markets, but it's not a bad time at all to get a little defensive, especially in fixed income short-term, high quality fixed income offering yields opportunities we have not seen in over a decade not a bad place to hang out for a while >> thank you, both amanda, brian from wells fargo. coming up, johnson & johnson down once again after wiping out nearly $40 billion in market cap on friday. the question is, was that selloff excessive? one of our next guests says yes and the other says no. both will make their case next a month ago goldman sachs head of commodities told us it was back in the u.s. crude dipping below 50 bucks earlier. where do prices go from here we'll ask them ahead. plus, amazon is cutting the

craft hoping to improve its bottom line. the company reportedly getting rid of products that can't make a product. that's where the word craft comes frcome s from i don't know what's going on. i've done all sorts of research, read earnings reports, looked at chart patterns. i've even built my own historic trading model. and you're still not sure if you want to make the trade? exactly. sounds like a case of analysis paralysis. is there a cure? td ameritrade's trade desk. they can help gut check your strategies and answer all your toughest questions. sounds perfect. see, your stress level was here and i got you down to here,

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welcome back to "power lunch. a rough day for health care stocks take a look at johnson & johnson shares down another 4% today after their worst one-day decline friday since 2002. kate rogers joins us with the very latest on this one. kate >> the company out with another lengthy statement on sunday sharply refuting the report from friday claiming from 1971 through the early 2000s some johnson & johnson talc-based baby powders tested positive for small amounts of asbestos and they failed to disclose that information to regulators or the public the company also releasing a new ad saying science not sensationalism depending the safety of its talc saying if we had any reason to believe that our talc was unsafe, it would be off our shelves. the ceo appeared in a video adding it is safe and does not cause cancer and has never

contained asbestos reuters says it stands by its reporting. j&j is facing thousands of lawsuits claiming that its talc contained a contain contained asbestos and caused cancers. the company was ordered to pay $4.69 million in a missouri case involving 22 women and their families and the company, of course, is appealing that ruling >> kate, thank you kate rogers. how much of an impact will the report have on johnson & johnson. good to have you both. daniellea, i'll start out with you. as damming as the article seemed, you say that actually those documents were already submitted to the courts, they just haven't been out in the public yet >> exactly so, our understanding based on conversations with the company is that those, in fact, exact documents were used by the court

cases that had already been decided. some for j&j directly and others reversed in favor of j&j that is 40 plus cases to date. five still ongoing either in appeal or still being argued the 35 plus cases that have already been decided all have been, ultimately, in favor of j&j. >> the fact that the reuters article pushed this back into the public spotlight are you worried about more litigation and, therefore, more s settlements on j&j >> embolden some other litigation attorneys and users of johnson & johnson baby powder that suffered diseases whether it's because of the baby powder or not the j&j science refutes that but, ultimately, involved in some litigation to come. >> you have a price target on the stock at 127

you have been more cautious thinking fair value is right around here. so, what would you say about the stock now? you were cautious before, but now it's come down still reason to be concerned >> yeah, i think that's a good question and i think going into this news we thought the stock was overvalued and a little bit of a safety premium in the name. you know, people looking at the turbulent times in the market and going to j&j needs to be a safer name the truer value closer to $130 and i think the stock looks fairly valued and a good opportunity to get in the stock based on the pull back some of the safety premium has evacuate would the stock because of concerns over the talc powder >> what would the analysts for the stock to go higher and above fair value if the safety premium is gone, damian, what are the fundamentals in the story that make more positive even when danielle the bull insists that

litigation is still out there. >> from the risk of litigation, i would say it's still out there. the amount of market capitalization has been way too high relative to this specific case some reserves going forward, but nothing to the magnitude of what we've seen happen to the stock over the last couple days. i would reiterate that, we do think the stock is trading where it should be trading and there are some positives in the story and also some other things that offset that to really get to a fair value of where the stock is right now. >> danielle, the ceo is going on "mad money" with jim cramer tonight and we were talking to folks who are positive on j&j so strong and call it a conspiracy theory and we spoke to a reporter on friday so, does that tell you something about -- what more should the ceo try to do here to calm the concerns the public has and why do you think they were so defensive about it >> i think an article like that

really calls into question the reputation of a company that is generally regarded as focusing on patient health and safety i do think some defensiveness is warranted, particularly if they continue to stand by their view that their talc is safe and does not contain asbestos so, my view is that they should defend themselves here and should continue to speak the party line that, you know, this is a safe product. >> so would you buy the stock? >> i would, absolutely >> would you buy the baby powder >> i don't have babies, but if i did, i would >> what about damian, in terms of the stock >> from our perspective more of a hold we are not thinking it is under or over valued what is going to happen here in the next couple months,

quarters, years, these litigation cases are going to go on and on and on and over time j&j will do small settlements and cases will get off of the stack and get back to fundamentals really kind of a hold position right now. >> thank you, both damian and danielle talking about johnson & johnson which is down 4% again today. on "mad money" jim cramer will sit down for a one-on-one interview with alex gorsky coming up, amazon is also down more than 4% today and having the worst quarter in a decade alexa, is this a blip or a reason to worry? the trading nation tm ll ke lk,ext.eawi duncan just protected his family

with a $500,000 life insurance policy. how much do you think it cost him? $100 a month? $75? $50? actually, duncan got his $500,000 for under $28 a month.

less than a dollar a day. his secret? selectquote. in just minutes, a selectquote agent will comparison shop nearly a dozen highly-rated life insurance companies, and give you a choice of your five best rates. duncan's wife cassie got a $750,000 policy for under $22 a month. give your family the security it needs at a price you can afford.

welcome back to "power lunch. getting crushed and adding to a steep selloff the last couple months stock down more than 20 per. shedding more than $2 billion in market cap in that time frame. on track for its worst quarter since 2008 so, is amazon's reign over retail coming to an end?

harry, there can't be too many big stocks in the market with this exact profile down more than 20% from its high, but still up 30% this year amazon is there. what does it seem like to you technically from this point? >> yeah. i mean, you hit it, mike still up 20% year to date. talk about the importance of starting point i think the stock needs additional time to stabilize, but fine for the long term and one of the better looking retail charts with the rest of that group breaking down. i think what's important to note here is while the s&p 500 breaking below the low, amazon above it trying to make this a higher low this is a sign of relative strength that we'd like to see now, for levels 1450 is one we're watching there is a key tracement there the stock's gain since 2016. very open. what could continue to be range bound, consolidation over the coming months. but we still think this stock

works for the long term. bullish long-term, near term, let it stabilize for longer. >> gotcha. and, boris, arguably, if the stock did shoot to the upside on sentiment, did we have to see it the other way or is this a long-term secular play for you >> i would be interested now but in a very cautious way i agree with arie that it will have to trend for a while. it looks like a strong buy because we have to separate the company from the stock but the company continues to operate on all cylinders doing very, very well. the thing that people always underestimate that the new push into new businesses is very productive on a long-terms with. they are going now into logistics business amazon is its own best customers. aws for themselves and did

advertising for themselves and roll out for services for others the same thing with logistics. use it for themselves and so good they will be able to gen t generate going forward the short term, the stock, you probably want to collect selling points >> gm and fedex could explain weakness in that, as well. for more trading nation, head to our website or follow us on twitter over to sue herera for a cnbc news update. >> here's what's happening at this hour, everyone. the white house director of communications schlapp says funding for the border wall remains the president's top priority >> negotiate with congress, and looking to have increased security and we will find a way to find the $5 billion and

increase not only for the physical barrier but for technology and for personnel >> gop senator lamar alexander of tennessee announcing he will not seek a fourth term in 2020 the 78-year-old alexander has also served as governor, education secretary and president of the university of tennessee. he also made two presidential runs he is currently the senate pensions committee pope francis turning 82 years old today. but he began celebrating his birthday a day earlier with a group of sick children they led him to a huge birthday cake at an event at the vatican on sunday. happy birthday that is the news update this hour, back to you. >> sue herera, thank you. oil dipping below 50 a barrel goldmine warn of this and the fallout from it. join us on what we can expect from here. stay tuned now, the latest from

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. let's get a check on the market down as many as 400 points on the dow jones industrial average almost there, 387 is our loss right now down about 1.6%. s&p 500 down by 1.6% those are the february low levels and a lot of traders are saying after we slice through 2600 those february lows are clearly in sight just about 20 points away from them american express, microsoft, johnson & johnson leading the dow lower now. restaurant stocks meantime in the red. diamond and domino's and health care the insurancers among the worst performers hca and anthem

are the laggers there. the oil market getting a lot of headlines today crude went below 50 a barrel, did it close there dom? >> oil prices finishing near the worst of the day crude prices below 50. on the january contract, the world benchmark prices you can see on the february side, just about $59.35 remember trading for january crude future is the wti ones continue the final trading on december 19th. that january contract did fall below the 50 yellow mark and now a report from energy research firm shows that it rose by over a million barrels between december 11th through the 14th that's adding to that whole oil and that's been in the markets for months now at this point attention, of course, turns to the american petroleum institute and out tomorrow afternoon and the official u.s. government inventory data comes out on

wednesday morning. back over to you guys. a tough year already for crude down 16% and now falling below $50 a barrel how big a concern is this downtrend? is it even a concern jeff is research commodity at goldmian sachs out with your new forecast for next year. but i'm sure you love this headline, $50 oil is bad for the u.s. that was from the last time we saw you. why do you think now that we are below that level, why is it a problem? >> now $4 from being there you're pricing in the '08, '09 recession and the 2001 recession and everybody on the show will agree that the probability of seeing that scale of a recession right now is quite low in fact, we estimate at $45 a barrel you're pricing at 1.5 million barrel per day that is the demand side. if you decompose the movement in price and supply, the market has

moved in on the improvement in supply not only what we've seen in commodities and oil and the demand prospects do we think that's justified no, we don't we stick with our $70 barrel target for 2008. >> so, you're saying that where we are now on oil. you know, people could say, this is great we're under 50 bucks and this is a wonderful story, even though puts pressure on some producers. you're saying, no, that's not great. a demand story and weak demand means weak global economy. >> that's right. what most of the people i talked to are focused on, something bigger and more sinister we're not just seeing it in oil and commodity. the asset space. in fact, very rare that you see stocks, bonds and commodities all down together. the only thing that is performing right now is cash >> i'm wondering at $45, i know you're not a credit analyst, but i'm sure you take a look at this, as well. in terms of the junk borrowers out there, the ones close to

junk that are fallen angels because their credit rating goes down what sort of snowball effect does that have >> that is part of the reasoning we made when we said, hey, oil prices below $50 a barrel are bad for the u.s. and the connection to the high yield market because once you go through $50 a barrel which is what we're doing on a wti basis that creates the high yield market. we saw what happened in 2015 and 2016 we went down and visited $26 a barrel and created serious stress on the credit markets >> ironically. look what happened ever since. it helped to drive america's rebound. the producers got more efficient and now texas is basically producing more than iraq so, is going below 50 really that bad we dealt with 30 okay. >> well, you go back you cut a lot of supply out of the market that helped rebalance the market by going down to those levels at this point right now, where i get the 1.5 million barrel per

day number you're cutting out as much as the decline and demand is for a full blown recession >> what is the path to 70. on the way to 70, do we go to the point where it causes stress in the credit markets? >> when you say 70, it's on a basis. 60, 61 on a brent basis. in terms of the path of getting there, it is not going to happen tomorrow not buy forward expectation of supply cuts and not going to buy promises from china from policy stimulus it needs to see real physical tightness. when will we see that physical tightness? it won't happen until january or february until we see evidence of the production cuts now, a demand story here and there is a positioning story on the demand side, we need stock because people built up precautionary inventories going into the sanction deadline when it didn't happen, they built up large, long possessions that were liquidated you are going into a market that will have to restock in 2019 and

that's going to be the stimulus that moves you up into those higher price levels. >> you mentioned, you haven't been in an environment, but more broadly in the commodity sector, what have you seen in terms of industrial metals per se and should we expect global demand to pick up for them, as well is oil a technically, politically driven pocket of the commodities world? >> it's a similar story for the meda m metals an improvement in the trade war a couple weeks ago because of the g20 meeting. a lot of those demand concerns i like to point out from a level perspective, it can't get much worse. if you think of policymakers want to target and china means a lot of upside here nobody will work on any promises, they want to see action which means we have to see the real physical demand >> what are the break evens? it varies by regions a little bit.

north dakota versus texas. are they below the prices now or are people already shutting down production >> we haven't been there long enough but at $49 a barrel, you're there at this point right now. now, in terms of going back on the metal side, our targets there are also quite strong. we're at 6,500 on copper going up to 7,000 next year. the key here is you have to see the physical demand and people have to be convinced what we're seeing right now will not snowball into '08/'09 or 2001. >> thank you for being here. coming up, ge power the american century and then it burned out that's the headline from a new and highly critical on the company's decline in "wall street journal." former vice chairman joins us with his take on what ntwe wrong. "power lunch" is back in two

shares of general electric shares are down nearly 60% year to date. the stock kicked out of the dow and the "wall street journal" going in depth on the company's decline in a major takedown this weekend. let's get a former ge insider on the newsline is bob wright,

former vice chairman of ge and our parent company nbc universal. bob, always great to speak with you. >> thank you, melissa. thank you very much. >> you left the vice chairman chair in 2008. the article went back decades and told of so many different layers of, i don't know, things that could have contributed to this stock decline that we're seeing today when you look back, what do you think ge's biggest mistake was >> let me just say one thing you're absolutely right. it's a very entertaining article because a lot of hard work went into that. but i just want to say before i answer the other question is, we have to remember that bad decisionmaking is not fraud. and i'm going to come back to that they're not even close and bad management is not fraud.

and so there's a little bit of that in that article and i want to get back to that. the other thing i figured, the issue today for 30 years ge has been audited and has done its own auditing on income recognition. and income recognition is a key element in the power systems, business and in aircraft engines where people sign contracts, maintenance contracts that could be 30 years long it's a question of when you recognize the annual income and how it's done. and it's been the subject of accounting issues for many, many years. i don't mean bad things. disagreements among accountants is how it should be done audited almost every year. i have to assume that kpmg did its audit in '15, '16, '17 and there was no issue or if there was an issue, they

made changes so, it's just -- that's part of this the key part of this whole thing. and you have to, you really have to understand that i see the other thing is cash flow i think larry, the guy in there right now is cash flow guy he's an operating guy and that is what is needed. what is happening here the one thing that goes through all all those years is lack of attention to cash flow versus book income. we end up with a situation where the book income is significant and the cash flow is terrible. that has to all get fixed. but so many bad decisions that -- it's just hard to list them all >> when you say that bad management is not fraud. i mean, are you essentially saying that even when you were there as vice chairman that you were a party to this bad management and decisions that were terrible? >> well, when i was there as the

vice chairman, unfortunately, that's when the markets collapsed. the dotcom market collapsed. we had enron collapsing and we had 9/11 so, most of that time we were in a fight for our lives because our major markets were impacted. energy, aircraft engine and insurance. and so we were scraping just to find cash to pay all the bills in that period and build the business back up i think the real and then 2008 and '09, that was just terrible. a terrible time for us so, got hit with a lot of them i'm not excusing anything. but a lot of repair going on what happened is some time in 2014 is immelt started to go on some sort of a victory tour to

create new business. he wanted to be in the, he wanted to be in the enterprise software business for industrials. so, he traded this company and that isn't mentioned in the article, by the way. i'm not sure why and that and i'm not sure why it involved somewhere around $4 billion of expenses went into that >> 4 billion >> yes >> they just announced they are spinning off a good piece of that and at prices we don't know so there's something like that it may be lost he said it with was done poorly and he put it on the shelf they announced they will spin off and they are selling another one to silver lake and all of that stuff is something in the 4 billion. they may be selling for 2 billion. i don't know we don't seem to know. the cash flow issues it was not

considered to be nearly as important as it is i don't know how he could sit there and not be much tougher on matching up. they made decisions. you could stretch out your payments you can discount machinery and all that that's not illegal that means that you're not getting cash in the early years. somebody has to look at how we will cover that. i'm seeing bad decisions >> right >> i didn't see anything in there i would consider fraud i dobt know what the department of justice is doing. they may be reacting to a stockholder charges which allege that this was sort of

manipulated intentionally. it's a terrible situation. i do think he would be a prime candidate. he has operational experience. he knows that. he has -- as i understand he did two dozen acquisitions and never had a writeoff >> right >> sure. >> we shall see. thank you for joining us and sharing your thoughts. >> thank you former ceo of nbc universal. >> and such passion for the companies. remember the guy who cried at the meeting when he was talk about trying to save the company? sitting near session lows right now. an hour of trading left in the day. the dow down more than 400 points right after this.

welcome back the dow down 450 points. he is managing director. good to see you again. what are guys talking about down

there? >> not a lot of love in the room today. look, we have fed announcements later this week. a lot of activities through the week and then we have exploration. we thought some of the selling would dissipate it is not happening at the moment. oil down and volatility up a lot of emotions starting to come in. we'll see what the rest of the week and rest of the year holds. >> you think we are at capitulation yet or no >> i have been here a few times through those kinds of events. not seeing that yet. you look around you're looking for opportunities. where is the growth going to come from? they are saying it's time to cut

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1.8% we have seen so many times in the 2:00 hour. >> yes >> things seem to fall apart a little bit >> yes they do the nasdaq down for the year might be the first since 2011. the worst quarter since 2008 >> thank you for watching power lunch. >> closing bell starts right now. it is time for the closing bell, more volatility as we kick off the final trading week of 2018 are investors better off so searching for growth outside the u.s. >>. attorney