think there is an tremendous opportunity in equities to be long. >> mike wilson, it's been good having you appreciate you being here. happy new year to you as well. dow right now is down 350. we continue to watch the market reacting to what the fed did yesterday. s&p is down 30 does it for us "power lunch" begins right now >> thank you, scott. i'm mel la lee, stocks dropping sharply on fears of a shutdown talk of a fed fumble and the nasdaq now hitting a bear market what is next we will ask professor jeremy siegel plus is big pharma about to return to hiking prices in january after taking a pause following pressure from the president? and a shark tank pitch that brought all of the sharks to tears. you will meet the daughter who pitched her late father's product. find out how this 9/11 hero created a cutting board that is selling like crazy "power lunch" starts right now

>> and well come to "power lunch," everybody, i'm kelly evans. stocks are way in the red again today. this follows the fed meeting yesterday and the threat today of a government shutdown the dow and s&p having their worst month since 2009 the nasdaq today dipped into bear market territory. it hasn't done that since 2011, hasn't closed there since 2009 we're watching consumer discretionary, tech and energy, all leading the way lower today. utilities the only sector higher the tech sector now officially entering a bear market, it's down 20% from the highs. crude oil tumbles, too, down 5% again today. over the last three months crude has fallen over 35%. we'll keep a close eye on that one. now to what we're watching at this hour, elylan mui is in washington bob miss knee where the dow is hitting a 14 month low and steve liesman is looking at today's hangover from the fed meeting. >> republican lawmakers are meeting with president trump at

the white house and importantly it's not just members of republican leadership like paul ryan and steve scalise but also the leaders of the conservative freedom caucus, mark meadows and jim jordan republicans are under pressure from the right to take a vote on $5 billion in border wall funding, they want to add that to the short term spending bill. i spoke with a conservative leader in the house and he told me that he does not want to leave capitol hill until this vote is taken and that's a problem because democrats they're making their position very clear as well and that is no wall. chuck schumer saying that democrats are not budging in their opposition nancy pelosi saying that a border wall is a nonstarter. so what we're seeing right now is that both sides are hardening into their positions, that makes compromise more difficult and does mean that the risk of a government shutdown is rising. back over to you. >> thanks so much. let's get more on the markets

right now. bob pisani at the new york stock exchange how much is this threat of a government shutdown factoring into the markets today >> it's hard to say but certainly it's not a positive overlay. i think the real concern here is we've broken through all the technical levels and the obvious marginal buyer is not there right now despite the lows we've seen nobody is being rewarded for dying on the dips and that's a major problem. there you see the s&p we're just off of the lows, all the sectors are on the weak side, especially consumer staple stocks the bank stocks we keep waiting for them to bounce because we are stupidly oversold, i know that's not a technical term, but citi group has closed down 11 days in a row and that is a record nobody has ever seen that before suntrust, u.s. bank, it doesn't matter they are at all 52-week lows the market issues we're dealing with today, the fed was considered to be somewhat helpful a couple days ago, it's not as friendly as was hoped

for. obviously we're getting mixed news for the tariffs the chinese are reporting that they are going to start trade and tariff talks in january, that's a marginal positive of course, the u.s. political situation in a contentious move, particularly on discussions on the border wall and continuing funding for the government and the big overlay for everything global slowing just how much is it slowing down, we don't know, but it's clearly starting to impact earnings issues we saw that yesterday with fedex overall here who is the marginal buyer in the market again, i keep putting this up here i want to point out oil at a 15-month low, the dollar is slipping, gold is at a five month high, the s&p is at a new low for the year and yields, we're back to ten-year yields bark to the old march levels, that was one of the worst trades of the year that we have seen. that was a crowded long a couple months ago, no longer really working. >> bob, i was looking for a ray of sunshine in this market the one that i did find, you mentioned the financials they're not doing as badly as

one might think with the yield curve at 10 basis points. >> this is what i call a really weak bull argument they are not doing much and they're sort of still not bouncing after being down 30% and hitting multi-year lows, so this is a sign of some hope. yes, i would agree with you. they're certainly doing better than the rest of the market for the last two days, but on these -- these levels are so far oversold that you would have thought there would be a little more interest in buying them here so i don't disagree with you, but there's not a lot of enthusiasm and the volume is not particularly big nobody is trying to come in because they've been burned so badly. we've tried bank rallies a bunch of times in the past month that haven't worked i think we are going to have to wait until the end of the year unfortunately i wish that wasn't so, but i think that's going to be the case. >> buying any of these dips is a hard thing to go by these days bob pisani at the new york stock exchange. the markets clearly not liking the words and actions from the fed, but does that mean that powell and company did something wrong? steve liesman joins us now from

washington steve? >> melissa, the market has sent a clear message to the fed, what it's selling about the need for tighter monetary policy the market isn't buying. it's rare to have such a diverge he is between the markets and the fed raising the question does the fed chairman have the market's trust the fed is failing to convince markets at first, the joe ut look is brighter than the market thinks, second higher rates are the right response to an economy that's going to do that and a third two rate hikes are a data dependent forecast not a promise. >> i think from this point forward we're going to be letting the data speak to us and inform the outlook and inform our understanding of what would be appropriate policy. so there's a fairly high degree of uncertainty about both the path and the ultimate destination of any further increases. >> not much uncertainty in the minds of the market. the other problem the powell fed seems to have is setting expectations markets went into this meeting expecting a more dovish outcome

of what we got in the first instance they wanted the fed to say we're going to hike once or not at all next year, instead the fed said it's going to be to do two hikes. this he wanted flexibility on the balance sheet reduction, powell stuck to the doctrine that they are not going to be changing the plans to sell off the balance sheet by $600 billion this year. a lot are concerned about the economy, they got this line that it's monitoring developments and a modest downgrade of 2009 gdp some wanted to call for the language for further grad wall rate increases, it said some powell doesn't have the trust of the market, may never have had it the good news, the fed lost that trust before, 2013 the fed regrouped, and got it back, but it's always rough sledding when the market and fed are talking past each other. >> and you will be speaking with new york fed president john williams in the morning.

>> see if we can get more clarity on the outlook with one of the principal policymakers at the federal reserve, new york fed president john williams, that will be 10:00 a.m. tomorrow. >> where is he on the hawk/dove chart? >> he's sort ever in the middle, maybe leaning a little bit right or towards the hawkish side. the reason i say that is because amid all of this tumult in the markets he sort of stuck to his guns that the fed needs to raise and i guys that's where all the voters are right now remember yesterday's decision was unanimous. there was no dissent. >> we will see so if he softness his rhetoric tomorrow that could be key, or not. either way steve, thank you very much >> sure. we're watching a major selloff again today. the worst year for the dow in a decade the nasdaq down 20% from its august 30 highs and it be could the first time in history that december is the worst month of the year for the s&p 500 on top of that a new survey of retail investors showing that bearish sentiment is above its historical average for the 11th consecutive week

university of pennsylvania wharton school professor jeremy siegel joins us now. welcome, sir. >> happy to be here. >> do you think that sentiment has gotten overdone, that the market is oversold, that it's just throwing a tantrum about the fed or do you think there is a real economic slowdown materializing? >> well, first of all, i was pretty shocked when i saw the statement at 2:00 i said, oh, boy, i shook my head and said, this isn't good. they barely acknowledged any slowdown, i mean, the wording was just so cautiously more dovish don't forget, i mean, we talk about the fact that they lowered by, you know, from 3 to 2 the number of projected funds increases next year, but the market in the futures market they lowered it two from three to one, barely one so, i mean, they're behind the curve. they're behind what the fears of the market are. >> what the fears of the market are, professor, but is there an

economic -- we got the jobless claims number this morning it was at 215,000 it was very low. >> this is the reason -- and this is the reason, the fed has mandated to look at u.s. data and believe it or not u.s. data looks quite good you're absolutely -- jobless claims the last two months have been down. i was worried a month ago, they're down retail sales in november were quite good housing starts, surprised on the upside that's what they look at they're not going to take any cognizance of the global economic situation unless they see that directly influencing the u.s. >> but should they should they be taking a look at those economic indicators? should they be looking at what the markets seem to be broadcasting we spoke with ed la zeer earlier this morning and he said absolutely the fed should take a look at the market's message more and incorporate that into their thinking. >> i think they absolutely should have. i am shocked the ten year down at 275, i mean, barely positive

slope now on the yield curve i was very surprised on the dot plot only two members thought it should not have a december hike and they were not the voting members. i mean, we actually know who they are james board and neil kuscari have been outspoken and no one joined them. so they are behind however, they are capable of watching up. i mean, i remember 2000 to 2001 their december -- the market thought they should lower it, they didn't, the economy went south and then in january they did a double decline before the meeting. they said, yeah, you're right, guys, we were underestimating how poor this economy is and then they caught up or tried to catch up so it isn't hopeless, but it was

really disappointing in terms of their acknowledgment of what the market was saying. i'm not surprised at the response. >> given the disparate views between the fed and what the u.s. markets are telling us, professor siegel, should, then, investors be will uld into thinking that valuations look historically fine or should there be an embedded discount in the valuations we're seeing right now because of the outlook? >> well, right now we're trading at 15 times earnings, the s&p 500, 15 times operating earnings for this year. even if we have no increase it's 15times earnings of next year. now, the 65-year average is 17 it's actually a little over 17 so we are actually selling at a discount of around 15% from the long run average and also in a very low interest rate environment. i think long-term investors are definitely going to be rewarded,

however, remember, if there is a recession earnings will drop 20%, we are no longer at 15, you are at 18, you're worried about that there's political concerns going forward clearly in the second half of this trump administration, there's worries about what's going to happen in 2020, is there a potential corporate tax cuts being drawn back don't forget when psychology shifts and we've had that everyone looks at, oh, my god, what could happen. the gloomy side. three months ago it was all rose colored glasses, everything was booming, everything was fine this is what typifies the markets. >> let me just ask you this. >> yes. >> is it possible that -- is this definitely a showdown scare or is it a speed up scare? here is my point, if there is no recession, if there is no crash at this point is the market down -- are people concerned about earnings because the labor market is strong corporate profits may be under pressure next year because of that if the fed is not hiking because there is no inflation and the economy is still humming along that's fine.

so, you know, earnings can fall for a couple different reasons, they can fall because the top line drops or because the bottom line rises there a different way to think about what this market is telling us >> well, one has to remember that 45% of the profits of the s&p 500 come from foreign sales. >> true. >> so obviously the stock market is going to be much more worried about the foreign slowdown which we see everywhere than does jay powell who is looking at the u.s. market economy and said, oh, my indicators say okay so there's automatically always going to be a disconnect it's going to be much more the world economy for the stock market but much more the u.s. economy for jay powell and the fed and that's one of the disconnects and the reasons we got, you know, his ruling and his interpretation, oh, u.s. data looks pretty good my feeling is gdp is what's going to be 2.5 this quarter, that's not terrible. it is down certainly from the average of the first three

quarters and next year, you know, we are looking at 2, some are looking at 1, this is a disappointing slowdown we are not ratcheting up to that higher level that so many people had hoped for in the trump administration >> all right. >> i think that those fears are weighing on the stock market. >> fair enough professor siegel, thank you for joining us this afternoon. appreciate it. >> thanks for having me. stocks selling off right now continuing yesterday's post fed frenzy and the dow down 7% so far this year. one group holding up okay, though, healthcare stocks, the sector one of only two in the s&p 500 that is higher for the year leading the way, pfizer, meshing and ely lilly. is big pharma on a collision coseitthur wh e president over drug prices? that's next on "power lunch.

the healthcare sector is trading lower for its fifth straight day now on pace for its worst week since march this after a bombshell report from reuters that over 30 drug makers plan to raise prices as soon as january 1st ending a self-imposed pause during the second half of the year. let's bring in david maris. >> thank you. >> the headline is terrible. it doesn't sound good to a congress, especially that's going to turn democratic, the house, that is, in january so put this into context because

drug makers raise prices all the time are these big increases, are these expected increases >> it's really the time of year and also after everything that the government has said about this and it's almost as though the song "do you hear what i hear" it's as though the drug companies don't hear anything from the public or what's going on in congress and doing whatever they used to do deciding we held off for six months now let's dom back to the same old game plan and it's not going to work this time. >> do you think congress will actually step in and do something? the president has been proud of the fact that he jawboned a particular drug company into raising prices, pfizer. >> and the outgoing ceo was one of the first to say we're going to raise prices again. the difference now is that you have a democratic congress that starts january 1 and they're champing at the bit to attack drug prices and you also have republicans that are looking to 2020 and saying, look, we want to stay in power so both sides are going to try to become the party that says,

let's make some progress on drug prices so you have these two forces that are really going to heat up. >> can it be deflationary and be good for the sector? does this mean you have to stay away from pharmaceuticals entirely >> we have an underweight on the en sire sector it's a very profitable sector. >> you are the pharmaceuticals guy. >> you have companies that have almost every drug company has beaten earnings the last two quarters by a lot, record earnings so it's stuff for them to say, look, we need to money to fund innovation so it's a really tough argument. and it's coming at multiple sites. there's trouble with drug advertising, trouble on state transparency laws, there's just a lot -- there is a lot of factors that all are soft targets for congress. >> you say mylan and some of the other generic drug makers can actually be part of a solution which is ironic since mylan was the one who gained all the attention before for jacking up prices on a drug that had been out for a long time. how does that work and do you think mylan -- i don't know how

you rate mylan right now but will they actually gain from this >> after a decade of having an underperform on mylan, recently upgraded on valuation, but the problem with the generic drugs and we are still cautious on the overall sector, subsector of generic drugs is that they could be part of the solution, the problem is they've been part of the problem as well and recently a senator came out with an idea maybe because of high prices in generics we should come up with we can start to produce generic drugs. there's also a price collusion suit that's going on with 49 states coming out against generic drugs that alleged lly colluded to keep prices high. >> state sponsored generic drugs? >> that's one of the plans being floated here. >> i wonder if the other was big marijuana. we called with novartis with till ray is this sector going to look to other places entirely for growth if it can no longer look to

prici pricing. >> absolutely. companies will say should i believe in over the counter drugs, should i look to medical marijuana, others emerging markets. if you can't grow by raising price -- >> what is the glaxo partnership -- they're doing a partnership to basically spin off the consumer business and that would feel like something that maybe they would look to to diversify but instead they're saying we want to double down on core pharma. >> glaxo ceo came in and said i want to be a pharma company, i want to focus on pharma. we have this -- they make tums and everything else under the sun, we have this great otc business, what else can we do with it instead of just selling it to unls sw. pfizer has a business they don't want so they said let's combine it as a joint venture and maybe spin it out sometime in the next few years. >> david, we're going to leave it there thank you very much. paul ryan and kevin mccarthy speaking outside the white house moments ago. let's take a listen. >> all right let me just start off right now, we just had a very long

productive meeting with the president. the president informed us that he will not sign the bill that came over from the senate last evening because of his legitimate concerns for border security so what we're going to do is go back to the house and work with our members, we want to keep the government open but we also want to see an agreement that protects the border. we have very serious concerns about securing our border, so the president said he will not sign this bill, so we're going to go back and work on adding border security to this, also keeping the government open because we do want to seen a agreement. >> we believe there's still time, we could have border security, fundamentally that's what america is asking for, one of the fundamental jobs especially for our president as well we had a great discussion with him there. the president said what the -- what the senate sent over is just kicking the ball -- just kicking the can down the road. we want to solve this problem, we want to make sure we keep the government open and we are going to work to have that done and get something to happen.

>> speaker ryan, kevin mccarthy confirming that the president will not sign a bill basically that would keep the government open so it looks like we are in for a fight. sounds like they are going to go back to the drawing board and try to add funding for border security. >> this -- so the senate passed this last night. our understanding is some of the senators are already getting ready to leave town today. the house republican congress meeting this congress went haywire reportedly not just over the border wall, southerners wanted disaster funds in the bill now you can see the market's reaction obviously the shutdown itself doesn't have a huge economic impact but this sense of turmoil goes back to one of the core themes of the market. >> the sense of turmoil in a congress that the republicans have control of still and so if the turmoil exists here imagine what it will be when it's actually divided congress come january. >> yeah. >> that's a big unknown. >> we will try to find out more about how close we are to that shutdown, if we get any other word out of washington how long it might last.

up next the latest twis tws twist in relations with china. the department of justice charging chinese nationals with espionage. we will bring you the shocking details. plus the worst performing group is consumer discretionary. "power lunch" will be right back

we just heard from house speaker paul ryan. they will go back to the drawing board, they will go back to the house and work on another short-term spending bill that will include funding for border security the president will not sign the current short-term bill that will keep the government functioning. let's guy to eamon javers who has all the details on that and a shocking chinese hacking story. >> a couple surprises on a couple different fronts, melissa. you just heard paul ryan saying in the white house driveway that the president tells him he will not sign the government funding bill that the senate passed because it doesn't have his border wall funding in it. the president wants that boarding wall funding. despite indications that we had been getting last night and earlier this morning that he

might be inclined to sign it even with without that in order to get a deal to keep the government open, now the president drawing a line in the sand politically and saying i need funding for the wall or we will have a government shutdown. that sends lawmakers back to the hill i can tell you paul ryan walked very quickly toward his vehicle here to get back to the hill to figure out with republican lawmakers exactly what they can do about this, not clear that they have the votes to pass a bill that includes border wall funding in the house and the senate and get it to the president for his signature let alone whether they can do it before tomorrow when the deadline is. remember, the president is scheduled to go on a lengthy vacation at mar-a-lago starting tomorrow for the christmas holidays so will the president shut down the government as he's leaving for his vacation what are the optics of that? what are the politics of that? all of that to be sorted out here in the next coming hours. so high drama on the government shutdown front. >> real quickly on that front, so because there's so little time left and they have left this meeting to go back to the

hill, what possible outcomes are there for avoiding a shutdown? anything that you can see right now? >> you know, it's looking tougher and tougher. with the president drawing a firm line like that, the one thing you think of -- they kept using the phrase border security, they're not specifically saying border wall. if you look at the language of what ryan and mccarthy just said, so there something that they could put in the bill that looks like a border security, feels like a border security, is a section of wall, something that the president would accept to give him a political win. maybe that's one way to thread the needle here and get the votes for that up on the hill. >> speaking of security, they also -- then they went after china this morning and that's not just a u.s. effort, is it? >> yeah, that's right. that's very much tied to this overall negotiation between the u.s. and china on tariffs and trade. the united states side feels and argues that the chinese have simply been stealing america's technological crown jewels for

more than a decade and they want it to stop and they want it to stop now we're seeing this effort by the department of justice to indict two chinese nationals, here is the indictment that they released this morning with a lot of new details of exactly how the chinese have been stealing and which industries they've been stealing from according to the department of justice, those industries include space, aviation, manufacturing, pharmaceuticals, oil and gas, communications, computer processing and maritime technology all of those industries have been hit by this one specific cyber espionage group, that the united states government says is connected to the chinese ministry of state security and intelligence group inside the chinese government here is what rod rosenstein the deputy attorney general had to say earlier today. >> there is no free pass to violate american laws merely because they do so under the protection of a foreign state. >> so the deputy attorney general there saying that the united states knows exactly what the chinese have been doing and

in many cases exactly which chinese officials have been doing it and today indicting two of those officials here by name saying that we know what you've done and we know exactly for how many years you've done it and we want you to knock it off. >> how does that turn up the heat, though, in terms of the espionage effort on the part of china and other states for that matter we found and charged hackers in the past that have been tied to state sponsored espionage, cyber espionage and nothing else has ever happened from it. >> i mean, you remember the obama administration department of justice indicted a number of uniformed owe terms from the people's liberation army and, you know, that did not appear to have the effect that they wanted ultimately this is a name and shame effort also we are seeing statements come in now from countries around the world who are also calling out chinese espionage on the same wdayer trying to presen a unified front against the chinese to back them into a corner geopolitically, but it is a negotiation and the chinese

view this very much as integral to their efforts to increase their economic output. they can't develop these technologies in country, they're going to steal them from wherever they're being developed. ultimately, though, for a country you can steal your way to tie for first place in the economy, you can't steal your way to first place in the economy, you have to have your own innovation eventually. >> we will see on that front thank you very much. covering all the latest for us at the white house eamon javers. tech is leading the way lower again today and the nasdaq is now in bear market territory for the first time since 2011. it's having its worst quarter in a decade with err all over this big tech selloff and looking ahead to next year, what will the economy look like in 2019? we'll discuss when "power lunch" returns.

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. herrera. here is your cnbc news update for this hour. house democratic leader nancy pelosi says republicans are in the midst of what she calls a government funding meltdown. this as the gone scrambles to pass a temporary funding bill before the government runs out of money on friday night she repeated that any funding

for a border wall in the bill won't pass muster with the democrats. >> so here we are, we don't know -- republicans are in the state of disarray, we don't know what will happen next. we will see what they come up with in terms of disaster assistance, we'll see, but in terms of wall funding, that's a nonstarter i think they know that thousands of syrians gathering outside the headquarters of the u.s.-led coalition in northern syria. this to protest turkish threats of an imminent offensive on wednesday president trump announced that the u.s. will withdraw all its troops from syria. michelle obama wrapping up her 2018 nationwide book tour. the former first lady held the final tour event at the barclays center in brooklyn wednesday night. sarah jessica parker serving as the guest moderator. you are up to date, that's the news update this hour. guys, back to you. >> sue herrera, thank you. let's get a check on the markets right now.

take a check of the dow down by almost 2 full percentage points. the s&p 500 down by 41 and the nasdaq down by 128 points or almost 2%. of course, the nasdaq now in bear market territory down 20% from recent highs. within the dow walgreens, walmart, united tech are the big laggards johnson & johnson up 0.4 of 1% fossil, way fair, macy's all down between 4% and 10%. and there are names bucking the trends, the bright spots, the home builders, lgi homes, kb home, all higher on this thought that the fed will remain lower for longer >> melissa, thank you. part of what spooked the market in yesterday's conference was chairman powell's statement that they're sticking with their quantitative program qt is the name for this balance sheet shrinking.

the fed began buying bonds and the balance sheet grew to more than $4.2 trillion in size it's now set to shrink that by $600 billion in ex year on a preset course and the fed says this will have no economic impact joining us is michelle gerard, u.s. chief economist along with dan fitzpatrick president of stock market mentor. welcome to you both. >> thanks for having me on. >> michelle, let me begin with you. do you think that quantitative tightening, the balance sheet shrinking do you think that matters? >> i'm surprised by the focus that the balance sheet is getting. the fed is obviously been in the process of normalizing the balance sheet. i think arguably we may be getting closer to beginning to think about the end of the balance sheet normalization, maybe there is disappointment that it's going to continue through 2019, whereas some people thought maybe the balance sheet would be left larger and the normalization would conclude ultimately sooner, but, you know, i don't see that as posing

a threat to the u.s. economy i don't think that's what's behind the weakness and equity markets, the removal of liquidity from the system. you know, again, i'm as curious as anyone else about the fact that that's being given a reason for some of the negative reaction. >> michelle, no the so much as a reason but i think investors are confused because they say if the fed is tightening it's doing it in two ways, raising interesting rates but it's also draining the balance sheet. they are just trying to figure out is this two-pronged tightening still happening or do you just look at it as having one prong like the fed powell yesterday even alluded to something like, you know, the balance sheet is not a monetary policy tool. we only think interest rate hikes are. do you agree with that >> i do believe that there is to some extent the normalization is another level of policy -- a combination of the removal of a

combination. so i do think that it's fair to think of two levers, but, again, sort of in both cases, particularly when you think about interest rate increases, we are talking about normalizing. we are not talking about lifting rates or taking policy into restrictive territory. and that's the confusion here. i think the fed doesn't maybe do the job it needs to do as well as talking about the fact that neither of these two actions are really necessarily doing anything to slow the economy down, it's really just removing the support that arguably an economy that's growing for better than 3% for a third straight quarter no longer needs. >> all right well, with all that said, dan, you've been bearish stocks are you more bearish, less bearish based on what jerome powell said yesterday? >> frankly it would be impossible for me to disagree with more with what's being said i don't know how frank i can be so i will tone it down a little bit. i think the reason that the market is selling off so much on

this is because they're realizing markets is finally realizing that powell is not any different than the last three fed chairmen you know, they're still looking to dot plots and models and this and that and there's no common sense. the best indicator, the best indicator for what the economy is going to do is the stock market that's really it when i hear this talk about, well, powell or, you know, whoever is running the show, when i hear this talk that, well, they are not really looking at the market, blah, blah, blah they should be looking at the market they should be looking at the market so the way i see it is -- and i know i've given a couple charts to you there, on the fed funds rate they kept the money supply basically for free for seven years and i hear this talk about, well, they're normalizing and this and that. after seven years of free money what exactly is normal and are we -- we're letting the same people who gave us this crack cocaine for free, we're letting

them tell us now what's normal so i really just kind of think the market is a little bit freaked out by everything. so that's an issue. >> how much damage do you see being done on the s&p 500 right now? >> yeah, that's a good question, melissa. it's funny, a week ago i had a chart printed out where -- when they broke the 2600, i thought, you know, that's a head and shoulder pattern, i'd look for at least 2300. now we are down 150 points and that didn't even look like much of a call. so i will say this, i i can't, i think we could at least go to 2300 and if you look at a longer term chart, now, and this is kind of the silver lining, i guess, we are in a secular bull market and it's rm, really easy as traders to really zoom in and pretty soon you are looking at a tick chart or one minute chart and it's important to step back, look at the big picture. we could actually go down to 2150 and really still be okay with respect to the secular bull

market, but my question to viewers is do you kind of want to stick around and ride that all the way down, or do you want to respect the risk that's in the market right now, versus the risk of missing out on upside, and i don't think there's much risk in missing out on upside. >> last hour we had jeremy siegel on who in a way made the same point, he said that long-term investors don't need to worry and you are also saying we are in a bull market. >> right. >> sure, it doesn't feel good to ride that down but unless people are trying to market time at home can't you just say, well, in the long run you are still telling me it's a bull market? >> that's a really good question, too. it's not really a function of timing the market, it's a function of managing risk and there's a difference between timing the market and managing the risk what i'm saying is with so much overhead supply, i just think there's a risk of any rally -- and i think we could go back, by the way, to 2600 on a snap back

rally. i think we could but that's really the upside that i see so if you're sitting there and you're a long-term investor, sure, just stick with what you got, you're good, but don't look at the market for about a year i mean, seriously. but if you are a short term investor and frankly most of the viewers r let's face it, most of them are, it's not a function of timing, it's a function of saying, okay, the market is going lower. if i'm on the sidelines i'm looking for opportunity. >> sure. >> but if i'm in the market i'm looking for relief there's a huge difference. >> right. >> between the two so if you have a good cash allocati allocation, now you are in prime position, you wait for this thing to settle out. but i don't think we're done i think it's still going to be volatile is what i'm saying. >> i want to bring michelle back in for the last word should the fed ultimately listen to the markets more? siegel said that and lazear, a number of voices have said that. the market is the best forward looking indicator out there and yet that is not a data point

officially that the fed looks at in its mandate. >> it should be. >> i think that there's a lot of information to be gleaned from the markets, absolutely, millions of profit maximizing investors out there tend to get the story right a lot better than us economists, i will give you that, however, i think you also have to look at both sides of this. when the equity market has running up and financial conditions were off the charts over the last couple of years, we did not see the fed say, oh, my, look at the blow off conditions that are -- the equity market is signaling, we can't just go gradually, we need to step up the pace. i mean, if they were truly looking at the markets in the last couple of years they would not have only increased once a quarter even though they were well behind the curve. so there's a little bit of a two-way thing here you know, be careful what you wish for if the fed is really going to be looking at the markets, who are looking at the fed and looking at the markets, you know, it's -- it can get, you know -- it's a difficult situation and,

again, it's just not as clear cut as it seems like now -- >> but the feds should be looking at the market. they should be looking at the market on the way up. >> and i think they do i don't know dan fitzpatrick, michelle gerard. >> maybe they are just not good chart readers. >> we will send them some of your stuff, dan. >> no, don't, i'd scare them. up next we will talk to two sharks, dave and john and kevin o'leary about what they're seeing in the economy, the state of the consumer and how small businesses are feeling right now, plus we will ask them about one of their most heart warming and profitable deals ever. we do have two components in the green, j & j and pfizer in ostoesonowwi t sector, we are cle ssi ls thhe dow down by 1.8% stay with us

(indistinguishable muttering) that was awful. why are you so good at this? had a coach in high school. really helped me up my game. i had a coach. math. ooh. so, why don't traders have coaches? who says they don't? coach mcadoo! you know, at td ameritrade, we offer free access to coaches and a full education curriculum- just to help you improve your skills. boom! mad skills. education to take your trading to the next level. only with td ameritrade. another rough session in the markets today as we've been telling you the dow is on pace to have its worst december since

the great depression this with fears about the economy, trade and the government shutdown now spooking investors, how do main street businesses feel about this volatility joining us to give the pulse of the real economy are shark tanks also, kaley young, whose product is becoming one of the shark tank success stories of the year welcome to all of you. >> thank you. >> kevin, is it as bad on the ground as it seems to be in the financial markets? >> no, that's the dilemma. for most of our companies, which are private, domestic revenue companies, we've not only had our best quarter, we've had our best year in history we're continuing to see a positive trajectory, especially online market is a forward-looking discounting vehicle. it looks like it's pricing in a recession i don't see. i don't see it in small cap and mid cap businesses it's hard to see 1.5% a day down every day, but i don't see the

numbers. >> damon >> i'm not seeing any on my direct to consumer company, but i am seeing it on some retailers. the i see it in my real estate stocks as well i'm seeing so much inventory in the market it's inflated because of the large tech companies coming in and buying millions and millions of square feet other than that, everybody is trying to shrink in their imprint. >> is it the uncertainty for the retailers, is it the trade war specifically >> yeah, the tariffs are increasing prices. the thing about immigration, is that going to increase the bottom line on how much you're going to have to pay people to work there are people getting it direct to the consumer they don't need to go to the store anymore. >> that's why the tech companies are doing as well as they are. >> i think the administration needs to settle the issue with china. too many of my products being ripped off not just some. pretty much all of them. i'm tired of it now. it's time to push back >> these aren't products that

are tech products. these are things that are manufactured in china. >> that's what people miss everybody thinks, oh, it's the apple. it's not just technology it's little manufacturing devices that are patented in the united states, invented here, that get ripped off within hours in china >> hours >> hours as soon as they're successful, as soon as they're working on amazon and there's nowhere i can go to the chinese government to say stop everywhere else in u.s. and europe i can do a cease and desist enough with this >> how do we protect the cut board pro? kaley, welcome to you. you have a fabulous story. quickly, show this to us we'll ask how we can protect this in the market and make sure you don't get a bunch of rip-offs >> so this is the cut board pro my dad invented. it's a two-sided cutting board we have the meat side and the everything side. so there you can see my dad's logo for the firehouse as well >> the fdny seal is important to you because he passed away at 9/11 from cancer >> correct >> when you came on shark tank

to pitch this product, the gentlemen sitting here, everyone was chomping at the bit to get a piece of this. it's done quite well. >> it's been an unbelievable success. there's over 100,000 people waiting for the product. it was such an emotional moment. even the cameramen were crying this tragedy has been turned into a phenomenal success. we all think your family is remarkable, but this is now a business you're running a real business >> and we're talking some of the largest retailers in the world who are really, really getting behind this and a good amount of the proceeds are going to be going towards a cause. all five of the sharks are in. we never agree on anything >> and you never cry about anything either. there you were bawling across the board. >> it was really hard to hear that story both parents passed away you are now the matriarch of the family >> wow >> you're doing a pretty tam go - damn good job. >> thank you so much >> why is this so important to you guys >> just because we were so involved in our dad's process creating this. so to bring this even more to

life and to continue his dream is just inkrencredible >> what is your goal for this project? >> my dad wanted it in every kitchen in the united states we're kind of thinking worldwide now. >> she already has extensions. i think your dad's book is now a cookbook number four on amazon. >> yeah. >> "cooking with the firehouse chef," in case people are looking for it >> if only my kids will take my legacy that far. they won't even talk to me >> this is a start congratulations on the product for everybody who wants to look for one for christmas, a couple great ideas there. appreciate you coming on to talk about it damon and kevin, great to see you guys and get the pulse on the ground. >> thank you >> thank you apple shares falling once again today. down more than 7% this year. in a bear market officially. will the slide continue in 2019? let's bring in the senior equity analyst at cfra. he just slashed his price target for apple from 255 to 215, maintaining a buy rating the latest rounds of headline,

it's had to pull some of the older phones from the shelves in germany because of the patent dispute with qualcomm. it has the same dispute in china. is that going to be an impact? >> i think it's absolutely a risk that's sitting out there. but that being said, you know, i think right now when you kind of look at what qualcomm is doing here, i think it makes complete sense. i think they're kind of really trying to go full throttle here as we enter 2019 that being said, i think the risks associated with this are a little bit overblown at the end of the day, we don't expect this to have much of an impact to apple's, you know, larger business from a broader perspective. nonetheless, it's absolutely a risk that's out there. >> it's the 7 and 8 models how much do they actually sell in germany how many do they sell in china what's the back of the envelope impact to eps, do you think? >> yeah, i mean, as far as germany is concerned -- and we're looking at the iphone 7 and 8 here we're talking about less than 1%

of revenue overall from that perspective, we think it's very immaterial to the company's business when we start looking at china here, we kind of start looking at the risk there. it's, of course, much more relevant, but that being said, we think that the risk there, 20% of their business, is very, very small at the end of the day. we continue to believe that, you know, the iphones will remain on the shelves within china >> you ratcheted down your price target, as we mentioned, to 2015 that's still a long ways from where the stock is trading currently. what changed in your model, if anything was it simply that volatility took the stock down? >> i think it's a number of factors. i think one, we've got to be -- we have to realize the fact that, hey, listen, there is a problem here in terms of the current cycle, in terms of iphone units we do believe that we're probably trending closer to down 5% to 8% in terms of volume. you know, as we kind of go here over the next month or two as we

approach that december quarter, earnings season, listen, we're not calling a bottom here. we think the estimates will need to come down significantly as a result, that does get embedded within our lower multiple now at about 15 times, previously around 17 times earnings that being said, we think once those estimates kind of come through, you know, flush through, we do see the stock improving and starting to perform the way we expect it to perform as we kind of go through the year >> angelo, great speaking with you. thank you. >> thanks for having me. coming up, a big selloff on wall street once again the post-fed slide is continuing with the dow down nearly 500 points we'll have much more on the markets and also check out oil it's down again today. a third of its value wiped out just this quarter. what is behind this decline, and when and how could it end? plus, facebook falling again on a new round of bad news about its handling of user data. is regulation of big tech

inevitable silicon valley's congressman is about to join us

welcome to the second hour of "power lunch. two big stories we're watching right now. just in the last half hour, paul ryan saying the president will not sign the spending bill that news sending stocks to near session lows we're off nearly 500 points. dow is down 280. it's a 2% selloff.

elon, let's start with you >> well, thebattle lines have now been drawn house speaker paul ryan making it very clear that president trump has got to see money for the border wall in order to support a spending bill. >> we have very serious concerns about securing our border. so the president said he will not sign this bill so we're going to go back and work on adding border security to this, also keeping the government open because we want to see an agreement. >> ryan and other lawmakers are now back on capitol hill they're regrouping and trying to figure out how they're going to add that $5 billion in border wall funding as well as money for disaster relief to the short-term spending measure that would keep the government open through february 8th now, there is something discussion that one way they could thread that need is perhaps give conservatives a way to vote for that $5 billion in border wall funding while maintaining a so-called clean spending bill that has no strings attached, but that's all part of what lawmakers are going

to be hammering out this afternoon. what we do know is that if any changes are made to the spending bill, that would force the senate to come back and vote on this bill again. and guys, the clock is ticking back over to you >> the dow is now down 500 points real quickly, what are the prospects of democrats taking 20 of the more moderate republicans, maybe the ones who have already been voted out, and passing that bill? how would the president react to that >> in the house or the senate? >> in the house. >> if the house passes a bill that does not have border wall money in it, the president will not support it the challenge here is that, that bill may just be doa in the senate anyway because it's not clear exactly how they are going to compromise between both chambers of congress >> yeah, no, at this point it looks like we're heading for a shutdown anything could change. thank you for now. let's check in with bob. as we mentioned, we keep sinking here dow is down 522.

is it shut down related, bob >> you know, i think at this point, the market has assumed a life of its own. a lot of this is technically driven i just think there's a genuine buyer's strike i've used that many times. there's no reward for buying the market right now there may not be until the start of the year. i wish it were different let me show you the sectors. it doesn't really matter that much consumer staples weak, some weak earnings comments. health care, tech. here's the good thing. the banks are not down as much everyone said, oh, maybe they're bottoming. yes, on a relative outperformance, the banks have been doing better, but that's a poor commentary given what's going on weird market internals like really extreme numbers so we watch things like put call ratio, how many people are buying put options versus call options. 1.6, that's a really extreme number you don't see that very often. new lows at the new york stock exchange, 1,184. it's been a decade since i've seen that. just want to remind everybody, kind of extreme levels here.

s&p 500 at new lows. ten-year yield, lowest level since april. that's a trade that didn't work. oil is at a 15-month low the dollar has been down recently one-month low there. that's interesting gold, five-month high, over the 200-day moving average another interesting move my question is, where are the buyers going into the close? that's what i'm trying to figure out. of course, remember something. hedge funds are in redemption. i don't know how active they're going to be. the retail investors, they're not heavily selling, but they're not buying either. they seem kind of frozen at this point. there's a lot of notes being passed around about pension fund rebalancing at the end of the year if you have a 60/40 portfolio and the stock market is down 10%, you've got to rebalance into stocks. maybe that could be a marginal buyer. how about mutual funds some active ones could see opportunistic buying i haven't necessarily seen it yet. again, remember corporations are out there on buybacks. they've announced them but there's a limit to what buybacks can do. they can't be more than 25% of anything in their stock in any given day. so there's a limit to how many

potential buyers there are out there right now. we're just going to have to see. extreme levels here on the internals. back to you. >> yeah, we are seeing that reach for safety when it comes to the sector performances utilities, a stalwart when it comes to markets like these. we're seeing extreme selling pressure they're actually holding up decently but that's it. >> yeah, even the other day -- remember, we saw a couple day where is utilities sold off rather dramatically. obviously they're being used as a source of funds. >> yeah, bob, thanks the dow and s&p 500 on pace for their biggest monthly losses since february of 2009 the nasdaq also briefly dipped into bear market territory, on track for its worst month since october 2008 so what's an investor to do with just a few trading days left in the year randy warren is cio of warren financial services gentlemen, great to have you with us on a day where we're just seeing pressure right into the close here

the dow is down by 548 points. randy, i go to you first you know, after a bout like this in terms of selling, you have to start thinking about capital preservation, no >> yeah, you want to think about capital preservation, but really what's important here is for investors to find some investments that are china-proof and fed-proof and recession-proof. you're going to have to go back to some names that have real growth in them so there's names out there, and we're going to give you some stocking stuffers today like salesforce, amazon, workday. there's some names out there that are down pretty significantly that still have 30% plus growth. the trends are still pretty good so you're getting real bargains out there right now. >> you could have said that a month ago or two months ago as well you got even bigger bargains today. sandy, at what point do you look at the technicals and say the

markets are going in a direction and i'm going to find these stocks i think are great values, but i'm going to have to be prepared for paying ahead, even if i want to get in right now? at what point do you say, you know what, maybe it's not worth it right now >> no, i think it's always good to have that shopping list, if you will, of very high quality companies and look to buy. you look at a lot of those fear gauges that bob was talking about earlier. the vix is spiking over 28.5 the last time we saw it do that was early february that's right when the market bottomed investor sentiment is really terrible, which is also bullish. the put to call ratios are bullish. i think this is, you know, we like to take our time, buy the right company, and put them away in our portfolio for the long run. >> sandy f t, if the market rebs here, does that mean we'll revisit the way they feel about powell and all the sudden it will be powell stands up to the market and powell has a backbone and even the president comes around to that after flogging him the last few weeks

>> yeah, no, it's tough. basically the fed has definitely stopped spiking the punch bowl, if you will. the street definitely wanted more of a dovish commentary out of him looks like they're not going to -- you know, like they said, gradual increases for next year. you have to keep all that in mind i think that's getting baked into the market here if a lot of index funds are moving the markets up and down and a lot of short-term quantitative computer algorithms moving the market around, make your shopping list. >> i wonder there's no inflation. this is kind of a weird one. if the economy is fine, if this has been just a terrible quarter for the markets but there's still no inflation, does that still justify the fed not doing anything not because there's a slow down per se, just because there's no need to tighten. >> well, there's definitely no inflation. you see things like the oil prices down significantly.

every time oil prices have dropped about 50% in the last hundred years or so, the market has rebounded dramatically in the next year. so 2019 could be a really decent year when i say a dramatic rebound, i'm talking 23% and more there's not a lot of inflation that's good news and our economy is still doing fairly well. i know that's hard to put up with right now, with the market going down 400 or 500 points every day, but we've got to stick to our guns. >> all right well, the dow is down 567 as we speak. thank you, both. let's get to dom chu for a market flash here. >> so kelly, we did see very briefly consumer discretionary as a sector, those stocks, the latest group to dip into that minus 20% category now down more than 20% from its recent highs in late september more than 50 stocks at this point in the index the sector already trading at those minus 20% or worse levels.

you have elle brands, mohawk industries, michael kors each of those stocks is down more than 50% off of their respective recent peaks. among the names today pushing the sector lower, you've got chipotle and a number of the cruise line names like carnival, norwegian, royal caribbean this after caribbean issued a weaker than expected quarter, citing higher fuel costs still, a notable sector, consumer discretionary >> yeah, chipotle has been terrible 7% today, down $130 from the high a lot of carnage out there crude oil is also continuing its slide, hitting the lowest level in 15 months crude is down 40% just since october. our next guest says the downward pressure there is like a freight train that's hard to stop. so what can we expect? let's ask the portfolio manager and managing director with tortoise what do you do at this point, just throw your hands up >> no, you buy energy stocks they're essential assets you're right, because of the downward decline in oil prices,

they look like a really good value. there are greatopportunities, we think, in the energy sector this oil price sdecline is a bit transitory we think oil prices return to higher levels in 2019. we just view it as a great opportunity. >> i mean, it might be a great opportunity, but this is what melissa was saying a second ago. uk you could make the same argument all the way down the market. maybe if it's tech, if it's consumer discretionary, that's one thing. when we're talking about oil and the way the supply situation has changed with extraordinary renaissance going on in the u.s., what's the justification for higher prices? >> well, so specifically on oil, we simply need to be at higher oil prices throughout the world. so everyone across the world needs higher oil prices. lower oil prices are fine for a while, but it's dangerous if oil prices get too low this is the reason why there's not sufficient capital investment made by oil companies to produce more oil into the future >> but that happened last time,

rob. the price went down to 30. u.s. producers got more efficient. now the u.s. is pumping more than ever. so it didn't hurt them >> well, it didn't hurt them from that perspective, but look at their stock prices. if you look at the last three out of four years, the stock prices of u.s. oil companies have gone down yes, they produce more volumes, but their stocks haven't gone up that's because they need to be disciplined. they don't need to grow as much. they need to generate free cash flow to generate free cash flow in a low oil price 1r50ir7environmenu have to spend less capital that means u.s. production won't be as high >> rob, are you an optimist when it comes to your outlook for global economic growth i ask you that because one of two things, or two things have to happen simultaneously that is that people get really disciplined. we know opec actually enacts the cuts next month, the u.s. actually becomes more disciplined when it comes to the

amount of oil they produce although, they were pumping out record levels right now, as kelly mentioned. a or global growth has to improve. what happens >> that's a good question. one thing you have to keep in mind is 33 of the last 34 years, demand for oil has grown the only year it didn't grow is 2009 we all know how the environment was then so we think that you will continue to see oil growth we don't have to have a robust -- we're in a robust environment, we think, globally. the economies can slow down both globally and the u.s., but we'll still see demand growth. that's great for investing in the energy sector. >> we got to go because we have a market sliding before our eyes rob, we appreciate your time take a look, nvin fact, at the markets. the dow down by 666 points. >> uh-oh >> exactly not a good number there. we have a news alert on berkshire hathaway >> the reason why is because

berkshire's insurance business head has been talked about as one of the heir apparents to lead berkshire hathaway after warren buffett earlier this week, he purchased 67 shares of berkshire class "a" stock at an average price of around $296,515. that works out to be just shy of $20 million in terms of a bet on berkshire stock at the then current prices right now they're down at their session lows around $288,000 and change an interesting move when a senior executive that could be possibly an heir to warren buffett has placed a $20 million bet on berkshire shares. those shares have fallen by about 13% just over the course of the past three months back over to you >> interesting insider buy, dom. thank you. coming up, beer giant anheuser-busch striking a

million-dollar deal with tilray. the ceo joins us to talk about this partnership and the signing of the farm bill, which we're expecting later this afternoon and the bond king and father of index funds warning about passive investing. we'll debate that straight ahead on "power lunch. we're just off session lows, down 610 on e w. alerts -- wouldn't you like one from the market when it might be time to buy or sell? with fidelity's real-time analytics, you'll get clear, actionable alerts about potential investment opportunities in real time.

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welcome back the dow down 630 points. we're seeing more than 2.5%

selloffs across all the sectors. you can see where the worst damage today is, actually in the consumer discretionary sector. a drop of 3.25%. energy also down more than 3% on a renewed drop in oil prices technology, which has been at the heart of a lot of the selling pressure lately, down about 3% the nasdaq today down 20% from its recent highs first time it's been in bear market territory since, i think, 2011 in fact, all but four sectors are now off 20% from their recent highs the four that aren't yet include some of today's outperformers. it's tilities, real estate, health care, and consumer staples. in fact, real estate, if you're looking for one bright spot this year so far, it's been real estate investment trusts but we'll have to check everything after today >> absolutely. kelly, thanks. now to a bright spot amid this market selloff. shares of the cannabis company tilray surging on a new partnership with anheuser-busch. they're teaming up to research

cannabis-infused nonalcoholic drinks for the canadian market here with us now, the president and ceo of tilray. great to see you again >> thanks for having me back >> where do you see the most promise in the beverage market what types of formulations what are the challenges to producing a thc or cbd infused beverage the layperson would think you just sort of put a few drops in and shake it up and there you go but there's much more science to that >> there's a bit more science to it we were excited to announce yesterday a partnership with ab inbev to perform r&d on thc and cbd beverages in canada. some of the complexities involve things such as water solubility. so cbd and thc are both essentially oils and don't equally disperse in watter that's one issue flavor masking

bioavailability, so how much of the key ingredients are absorbed into your body time to peak effect, duration of effect, time to onset. then you have flavors, recipes, packaging, brands, all those things that need to be developed in a market like canada in time for the sale of those products next october >> yeah, it's not too long away. you've got less than a year. could we see a commercial product come from this joint venture in time for that october 2019 date where edibles, consumables will be legal in canada >> that's certainly part of the goal decisions on commercialization will be made by the jv in the future we'll be moving very quickly towards that date. >> the other sort of cannabis-related news today is that president trump is expected to sign the farm bill later this afternoon, which would effectively legalize cbd oil in the united states. how does that impact your business, and can you see being in the u.s. market through cbd

products >> we do we're really excited to tap into what is estimated to be a $22 billion hemp derived cbd market in the u.s we announced a supply agreement on monday for both canadian hemp derived cbd and cbd grown in montana. so we're well positioned for the farm bill to become law so that we can start working on those products and selling those products in the u.s. >> and what sort of products do you think have the most promise here in the united states? there's the aspect of consumables, but there's also the health and beauty and pharmaceuticals as well. >> it's a wide range so like you said, everything from pharmaceutical to beverage, functional food and beverage, cosmetics, and other products that are more wellness, products that maybe help people sleep or help people relax. >> is it an even bet on the part of tilray in terms of the money you're spending on rmn&d >> it is we're really optimistic.

one of the things we're most excited about is i think we're seal ten new countries legalize medical cannabis i think we'll see three or four countries legalize adult use cannabis similar to the way canada has done that, which is really exciting for us it's why we've partnered with global partners such as novartis, as well as ab-inbev. it's a global opportunity. we're very excited one of the things we're most proud of is we still control our own destiny. unlike some of our competitors that sold, we still control our own destiny as we take advantage of this growth globally. >> that was pointed criticism. brendan, thank you very much we appreciate your time. good to see you. brendan kennedy, ceo of tilray and coming up, we have utilities, consumer staples, health care all getting crushed in the selloff today, like we were talking about a moment ago. these, some would say, are the safety stocks. are they still a good bet? t is the time to reach for safety more on this when we come back

welcome back i'm mike santoli it is time for trading nation. the safety trade acting anything but safe right now defensive sectors like health

care, staples, and utilities plummeting over the past week and offering no real shelter as the selloff intensifies. is there nowhere to hide we discuss that. bill, first of all, what's your read on this pattern here? does it just mean it's indiscriminate selling folks are just getting rid of everything and therefore not really discerning between safe and not safe >> there's been systemic selling across the board for about two months now you're seeing it from index to index. you're seeing a portion of the treasury yield invert. now you're seeing the dow take out february lows. you're seeing the nasdaq get near february lows ultimately, i did not predict this last leg in the market. that's okay. i've been pounding the table on being long treasuries. so if you're long the reads or utilities, they may outperform, but you're still going to lose money. i like going long on treasuries. there may be a golden cross down the road where you get the

50-day moving average, move out above the 200 day. it broke a long-term down trend from 2016. i think there's upside here to about 127. the same way the ten-year yield has broken down its down trend line the ten-year yield, i think that can get to 2.50 now. >> yeah, that's a more pure version of a safety trade. so stacy, with those yields going down, wouldn't utilities and staples also be relative beneficiaries? >> certainly with those yields going down mike, you asked a question about the indiscriminate selling i think that's a really important point. i think that's actually what we're seeing out there right now. it's not necessarily indiscriminate selling as much as it's a buyer strike i think we need to be aware of kind of where we are in the cycle, where we are in the year, and that we're really just seeing a lack of buyers rather than a seller-driven selloff that's incredibly important because you don't want to change whatever your thesis is just because of some of these gaps in the marketplace. if your thesis is longer term, one year, two years out, this could be a great time to look

for individual names so if you're moving to a more safe type of portfolio, look for the names that seem to be disconnects in the market right now rather than change that entire thesis. i think there are opportunities out there. as we talked before, there are potential gaps in the marketplace. we're seeing those gaps. i think the idea of picking names, being more of an active manager as we enter the next two years is going to be incredibly important. look to use this opportunity for a buying opportunity for the names that you've been waiting for. >> all right air pocket near year end maybe that's kpas batding wh -- exacerbating what we're seeing here thank you, guys. appreciate it. for more trading nation, head to our website or follow us on twitter. over to sue herr raera with a c news update. >> here's what's thappening at hour the homeland security secretary says my granteds seeking asylum at the southern board ler have to wait in mexico until their claims are processed this during an oversight hearing before the house judiciary

committee. >> the individuals arriving in or entering the united states from mexico illegally or without proper documentation may be returned to mexico for the duration of their immigration proceedings. they will not be able to disappear into the united states three astronauts, including one american returning to earth after more than six months aboard the international space station. they landed in kazakhstan a bit earlier this morning and residents in northern california got a surprise last night. take a look at that. a mysterious light flew through the sky. it quickly got people's attention. it lit up on social media. observatory officials believe it was likely a meteor or remnants of one very cool. that is the news update this hour, guys i will send it back to you >> jerome powell taking flight after seeing the market reaction >> he wishes sue, thank you we have a big selloff on wall street right now. the dow is down by 460 points. we're well off the session lows.

we had that bounce in just the past 20 minutes or so. we had been down by almost 700 at the lows of the session 29 of 30 dow components are lower right now. j&j the only one in positive territory, up by almost a percent. up next, the closing trades on oil.

welcome back let's get a check on the markets right now. the dow is down 470 points at the lows a while ago, we were down almost 700. about a 2% drop for the blue chips. the s&p is down 43 all ten s&p sectors are lower, led by consumer discretionary today, along with energy and tech the s&p tech sector actually in bear market today. that means down 20% from its latest highs in the dow, walgreens, walmart, united tech, and united health

are the laggards walgreens down 5.5%. the f.a.n.g. stocks also falling today, led by netflix, down by a little less than % facebook seeing the fewest losses >> one of the reasons for today's selloff, the odds of a government shutdown seeming much more likely. here's the very latest on this developing story >> gop lawmakers are now preparing to take the procedural steps they need in order to add that $5 billion in border wall funding as well as some money for disaster relief to the short-term government spending bill they are trying to balance these competing demands between the desire of the conservative base to build the wall with the hope, perhaps, of keeping the government open past friday. we saw steve scalise he's the republican in charge of counting all the republican votes. we saw him as he came back from his meeting at the white house he told us that the lawmakers want to give the president the tools he needs to keep america

safe now, the house is currently voting on some other issues that will continue for about another hour or so no time has yet been set for when republicans will get together and hammer out that path forward there's also no clear plan for what happens if the senate rejects a spending bill that includes border wall money so right now, guys, chaos on capitol hill and time is running out for compromise back over to you >> and what's the gap in terms of how many republican senators would have to vote how many are needed? >> how many republican senators we need to vote, you need 60 senators in the house in order to pass any spending bill. clearly they would need some democratic support to come along. >> okay. ylan, thank you. crude oil falling $2.29. that's a 4% decline. that's the lowest level since august 2017. well, the dow nearly 7 h points at the worst levels of the day

leslie picker joins us now with how hedge funds a faring >> it's not looking good for them the red on their screens really near the red everybody else is seeing we're really seeing the market drawdown trickle into the quant community specifically that's a strategy known as equity market neutral. that's really feeling the pain this strategy aims to minimize swings in performance and preserve capital by not necessarily outperforming the market but not losing money either it doesn't look like they have succeeded in that goal according to number. their prime services team is estimating losses for the equity market neutral strategy to be more than 6.2% in the year through november that's owed in large part to the past two months. a large part of these losses can be attributed to deleveraging that these hedge funds really had to do while these large swings were taking place during the month. it made it difficult for their algorithms to trade profitably now, the stock pickers are also struggling year to date.

they're down about 5%. one of them, bill ackman, saw his year to date gains, which will be almost 17% earlier this year, get almost entirely wiped out last week. his latest performance report showed that the fund was up less than 1% for the year albeit, they're still beating the s&p 500. >> got to be so frustrating. people like ackman, had such a good year going into october i wonder how that affects their decisions and the statements they have to give. we have a couple weeks left, but it's not looking good. >> when you're long, concentrated, and lempvered, it just difficult to perform in this market. he's still beating the s&p 500, which may be helpful, but in order to get over those high water marks of performance and get some decent fees, which he was hoping for this year, it's going to be a lot more difficult to do now that you're seeing such huge drawdowns. >> right this is really turning up the heat on hedge funds as a lot of

people want their money back, right. so they have to sell in order to meet redemptions >> that's true, 100%, as well as in the long-only community as well, where we're starting to see a lot of people get scared from their mutual funds and say, i'm seeing all of this red on the screen i'm going to take my money out then those mutual funds also have to sell you're seeing kind of a bifurcation of both sides having to do that it's creating more pain for everybody. >> on that point raeal quickly, are you hearing anything about blow-ups are there liquidations at the heart of these extreme moves >> not yet i keep asking about that >> oil hedge funds must have blow-ups >> there have been reports of hedge funds down 17% year to date especially the commodity focused ones, but none that are big enough to really bring down the rest of the market with it quite yet. we'll start to see more of that take place in the first quarter

when people start to really give their redemption notices first quarter will be the time to really look for that. >> all right leslie, thank you. >> let's get to a market flash >> kelly, take a look at where some of the biggest 2018 ipo names are trading. drop box falling today to a dollar below its march ipo price. joining other tech companies that went public this year that are also trading below water spotify did a direct listing with a reference point of $132 set by the nyse. it's now at $113 and change. sonos priced at $15 a share in august did see a rise at the beginning, but now down $5 from that price. domo in june, shares priced at $21. they opened at nearly $24. that's also below water. guys, their collective performance, some of these biggest names, may be an ominous signal for the class of 2019

mega listings we're expecting to see next year. >> all right thank you. let's get to dom chu for a market flash on biotechs >> getting hit hard. the spyder etf now down more than 4.5%. that fund is down more than 30% from its 52-week high that hit back in mid-may. this etf, the xbi, has now fallen nearly 20% since the start of 2018, which makes it on pace for its worst year since the fund's inception in 2006 worth noting biotechs in the broader health care space under pressure for the last week after the texas judge ruled that the affordable care act is unconstitutional the health care sector dipped briefly into a pullback earlier this week. >> interesting you brought up the xbi. it is the big cap biotechs that are doing much better than the smaller ones the ibb is doing better. >> and again, like you said, this is the equal weighted one

kind of a broader look >> all right dom, thanks. when the father of index funds says there's too much money in index funds, you should pay attention. he's not the only one sounding the alarm on passive investing are th rht 'ldetehat next closing bell. (sighs) i hate missing out missing out after hours. not anymore, td ameritrade lets you trade select securities 24 hours a day, five days a week. that's amazing. it's a pretty big deal. so i can trade all night long? ♪ ♪ all night long... is that lionel richie? let's reopen the market. mr. richie, would you ring the 24/5 bell? sure can, jim. ♪ trade 24/5, with td ameritrade. ♪

as the selloff continues, many are asking whether the rise of index funds has anything to do with the volatility we're seeing and whether we're in a passive investing bubble we want to first talk about these markets in this context. so jan, i'll kick it off with you. what do you make of this whip saw action, the fact we're at 15-month lows in the s&p 500 >> well, i mean, all of these are super painful, but i look at this as a multiyear drama that's playing out. so we had ten years up, central bank expansion in the u.s. everything was going one way now it's not unfortunately, we're still in

the early innings, i think, of central bank tightening, if you add in the ecb to the fed and the bank of japan. >> and it sounds like the ecb and bank of japan are going to be a long way off. could this be a long game in terms of the pain we feel from tightening around the world? >> it has to be really slow. i think the ecb wants to make it slow because their economy is not as strong as ours. they have qe to stop first then they have to raise rates. so we are years ahead. >> what are you telling clients right now in terms of how they should be viewing the markets? if you listen to what jan has to say about tightening yet to come, should we feel any better about years out when it comes to equity market returns? >> well, yes, i think we should feel better about 2019 i think what may be going on is a situation where next year you could see the majority of stocks outperform the indexes

keep in mind the indexes are market cap weighted. we've had a situation where many of these indexes have been driven up by these large-cap names. how it that we're seeing a lot of selling, it's the larger cap names getting hit a lot. stocks like amazon are down 30%. so i think next year we could see that some of the smaller names can outperform the indexes. i think that's when it makes sense to be a lot more selective with your stock picking. >> by the way, seeing quite a market comeback in just the past half hour, i would say basical basically pared our losses on the dow by more than half. down by 302 points right now 1.3% is the decline. on the s&p 500, 2481, down 25 points jan, when it comes to this debate about active versus passive, 80% of your business is passive etf investing. a lot of the etfs own the same stocks over and over and over again. what impact does that have on

the markets? >> well, i like to stress not all etfs are the same. as the other guest said, a lot are large-cap oriented most active managers have, i would say, a lower market cap tilt so it's not fair to compare active managers against a large-cap index in an environment where large caps are outperforming. so i agree that the story of the market is going to be a lot more mixed between small cap and mid caps so look at the etf exposure. that's what you have to look at. that's our story >> vahan, i took notice when jack vogel wrote for the journal and basically laid out his own concerns about how successful index investing has become and said he explored a number of alternatives, everything from regulation to different market structures couldn't really find one and said, you know, look, i don't think it's going to be outlawed. so has this whole trend gone too far? >> well, you know, kelly, keep in mind that about 20 years ago

if you wanted to be a passive index investor, you had to do it through a mutual fund. now we have these etfs, which are passively managed etfs that track an index that can be traded all day long. so you have a situation where you've taken a passive strategy and handed it to active investors, market timers i think that's what's really created the problem. these are things that should be -- >> i don't know. it's not all market timers if i just look in my own 401(k), what a lot of friends and family are doing, it's all in basically low-cost s&p 500 etfs. that's what has me worried frankly, it's not people who are in and out every day it's those of us counting on this for retirement. >> well, you know, if you're holding one of those instruments, even if you're not trading it, you're being affected by all the trading that's going on. so when you have days like this when all of a sudden there are these selloffs, all of these stocks are being sold, whether they're good stocks or bad stocks, because in a passive strategy, there's no -- you know, there's no selection taking place

people are just indiscriminately selling everything at once when they sell that etf >> they're also indiscriminately buying everything. the same argument should be made for the upside >> absolutely. >> if you're of that belief. >> i think that's why we saw the market go up so much >> sure. i want to go to jan here do you think the rise of etfs have contributed to what we've seen in the markets? whether it be the decline since october or the run up into that. >> look, i think there are two other issues that people don't talk about one is liquidity liquidity in the fixed income market after all the reforms, that affects it. also, algo trading there's a lot of machine trading going on in these markets, which can be following a whole bunch of things that are hard for us to totally understand. that's why you have these whip saw days where you're up a lot and suddenly end the day down and vice versa >> am i okay for retirement? yes or no? >> the great thing about an etf

is all the causes of the trading are externalized out of that vehicle. they're dealt with by the market >> i'm hunting you down. if this doesn't work out, i'm coming for you i'm going to say, you told me it would be okay. >> i have time to hide >> kelly is coming >> thank you coming up we'll have much more on this market selloff and a rebound. the dow down little more than 300 points, a little less now. don't mess coming up the chairman of the council economic adviser kevin hassett. power lunch is back in two you always pay your insurance on time.

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welcome back the president is minutes away from signing the farm bill into law. it is the first time they are there to talk about the pending government shutdown. down 344 we'll take you here live as soon as it happens. markets coming back by more than 300 points. we have been down more than 679 points

the dow is having the worst december since the great depression the s&p on pace for the biggest loss since 2009. steve, good to see you >> good so see you >> this is really something. are you anymore hopeful about the markets because of the price action we have seen today? >> you're going to get these bounce backs as you know when you have really violent moves to the downside i would say that the moves we have had even though it is probably significant, if it happened any other day not significant on a day like today. if you look at the chart and you go back you have to go back five years, right so 1,800 in the s&p and you have the retracement levels here is where we just broke down here is where we are going another 5% lower from here but you have pension fund

rebalance into year end. that's probably why you see a little bit of of a hiccup. i couldn't really buy into this just yet wait until tomorrow and wait until the smoke clears traders will be leaving the desks. maybe you get a lift next week going into year end. if you look at where we broke this level it is the february low. yesterday if you look at this you have hash tags these are replacement levels 1810 up to 2940 recent low recent high. five-year span this is where you want to buy the market 50% and the 618. those levels, 2375 down to 2242. i would not be a hero here although you can see this projections of 90 billion.

>> you're saying the earlyist opportunity for the s & p 500. >> it really is. you could see a nice little jump in the market. the problem is it could all fail in the first week or so of the year >> all right thanks much more when question come right back stay with us

welcome back to power lunch. earlier we had the steep market selloffs >> that's lot. it is made up of many things >> and people are desperate for it >> including february highs. at the same time people are saying another 5% down on the s&p. we will need to see a 40 on the vix and more in this market which we don't have going into the christmas holiday.

one bright spot is the notion they will remain lower for longer we'll see that today >> maybe no capitulation yet >> we'll be watching for it. closing bell starts right now. welcome to the closing bell. digesting the feds recalibrating the risk of a government shutdown. we are seeing a 2 plkt decli% d. it is down 400 points. this is an all too familiar feeling. the s&p down 1.5%. the nasdaq down 1.5%