knowledgement, that there are headwinds that will cost this company money. >> i have 20 seconds to talk about the return of volatility now you have all of the volatility you need. a 600 point swing today followed by multiple swings recently. it has been one of the big stories of 2018. >> thanks for watching power >> have a great weekend everybody. what we will be doing coming into next year is reassessing our views, listening to not only markets but everybody that we talk to. >> those words earlier from new york fed president boosting stock but the gains quickly faded. coming up on the closing bell, we'll discuss whether the fed's new tone can turn the direction of stocks in the final stretch of 2018. nike shares soaring today. we'll take a broader look at the

retail sector ahead of one of the most important shopping weekends of the year i'm scott. the clock is ticking on a government shutdown as the midnight deadline approaches a shutdown may not be a bad thing for the market we'll explain ahead. it has been a brutal year across the board one surprising play has outperformed all yearlong. we'll tell you whether that strategy could work in 2019. the closing bell starts right now. welcome to the closing bell. >> epic. >> he has nothing on me. >> better watch out. it is a little faster than yours. let's check in the nasdaq spending a good portion of the day 20% from the recent highs. it is now trading more than 2%

lower. the gains we saw earlier pretty much we vevaporating and headin sout >> volatility, what else is new? >> dow having a volatile day swinging more than 600 points. it was up nearly 400 points. t the count down is on we have more from john williams which rallied the market for a few minutes. we begin with you. >> scott, there is still no sign of a viable plan to keep the government open past midnight tonight. lawmakers have spent the last few hour oons proceed yurl vote on a bill they know will ultimately fail. it connects $5 billion in border wall funding the a government spending bill. that vote is currently at about 44 in favor. they are still waiting to on a

few last senator to cast their vote before they close the proceed yurl motion. all of this is -- government agencies have begun to notify employees to prepare for a federal government shutdown. about 25% of the government would be effected by this. 800,000 federal workers not just here in the d.c. area but across the country. we have gotten word from the smithsonian they would be stay open through january 1st along with the national zoo. we bright spot there we did see him as he walked off the senate floor a little while ago. he did not take any questions from reporters he did hold up a button he had gotten with senate cranky coalition on it. he said it is the unanimous position so perhaps sign there will be more scrooge than santa this

year turning to the fed steve is the key interview earlier with john williams we saw steve in realtime sent stocks sharply higher. how big of a shift in tone was this >> it is interesting for a few moments today it looked like john williams was going to play the role of santa claus. markets did rally strongly while he sat for the cnbc interview saying the fed is listening and not locked into a path of tighter monetary boxes >> we are listening very carefully to what's happening in markets for two reasons. financial conditions have important conditions we take that into account and think seriously about that we are hearing something important and that is a concern around ritzsks, a potential slowdown than we currently

expect in our base case. >> it is one of the most important members of the fed setting up a market committee. he said there is flexibility in the plans to reduce the balance sheet next year by 600 question and how big a tone shifts at his press conference said the balance sheet plan was pretty much on auto pilot. it suggests it may take more soothing words >> hey steve, question for you in light of what happened on wednesday you do you think the market is misreading the fed or is the fed not speaking clearly enough >> i think the market thinks the fed is going to go up two times next year it is misreading the fed. i don't blame the market i blame the fed for not being clear to the market. >> i don't know. maybe it is is just that the market isn't happy with the feds

kpik o economic outlook he addressed communications concerns he said they were flexible he said they were watching the markets. he said they are ready to reassess maybe it is that fundamental outlook they have that is looking so rosy. he continues to say the economy is strong is plain wrong the fed was calling and yesterday went to 2.3 which is a bit above potential. so the slowdowns in there, i guess what you're saying is a recession is not in there which is fed very rarely forecasts >> yeah. >> but you can have -- it doesn't have to be a recession it could be something in between or a more dramatic slowdown. >> it may get there. it may get there but it's hard to have the current inputs to

almost any model we are going to do it in the fourth quarter very few inputs to any model that would output something much below two and a half for next year >> thankyou. what are the market's message today? >> obviously the initial reaction was very positive obviously the selloff is they really don't believe the words that are coming out of his mouth. i think they want to see something more direct about it they want to feed off of something more substantial than saying we are going to be flexible >> what do you make of the big

rally and then completely losing it and diving deeper into the red. not convinced? >> not at all. this is now the new -- it is from williams too. we can't keep having the diverse opinions we can't have the president on one side it is clearly an indictment on what we are expecting out of the government if they do shut down. >> does the fed have a communication problem or does the market have an understanding problem? which one is it? today is a perfect day to ask that question given the williams pop. in my opinion if we zeroed in balance sheet talk nothing the static everything is potentially up for change it didn't hold why do they not bounce some

times? maybe it wasn't the main driver of the volatility. it would be my read. i think there are issues having this gap between what the fed thinks and says and judges or versus the direct movement on the marketplace they are never on the same frequency. i think there's a variety of reasons why. with machines and modelling positions get very large volatility is low. you have all of these credit spreads that are most likely margin avoid answer. you get this leverage. i think the fed is in a no one and i don't think they have made a mistake yet. being able to control the market

is beyond any fed even if they were god-like in their approach. i think mr. williams words were comforting to the marketplace. my guess is over time the balance sheet is going on an entirely new topic >> what if you want to focus in on earnings? where are the market expectations where do you see the biggest dislocations there >> we had a blowout earnings season we were expecting 19% and we came in at 26% earnings are certainly slower. we are looking for record earnings there is a little bit of a disconnect you have the fed coming out and

saying the fed is between a rock and hard place they need to be in that they were independence. if they said they weren't going to make a move it is not strong enough to actually raise rates things are getting very under valued at this moment. it is really something that most of us should be looking at at this point good points made by jeff what turns the market? >> it is hard to catch a falling knife. you will never pick the bottom in this case the consumer is strong university of michigan study showed that. that was for november. are we going to get that in the first quarter? are we getting that in the holiday season we'll get a good look right off

the bat if this can actually see some value worth buying. >> can you quickly -- i would like to mention session lows here anythingnal going on here? it is traditionally a very strong period. do other things enter tax rebalancing and that sort of thing? >> this is the first year you could see losses come off the table. today's losses, this is a big one. this is an expiration today. the problem is bigger than normal >> thanks to all of you. good weekend and happy holidays. >> you too still ahead, we'll have much more on today's roller coaster

market action including a discussion on the best place to put your money >> this is typical now a 700 point swing. it is now down 300 we'll dive into the big post earns pop. a big exception, what the company said that has investors cheering next. we're drowning in information.

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the dow was up 300 it is now down 280 nasdaq has been the down said ul day long they are picking up. russell has been in the bare market people are looking for reasons there is commentary regarding china and trade. saying china is trying to steal our future if you're looking for any solutions to trade war any time soon >> don't mention him >> it is a reminder it may take a while. it could be the reason for part

of the pick up in selling. who knows on what has been a volatile day there has ban 700 point or so swing. >> we were up 400 points after that interview >> it doesn't take much. whether it is fed commentary, shutdown commentary. >> or nothing at all what are the key take aways? >> it shows despite a tough economic envie ropment nike is firing on all cylinders. north america continues to recover. growing at9% revenue growth.

for all of the warnings europe is growing double digits digital, another highlight jumping 40%. the company raised the outlook for the year even offer add positive peak at the next fiscal year another reason the stock may be surging is because the set up. if you look it was a winner for the year this recent selloff shed more than 20% off of the value off of nike a lot of that was anxiety around the trade war. china is a key market. here is what it is and said about that >> there has been a way regarding u.s. china relations we have not seen any impact on our business nike continues to win with the consumer in china. for over three decades nike has

been a brand of china for china. >> so part of the reason why you can look to a stronger consumer but for nike it is a story about inknow vagt innovation they are giving consumers what they want for the apparel to they are able to grow sales growth where the strong dollar chips away at some of that growth >> and where you seen competitors have issues they are showing growth in all regions. >> right i think weakness told you a story there, that they are taking share in europe as well let's talk more about what to do with the stock we have david. your call today stood out. you said it was a flawless report and there's more room to run. have you changed the opinion >> it is really twofold. number one in the quarter they

hit the trifecta it is 31% in china it is on 80 basis points double digit gross profit dollars. we see it as a growth story from here they are actually doing double digit operating growth right now. two things looking forward are more interesting this company is only 8% digital in terms of their own e-commerce it is something they believe can double in the next five years. women only represent less than a fourth of the company. the womens market is more than 1.5 times the address of a market for men so solid report but more so looking forward there's a lot of room to run here >> you know, worth noting as well is the top rated analysts into space you were on the sidelines for a while. this was a report good enough to pull you from neutral to

overweight and to bump the price target up. >> that's right. we had it for over four years. we moved away when the underlying profile moved from double digit earnings. it has been a lot more volatile. you flattish to negative earnings the part of it was that competition. part of it was the adidas had taken a little bit of chair. that's what i think is the most impressive inventories are only up 1% it is far below sales growth you have seen a real inflection. that's why we are getting back on board >> with the 7.5% move today if you're an investor wondering if i still make money it is trading at 27 times the earnings it is sort of elevated for nike. is that deserved and how much higher can it go >> i mean we are bullish still we have a $92 price target on

it we don't have many that have the global reach that nike has and it can allow it to get full priced sales to grow in multiple channels, to get the womens business and think about the active category cht we haven't had both winning far long time and taking share from some of the other players there is still room to run with nike. >> what about the issue of trade and the fight with china i asked you the question in light of the fact that the stock markets at the lows of the day now, peter is on the tape saying getting a deal with china is difficult. how much of an issue is this >> it is an issue. we put out our sector piece. it is about a lack of charity. tariffs is part of that whether it increases the rate, increases the categories and doesn't leave brands and companies to take

inventories early. i think it's one of the headwinds. there is more uncertainty than we had entering 2018 >> so matt, who is the next nike in your coverage universe that has been beaten up and can show real strength? >> i think there's two buckets of opportunity as you think about the consumer sector. the first is i think defensive and so defensive in value. for us it's the off price retailers. they benefit from disruption burlington and i think the second thing is for fleet equality it is part of our premium multiple i think you can apply sides and scale will be the key with the geo political concerns, with tariffs in the next year. we like knee key for grownike fe

next 12 months >> appreciate the time from you both we do have breaking news i will let you go. >> thank you >> thanks for asking me. >> let's go get more on those comments from peter. >> yeah. you're talking about the comments in an interview yesterday at the white house they are now being released. navarro the top trade adviser and the biggest china hawk is criticizing saying it would be difficult for the united states and china to arrive in an agreement for the 90 day period of talks unless beijing is prepared for a full overall of industrial practices china is trying to steal the future of japan, the u.s. and europe by going after our technology he also weighs in here on the fed. this would seem to be the first official white house reaction we have on the fed. he says ultimately we don't understand why the fed is acting so contraction nar at a time there's no inflation to worry

about regarding the forecast for two more rate hikes next year. he says he thinks that's too many we have not heard from the president himself there's a lot going on here. given all of his commentary a lot of people expected we would see at loes a trump tweet on that clearly channelling the president's views that it is too many it suggests this ain't going to be easy. not convincing to completely overhaul the way they have done their trade for decades. >> and i think we were talking about some of those that came from the department of justice

officials here say privately and buying more products from the united states is not going to be enough in the view of the hard liners here to get to a trade deal these issues are fundamental and structural in their view the chinese trying to steal their way on the global stage. they feel it is the key behavio they want to address those things >> the chinese want to make a deal we heard that. 34 minutes to go here before the closing bell we have got a selloff on our hands that rallied, disappeared

and turned south the dow is down 378 points right around session lows. nasdaq is nearing a 3% loss right now. coming up much more on the big late day selloff we'll have much more on what's leading the declines (clock ticking) (bell ringing) it's time. time for a new kind of cloud. the ibm cloud. the cloud that proactively protects your business from threats, instead of just reacting to them. that lets you modernize and move more of your apps without re-writing. that unlocks insights from all your data and puts it to work with ai. get a faster, more secure journey to the cloud. the ibm cloud. the cloud for smarter business. ♪ ♪ hey! yeah!?

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index is solidly in the red. we look to close out with half

an hour into the close the nasdaq is down the dow is down 391 points goldman sachs and boeing represent 100 of those points. s&p down 2%. lead lower by kplun case services and technology. time now for a cnbc news update. ford motor company recalling more than 874,000 pickup trucks in north america about half of which are in the u.s ford saying some 2015 to 2019 which could lead to a fire the fiance is under arrest and charged with first-degree murder she was last seen on thanksgiving and reported missing by her mother. although the police have not found her body they believe sh was murdered by hi fiance. incredible footage of a car crash. the driver apparently fell

asleep at the wheel, drove up that wall, went airborne and crashed into the tunnel. believe it or not he survived with only minor injuries surprised he survived at all when toys 'r' us closed its doors it seems toys for tots felt the loss. they used to have boxes near their exits where customers could donate they donated more than 250,000 toys last year toys for tots still hopes to meet numbers this holiday even without toys 'r' us. you still have time to donate a toy. that's the news update this hour i'll see you next hour >> we can't get over that car crash still. >> it is unbelievable. >> folks on the floor are watching >> yaechlt they don't know whether he was intoxicated or fell asleep at the while of the

car. it is pretty amazing footage >> holy cow. >> i know. >> see you in an hour. >> all right the dow is taking another leg lower in just the past few moments. it is down 375 bob is here on the floor bob, we'll start with you. >> we'll, just look what's going on here. thanks difficult to do a deal in 90 days that's the time line i was given. 2435 we were at about 20 minutes ago. now you see 2419 this will be one of the biggest volume day of the year s&p industrials were the ones that moved the most there. you have boeing in that and you have the trade related names the whole sector has been down dow movers, we have good earnings it has been a good defensive tone pfizer a little bit better

goldmanmade attempts to rally twice. it is down a good 7% now for the week just remember this rebalancing that's going on at the close today. a lot of big names including apple, walgreens will be rebalanced in the s & p 500. most of the time they are reducing through bye backs you'll start seeing it you'll have big volume back to you. >> all right thank you. let's send it uptown where losses are piling up here with a 3% decline here. >> yes intensified sharing. further heightening market as they fret over the fed plus comments being lead lower by the fang related stocks amazon's market cap dropped below $700 billion for the first time in eight months another pocket of weakness has

been biotech underscoring what we have seen these levels the nasdaq is down over 7%. it is the worst week since november of 2008 again, it is due to a number of factors. >> we are looking at our worst week since the financial crisis for the dow and the nasdaq thank you. president trump addressing the chances of a shutdown earlier today at the white house warning there's a very good chance >> we are going to be working very hard to get something passed in the senate there is a very good chance it won't go passed. now it's up to the democrats as to whether or not we have a shotdosho shotdosho shutdown tonight >> joining us now is jeanette low. you're a policy analyst and you

speak to investors what are you telling them about what a partial shutdown looks like >> so in general historically when we look at the government shutdowns they don't have a very large impact on the u.s. economy or on financial markets. it is usually a full government shutdown this time we have 75% of the government that is funded. 25% will be impacted by the shutdown it has a smaller impact. i think in the news today you can see the secondary effects that will have a bigger impact that is what we think investors are concerned about. >> yeah. >> go ahead. >> i was going to say you have all sorlts of stuff. we haven't discussed the fallout from the defense secretary he will leave in february but that can only add to perhaps some of the market jitters that have already existed >> exactly you're going to have bad headlines going into the holiday

season and the stock market being down in general. you saw this budget fight. it showed that trump is showing unpredict ability. he had a budget deal they moved back on conservative pressure that kind of like fortells into the future how is that going to play into other debates and other negotiations on top of that you saw effects, right? you had the syria announcements to pull out the troops there it would be bigger news overall than a government shutdown at this point >> when the market was going straight up after the election ahead of the tax cuts and on the deregulation and on the trump agenda we called it the trump trade. how much of this sharp slide, 30 -- 20% has to do with the president? >> i think there's obviously

other factors coming into play the fed has a very big role. investors are kind of extrapolating a little bit to what is going to happen next year it won't be as easy for the trump administration to get policies through you're going see obstruction maybe on deregulation and things like that. you things like how are things like trade going to play out so there's those kindsov of figs and how those actually play out coming up in the next year it is putting impact on the market it is not on i have yobviously t about trump. >> after the scene in the oval with the vice president and democratic leadership now this going into the end of the year we want to talk about the hoping for anything to get done what are you hopes >> it is interesting some times they are a good thing. they kind of flush some of this out of the system. i don't know if it will be true. we'll see if itcomes to a

conclusion first there are still opportunities for things to actually get down. it doesn't mean you won't see some, you know, fighting back and forth on both sides. there is an option to do a couple of things on infrastructure they do have a get a budget deal both parties will have to come together and fill that gap and they probably will we have never had she quest ration come into effect. they will have to come to an agreement on that. there are little things you could see like infrastructure that could come out of this. it doesn't mean always when we fight we can't get anything done even though there might be a lot of political noise that comes with it. >> the market doesn't like any of it today. thank you. >> thank you so much >> talk to you soon. >> all right we do have 20 minutes to go. we just said the dow is at the low of the day it is better than 420 points

nasdaq has been down big all day. >> we were down 5% on the s&p heading into today for the week. this is just making it feel a lot worse. up next shares of goldman sachs falling again more after the break.

>> welcome back. robert frank has the latest. >> new comments from goldman sachs ceo. he said in excellents that were basically a year end message, i'm out raged nip from our firm participated in blatant misconduct it is including the use of proceeds we did not anticipate a group would osuch a brazen theme.

he said some have said it should have been a warning sign it reflected the risks i was speaking about the 600 million goldman earned from that deal. many saying it was such a large amount it should have been a red flag it all comes on the same day the malaysian government demanded $7.5 billion the malaysian government hoping to make up what is a huge scandal, a costly scandal. seeking to reassure his employees but clearly today from the share price not reassuring investors. back to you. >> i haven't heard from him either good to get it on the record there. >> yes >> wort performer right now. >> the dow is down nearly 400. we told you earlier it could be

the worst week since the fall of '08. the nasdaq is in that range as well it is getting absolutely hammered today >> another bumpy ride here into the close. also defense secretary announcing he is stepping down from his post. up next, what it could mean for u.s. born policy

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welcome back to the closing bell stocks are sinking again into the close today with 13 minutes to go. here are the biggest losers. goldman sachs, american express and apple no shortage of losers with the dow down more than 350 points all sectors are lower right now. >> energy is down 9% this week, the worst performing sector. joining us now is from rbc

capital markets. we always talk to you about oil and energy what do you make of the whole stew of what the markets are having to deal with? mattis leaving on top of everything >> i think it is really weighing heavily on this market. >> here is the thing yes. you have the saudis surging into the decision they are pulling back barrels. they report this week it will be a bigger cut than they announced. i think opec, but this has to do with demand. >> we have breaking news to tell

you about. >> yeah. i just ran into the council of economic advisers. earlier, a few minutes ago i brought you that reporting that he had given excellencomments w thought the white house was being too contractionary also that the white house thought two rate hikes next year is two too many. i just asked him for his reaction to the peter navarro comments i asked him if he agreed with concerns that the fed is being too contraction nar. he said i would not concur with peter. think the appropriate position is to respect the independence of the fed and not to comment on their policies finally, i asked him if the white house has an official comment on the fed rate hike this week. he said i just stated it

clearly some difference of opinion here between the cea and top trade adviser that we saw this weekend >> yeah. >> what else is new? >> yeah. >> earlier you had kudlow sort of calling him out from comments he made. you the kplik advisers in navarro. who is speaking for what >> you bring up potential government shutdown. it is is sort of the sum of all fears. >> this isn't new. >> this isn't new. navarro disagreeing with other members of the economic team >> no but it underscores whether you want to call it end fighting mattis walking out the door in protests >> yes >> look at his resignation letter it is sighing i fundamentally disagree with this president

mcconnell saying we need these post world war ii alliances. there is tremendous uncertainty about whether the u.s. is headed >> what about the policy decisi decision by the president to leave syria? what are the implications with what could be another vacuum there for yoois, turkey, iran, russia >> i think it's the story no one is talking about this will upset the israelis they will be upset with the u.s. leaving. iran's position will be strengthened we always said it is an important flash point to watch i think potentially syria becomes a bigger story in terms of the region in 2019. >> so much instability and uncertainty. >> it was -- >> i mean that's the question. >> it is seen as like the adult

on foreign policies. i think there's concern about where are we headed. >> thank you good to get your incite. we have about eight minutes to go before the closing bell the dow is down more than 400 points it is down 424 at this hour. yes. we have a little bit of increased volumes. it's definitely increased volumes and increased sellings >> we'll have much more on what's driving the selloff if there's any end in sight coming up there's a live look on capitol hill the senate continues to vote on whether to end debate on a spending bill. that is omg nit. l of the developments, we'll l of the d[leaf blower]we'll

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don't get mad. get e*trade, dawg. >> ti time now for a closing count down the dow and nasdaq are having the worst weeks since november of 2008. fed, trade, government shutdown. everything for investors trying to figure this out >> the market is completely fixated on the negative news this morning steve says don't be

so worried about it. we are not necessarily kplit today the rate hike. it would have been tremendous news market goes up 20 points they sold right into it. navarro says it will be difficult to do a deal the market drops dramatically. the market doesn't respond to good news but it responds dramatically to bad news that's a fixization. >> cross-claims says until the market you need more bad data because it will put the fed on the sidelines. we are not going to need them to tell us no more hikes. it will help be the catalyst >> or the opposite it will continue to reasonably strong we some how need to get it off of the negative headlines. on trade i saw positive.

the chinese says we'll reenter in january it should have been a nominal positive big close here it may be the biggest volume day of the year. >> options >> yes >> good weekend. we'll pick it up right now second hour of the closing bell. scott will be rejoining me we are here and let's take a look at how we finished up the day and the week on wall street. very ugly. it is down 1.85% on the dow. it closed arnds of the day. s&p down 2%. the nasdaq losing 3% and the russell 200 down 2.5% making it

the worst week for the dow and the nasdaq since the financial crisis s&p down 7% for the week and the dow is down 7% for the week as well markets earlier getting a boost on the day on remarks from new york fed president john williams think turn sharply lower williams saying that the fed is listening to the market. here is the volatile and would recore plans for the balance sheet. it seems to be what investors wanted to hear it just didn't last. we'll talk about what the central bank has in store and what it means for your money let's get straight to the market

action though. >> it is what it wished it heard from williams. it is not reacting to peter. the market is in the sway of this slow motion and relentless liquidation. it is feeding on itself. >> but why why are huge funds -- >> i think it's a combination of yes we are pricing in and props a slower environment we are pricing in a little bit of uncertainty i also think there's a sense that a lot of big money is caught ton wrong side. it is a derisking. i think a lot of that is what we are seeing in practice every day. the other piece of it is a sense that had everything going forus and so much good that went into the bank for 2018 which is the earnings growth which was the

tax cut and buybacks and we got nothing from it in terms of the market what are we going to bet on for next year? again, at some point the market gets sold out. all you can talk about is how conditions are building to show so much of a market stretch to the downside but further extreme extremes are some times needed before you get relief. >> yes thank you. let's get up to the nasdaq we have the big movers there >> the major indexes the nasdaq closing down roughly 3%. let us lower today were the high growth tech names like facebook, netflix and apple seeing a loss. it was the things that lead us lower. bio tech is a source of weakness not throughout the day but it was down for the week. overall for the nasdaq is down 7% just this week as we were discussing before. they say it is a number of factors that are really in play

here concerns around the fed and further tightening in 2019 also digesting the latest from peter navarro in regard to the u.s. china trade negotiations. it involves how that specific dispute complicates the broader negotiations, that 90 day truce coming to a deadline that of course is a bigger concern as well. for the week some of the biggest losers, walgreens and even tesla seeg a loath loss of 12% the loss wasreally wide ranging. >> thank you let's get to bob who is on the floor of the new york stock exchange to recap the damage that's been done here. >> i want to show you the s&p for the day here what concerns me is the market is fixated on bad news and ignoring good news further rate hikes are not a

commitment or a promise. it is market positive. we moved up 20 points. they sold right into it within 20 minutes or so that is not a good sign. late in the day peter comes out and says it will be difficult because there's big differences of opinion out there the market drops dramatically. the market does not hold on good news and it sells off on any mildly negative news that's the fixation we are having remember, the fed and trade are the two big stories that move the market only negative interpretations are working. we have goldman trying again didn't do it again down 7% walgreens sold off yesterday on earnings very defensive people are starting to argue and go defensive again, maybe.

nike good numbers. they generally held up better. take a look for the month. s&ps we are down we are down about 7% for the week and still no clear convincing sign of any bottom. back to you. >> thank you joining us to talk about what to do next and what to make of all of this, dense dnis, we e had you on and you have been very positive. >> yes and look what's happened. >> it all fell apart >> how are you feeling >> if the underlying conditions are pretty darn good if someone told you we might have gdp growth you would say i take that. the tax cuts were definitely a positive i can't help but look at that five year chart for the s&p. what does it show you?

it has been an incredible incredible run there are people on the street today who know nothing but a market that's redone i get the psychological perspective. >> it has been triegt up for 2019 yes. this feels like a '98 type of liquidation. i don't think that it was people were up to this point. >> we have more about whether it is some sort of return to normalization or that something much more worrysystem is go now facebook has an evaluation of

around $330 billion. does that make more sense? maybe so >> you made the point earlier while the economy is seemingly so good. we both know the market is not trading on what it is in the here andnow. >> just both sides need it too much we are there this great phase. how can there not be given the necessities from both sides? i expect it to be a positive for the market >> we want to also bring in. the action is so ugly.

what are you telling clients and investors to do? >> the might actually is, but you have to put this into perspective. in the earlier session since world war ii the market. we have had over a 15% correction since the peak in october. just from a simple kal kol cuelation. it looks rather unlikely it looks like the market is factoring in something with 10% decline in earnings. we think it will go up by 4% if not more this is basically price action in response to were bad news that is what i think we are

seeing it is very serious and can morph but i don't think we are there yet. >> do you think that you could have a big market decline plus trade uncertainty that does send you into a recession or something that feels like it >> it's not impossible so it is true that equities are a very forward looking instrument we have had a large increase in margins from about 8% to 12% margins have grown much of this is in account of increased trade of open markets across the world if you tell me we can reverse this in the course of 12 months, yes, that's what it is made of the question is how likely is that what is the cost to both parties to this and other parties who will allow this?

yes. bad things do happen from time to time. this would be rather extreme >> yeah. the other thing we have to deal with thank you. the government shutdown, possibilities of stocks. stocks are -- >> it is government sell off >> the government shutdown it could happen hours from now midnight deadline is looming >> vice president mike pence has just paid a visit to capitol hill we believe he arrived half an hour ago he did come here with white house chief of staff and kushner. they were here to meet with chuck schumer. what we have been hearing is in order to break the stalemate it will need to be a direct negotiation betwe

negotiation to get something done could it be the start of the talks? we'll have to wait and see the senate rae main to move forward on that government wall. the senate has been leaving this vote open for several hours in hopes that lawmakers can get back and have a chance to cast their vote there has been a lot of blame game happening the question here on capitol hill shifts from will there be a government shutdown to who will get the blame for a gochvernment shutdown we'll let you know on how it went and what happens with this vote on the senate floor right now. back over to you >> quick question. if we get a government shutdown then what? we are going into christmas. >> we don't know what the plan b is in order to reopen the

government or perhaps even top a government shutdown. there is concern it could last to january 3rd when we have a new congress democrats take control of the house. pr perhaps you can see a new round. right now no plan b. >> okay. you can't be feeling good about this >> yes and i think it is a real risk for this market. there are even threats that we are hearing. that to me is a factor that's not been explored. it is hanging out there in the distance >> hearing after hearing after hearing after hearing. >> yes >> at least the beginning part of next year you have to believe it is going too. >> yes >> and when you come down it's not bullish, whatever it is it's not positive it's a distraction and also the path there is if what we are seeing with the shutdown is a president that feels cornered

and will reach for every single campaign promise which would include being super tough on china. >> see i think the opposite i think it gets it >> yes >> i see that in 2019. >> the point is i think if we had a lot of other good stuff no big deal in the context of other things that are basically weighing on -- >> i do think and wonder how much of a selloff, how much more of a selloff is the president willing to stomach >> accept, stomach, deal with. >> that's the problem when you someone. >> in many ways the berometer, he wants that to be a representation of what is happening. >> you don't really know does it force his hand because he can't take the fact that the market is actually getting really into problem areas. >> i mean all rel rant questions

amazon was down. somebody needed to puke out big stocks >> there is a notion that somebody is going to rescue it >> is it an interview? >> it works. >> and maybe that's the wrong way to think about it. >> i think there's an end to the dynamic. i will say one thing we deal with activism all day long to me there are a lot more opportunities for activists today in the market that we see given that everybody has been sold off across the board.

i expect even though 2018 was a big year for activists in part because of the latter half of this year. >> have you factor in at all i have been hearing some of the selling may be due to raising cash to have to deal with higher tax bills for this year filed for, you know, in 2019 for the salt deduction that was taken away >> i haven't heard it at all can it drive it down >> not drive it down this much if people with looking for an excuse to sell -- >> sure. >> they want selling >> but if they need to do it to

raise some cash. >> got it. there has been a lotd of liquidity in the market. compared to october of last year it is the amount it would move it was twice as bad. compare october to, you know, what's happening in the last two weeks of december. it has to be much worse. so it doesn't take a lot of selling to cause a large price movement. >> i also want to point out that this is an equity move >> yes >> there are big moves going on but there's not a massive rush into safety. the dollar weakened. today it gained almost a percent. >> look, the action feels like some group is cornered some group is trapped. it is the deleveraging type of selling. not to say it's not fundamentally based in terms of why it is motivated by

something. >> it the below 280. >> aside from the big leadership stocks goldman sachs can't have a day it doesn't go down that's not great other banks were not selling off in a way that said wow, this is some type of disturbance we have to worry about >> what are the big hedge funds and we talk about activism and what are they going to look like >> you know what they look like in 2018. >> i just wonder what's happening sort of bethiend scenes if you will as all of this selloff is taking place >> if you can survive you now have a credible case there is a lot more opportunity than there was before when the market was at 18 or 19 times. the market at 14 or 15 times gives us more flexibility. that is if you can survive 2018 was a hedge fund where you

could see people just giving up. >> i wonder about people being on the wrong side of trades, wrong side of the market >> it is confusing >> and that is in the context of a market that will be closed you wouldn't want to step in it wouldn't have been the day that you say yeah. i will buy into this today maybe it is little bit mechanical >> where would you tell people has the best value right now when things turn around if they do here? >> just keep your eyes on three basic things that is to keep your portfolio diversified. rebalance to value and third, i know this is very tough, stay invested if it's possible but to stay invested and look at what's being priced >> thank you for joining us. >> thank you

>> thanks. happy new year >> good to get optimism here up next we'll discuss whether they should up the economy. we'll continue being the main focus. and cash was one of wall street's best fer forming asset classes this year. find out if it could be king again in 2019. we'll do that later on the closing bell ♪ there's no place like home ♪

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is the fed reassessing the 2019 policy plans. we are sitting down with steve earlier today. >> if there's a material in the economic outlook obviously we consider our path for the short term interest rate and would adjust policy to best achieve other goals. >> he is cofounder it is good to have you both with

us what do you make of what happened today with williams did he need to clean something up from what was said on wednesday? >> the main reason the market was ds appointed on wednesday is they were hoping for two things. they were hoping far lot of emphasis of data dependency and some were hoping for a one and done announcement saying we have stopped raising rates. he kind of went back and under lined we have our eyes wide open and adjust as needed the forecast has to come true. the fact that the markets still melted down tells me that it really isn't an issue of how the fed communicated what it is doing. there is something else going on

here i have a base case and sort of like a more scared case. that's my basic call on that >> all right good tease there is the fed missing signs of slowdown in the economy? >> yeah. absolutely is that what this is about >> you know, their eyes are wide open but they are kind of starring at the stars we called that back in the summer if you look that's no longer a forecast that's a fact. pce inflation, is at a ten month low having peaked in july. it is below the fed target at

1.8% i think he struggled with those questions about what's going on with inflation and had to kind of bob and weave around that the market is saying very clearly one thing that is pretty clear at least from our work on cycles, cycle risk is not that it is kind of knowable it is what we do the cycle is down. i think that part of the story is crystal clear actually. >> you gave us the big tease earlier. what's the play here >> i think the case is this is a bull market. it benefitted from this astonishing wave of monetary ease they have had zero rates

they had four guidancing all of those things have been taken away they realized no more hand holding from the fed it means normal times. it means normal volatility stocks have got to adjust to the risk to your world out there the part that i'm a little bit worried about though is that it follows. what if it's the case that the 3% growth that we had in the last three months was ahead fake we had a sugar rush and it turns out this really is kind of a secular kind of economy that can't really grow more than 1.5 to 2%. it can't tolerate much more than zero it seems ridiculous that it could pull this economy down that is kind of what we have seen in japan where these other sort of dampening forces take hold that's the case. the fed has to readjust what

they think a neutral rate is and confront that it was taking all of the monetary it can stand >> we'll come back to you in a moment we have to get to a news alert on the government shutdown >> we are getting details out of that meeting between chuck schumer. he told them any proposal with funding for the wall will not pass the senate, however he did point out that the senate democrats would be willing to consider a previous proposal it included $1.5 billion it does not include money for a wall but that could be a potential point of negotiation and perhaps a way out of the stale meat goi stalemate going forward. he did say it will not pass the senate that's a message he gave to the white house. back to you. >> thank you

you want today say that? >> yes i am on board for longer term structural things. i'm seeing the beginnings of a positive story we have our inflations the fed will get there whether they like it to not. they will become more dovish that's one piece the next piece is for the leading indicators for the cycle of growth to bottom out. we haven't seen that yet if you get that combo the risk of corrections, the risk of bare markets falls. without that we are still in this volatile time >> they are close to bottoming out. >> they don't know where it is going. it is a no no. >> the leading indicators. >> no no no. that's what we are doing we are watching that it's continuing to the downside. it is continuing to show slowing. the good news is with the inflation cycle downturn, they

are wrestling with it it will become harder and harder >> if they don't it says the fed doesn't know what they are looking at i don't understand why wouldn't we get a one and wait? what is so wrong with him the other day saying we did our hike and now we are going to wait we'll take a look. we will be data dependent. >> we kind of did. >> 3-2 >> imagine that you didn't spend your day starring at the market the way that i do. the fed is saying what has changed in the last three months out there. they are saying we don't think anything haschanged. if we run it this hot we will

get inflation. it was hard for them to come up with a story about why they would go from their posture to one and done it would smell of inconsistency and having knuckled under the president's threats. i think they went as far as they could. i think what don williams did today was try to emphasize the parts that were overlooked which is to say we are not anything. we are always data dependent we are more than usual i think he is trying to open the door to optionalty to deliver us to one and done if the data starts to rollover >> so finally we'll ask you, how far are they going to fight the feds >> i think they fought it pretty far at this point given the direction of the fed language. by the way, powell always tried

to explain to you where this consensus of two heists comes from it is an individual forecast >> he also said -- >> yeah. it's not about that. >> it could have been more it could have been more williamsish. >> you know what, if the difference between this market melting down for three days and not melting down for three days then i think the market had bigger problems. >> no. i think it is so sensitive it may have been. >> it is down 18% now. thank you so much. >> thank you let's take a look at how we finished the day on wall street ending another difficult week. the dow closing down by more than 400 points. the s and p down by 50 nasdaq was the big underperformer today the dow and nasdaq having their worst week since the financial crisis in fall of 2008 >> down 7% each or something

like that. time far cnbc news update. >> here is what's happening at this hour. a big jump in deaths related to fentanyl it shows overdose deaths increased more than 45% from 2016 to 2017 heroin related deaths remained unchanged. pope francis pleading for any sexual abusers to come forward and surrender to authorities. these comments are some of the most severe to date regarding the decades long scandal the supreme court refusing to let the government on asylum for those across the court illegally. john roberts voted with the courts for liberal judges. severe weather in southwest florida flooded a local animal shelter. they scrambled to move all of

the cats and dogs away from the rising waters. they are asking residents to temporarily house the animals until the flooding subsides. lots of bad weather all over the country. you up to date that's the news update have a great weekend back to you. >> you too thank you. nasdaq ending the week in bare market territory. down 20% from the highs but charts could be pointing to a bottom >> so here is yesterday's new lows on the nasdaq it was over 1,100. you can see that right there how far back do you to go before you have a similar number of new lows all the way here. this is 2009 it is basically after a bare market has been rolling for a while. nasdaq was much higher

we were in a strong position it is telling you that the damage has been pretty widespread it is showing thebeginnings. >> people are scared enough. it is the final chart. this is more of a longer chart this is the s&p. we are at 14 today we have do go back here to about 2013

obviously cheaper. it could be more of a discount >> of all of those i think it is the most significant because it is at a record high. >> you're saying the sentiment has shifted. >> especially with short-term traders. it was really a mass move to try to protect yesterday and today as well. >> thank you stocks selling off again the best place to be after out performing the market. that is coming up. >> and later we'll look at whether the wealth effect from falling stocks and home prices could actually end up arngspki a recession.

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the u.s. is charging a 35-year-old chinese national who is also a legal u.s. permanent resident she charged with stealing secrets he allegedly stole to a product worth $1 billion to a company employer he had been offered employment there. he used them to the benefit of a

chinese company where he had also been offered employment it is a $1 billi this it is a 35-year-old chinese national and a legal u.s. permanent resident he was arrested and charged with theft of trade secrets back to you. >> okay. thank you for that up next, stocks getting slammed this week. cash has been a safe haven we'll discuss whether it will continue in 2019 we'll do that straight ahead

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should investors be working to cast in 2019 as well? joining us is kevin and mark scott, we don't usually ask is it the asset place to be in the new year it turns out it works better than stocks and bonds and kplodtiekplo -- commodities what is your

outlook? >> you'll see it be an opportunity to buy stocks. think here in the u.s. with things falling the way they have we are now trading it a about a 14 times multiple before earnings i think it's an opportunity. obviously we think 2,400 is support level on the s&p and if it doesn't hold there i think that, you know, you'll have to wade through the mess, you know, that we could drop and fall a lot further. but one of the things i think is important here is that what we have seen thus far is with this selloff in the market we are basically undone most of the trump rally. we have hit the 62% retracement. >> you finally get a return on some of the cash if we have cash in 2019 it will

mean that stocks were a dud again right? >> well, i would agree i hope and don't believe that would necessarily be the case. certainly cash has become more attractive we buried that in the middle of last year -- this year that is it is not a bad place which we think it is providing a an opportunity to be by the way of cheaper evaluations. it is an outlook it is facing macro economic to reflect what stock prices have already undertaken you as a consequence we'll see we can see admirable returns and while cash will continue to

probably earn respectful place as part of an over dpall portfo. >> kevin, we talked about cash and we talked about stocks i wontder what about in between perhaps something like bonds if you think it will be okay you would suggest they would be in the market right now i wonder how it fits in at all >> i think when you look at corporate bonds right now you can see it over the last couple of months. but the one thing that isn't happening is you're not seeing defaults especially in the high yield market you haven't seen a lot of defaults i think corporates could offer a good opportunity to get a little extra yield in portfolios in 2019 obviously especially if the fed does pause, you know, if they continue to raise rates it will

put pressure on some of the corporations as we have more in the investment grade university and we had, you know, in years prior. overall i think that corporate bonds will have a place in the portfolio especially on the shorter end with the curb being so flat. you don't really have to go out too far. you can look at that short to intermediate part of the curve >> when we tell people cash is it money market funds? >> it is >> it would be either of those things a super short term treasuries. it is all, you know, plus right now. >> guys, best to you both. >> thanks, scott connection in stocks hasn't historically triggered but it could have an impact on the real economy. first 2018 has been a rough

year for investors, particularly hedge funds. we'll get a look at the wrong way trades next.

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let me guess, not well. >> that's right, scott it's no secret that hedge fund returns have lagged this year. but what were some of the crowded trades responsible for that underperformance in well cnbc surveyed hedge fund managers to find out a major problem for some was nxp pmt hedge funds were long that stock as a so-called merge he were ash traj trade. betted by the takeover of the equal come closing but the the deal broke apart after failing to get chinese approval and that sent the shares plummeting and haven't recovered. shorting volatility was another popular trade. the markets had been calm for last few years but when the vix spiked in february it burned many of the investors who bet against it crypto, of course, was another big wrong way trade this year wsh especially for the flurry of cryptohedge funds that launched after bitcoin sky rocketed to

20,000 last december today's the world's best known cryptocurrentky is trading one fifth of that price. hedge funds had been shorting 10-year treasuries, betting prices would decline and yields rise as the fed hiked rates. instead as w became a save haven for investors toward the end of the year amid market volatility and the investors tempered expectations about rate hikes. oil, the recent crowd in crude could you tell many hedge funds by surprise after piling into bullish positions at the end of last year. now, all five of these trades were the death knell for some major funds, guys. >> leslie, thank you leslie picker. >> and we were just sort of discussing what is happening right now amid this selloff that we haven't seen the damage that's done to some of the funds. >> the markets that negative you said global macro, watch out people on i don't think wrong side of trades. >> long, short-. you hear some people, six months

aigt, if you had a financial fund you were like long paypal and short, you know others tp so in other words you didn't really -- everyone was in the same trade in terms of big cap, secular growth against everything else, yeah exactly. >> this year's volatile market is going to put pressure on the economy, warning signs will start with the wealthy robert frank joins to you explain. >> well the fear here and the question is could the wall street worries low back become a self-fulfilling prophecy and affect the economy that hinges on the wealth effect that's the economic theory that when you are getting wealthier for you are likely to spend. for every dollar you gain you spend additional two to three cents but the wealth effect is stronger on the way down every dallas you lose results in at 5 cent decline in spending. as of the third quarter u.s. household had a net weather of 109 trillion the previous two peaks in welt as a share of gchd right before

the recessions of 199 and 2007 li 2007. the stock market lost 2.5 trillion in market cap this month. that could reduce consumer pending by $125 billion. economists mark zandy sed said the december fall alone could shave off 4% half a% of gdp next year one big caveat, real estate has not fallen as much as stocks that could offset the negative wealth the affect. three sectors could be hit airlines, second, home improvement, building hardware, furniture. hotel. when markets are bad people reduce vacation spending first back to you. >> all right some of the stocks have shone that. robert franke, thank you. >> looking at the wealth effect. stocks having an ugly december the santa auclse rally will it bring cheer? not happening so far not happening so far we discuss it next

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senate ylan mui with the details on the shutdown latest, ylan. >> so more of reports now that senator bob corker is saying that there is now a deal between vice president mike pence and chuck schumer that they cut a deal while having the meeting in

chuck schumer's office earlier this afternoon we don't know yet what the contours of the deal might be. but everyone is looking for a way forward as they try to break the log jam here on capitol hill unclear as well if they will be able to pull anything together to avert the government shutdown at midnight. but at least there might be a potential to limit the dang from any potential shutdown back to you. >> all right ylan, a lot of moving parts here we know you'll stay on top of it thank you for the latest maybe possible signs of a deal i mean, how much was this part of the market's plunge this week. >> i think it was just like a little sliver placed on top of a lot of other stuff that the market was worried about. >> i don't know if santa is going to show up, right. >> santa clause rally that is. >> start, right, if -- supposed to start monday. >> it's supposed to start monday just to be clear about the definition of the traditional santa clause rally, the final five trading days of a year ant first two trading days of the next year. s in stock trader almanac stuff

they isolated this years ago it's been a particularly strong short stretch of the calendar. average gain 1.3% over the trading days which is a good gain since 1950. up 75% of the time since 1969. 75, three to one chance. but it was known as a signal if you got the santa clause rally that was fine. if you didn't it was thought to be a negative sign for what the following year was going to bring for stocks hasn't been a perfect indicator. but that's the reason people were looking for it. >> average gain of 1.5%. 19.3%. >> not a ton but that may feel like 10% given what's happened. >> that's average over 70 years. >> has any of the seasonal patterns worked out. >> not many. in fact well december has never been the worst month for a year ever it probably will be or looking that way i thinks in the year that a lot of those rules of thumb really got challenged and look they always were just broad tendencies not predictors. >> well we will be here monday

to follow whether santa comes or not in the rally. >> i'm glad you wouldn't clarified. i wouldn't anybody thinking i had inside information about santa. >> we are having of an abbreviated trading session. "closing bell," noon to 2:00 p.m. around the market close at 1:00. thank you scott for being here have a good weekend, everybody "fast money" begins right now. the "fast money" starts now. live from the nasdaq mechanic site overlooking times square. i'm melissa lee. tim seymour, steve grasso. dan nathan guy adami breaking news on the government shutdown ylan mui has the latest. ylan. >> new reports that there is a deal to perhaps not avert the government shutdown perhaps limit the damage from a government shutdown. this is come from senator bob corker who says that vice president mike pence who was on the hill earlier this afternoon along with mick mulvaney and jared