>> allergan pops on the way back up strong buying. i bought that one. >> i like it new names. thank you very much. thank you all. i'll see some of you tomorrow, and i'll see all of you on fast money 5:00 p.m. because you haven't had enough power lunch begins right now >> never enough, brian i'm kelly evans. a rally on the street. santa put in a bunch of buy orders retail, energy, financials all jumping right now. can you trust the snap back? investors looking for direction out of washington. the government shutdown in the fifth day. president trump holding ground and taking aim at the fed. we'll look at what's next from here retailers are having their best holiday season in six years. amazon, kohl's and dollar general, that's a trio, all serging today. power lunch starts right now

>> and we do welcome you to power lunch. i'm bill griffith. another day of wild swings the dow soared more than 500 points at the high but it did rally on the open and then lose that triple digit gain earlier. it turned negative along with the s&p 500. despite these huge gains, this hour the dow does remain on track for the biggest monthly decline. get this since august of 1998 the s&p 500 and nasdaq are on pace for their worst month since october of 2008 back in the financial crisis the nasdaq is also having its best day in more than two years. this will all be on the mid terter term crude soaring by about 8 % and gold prices have hit their six-month highs. and retail a major bright spot in today's trading american eagle, kohl's, and way fair have been leading the way looking forward to the next couple of hours.

>> as am i let's begin with what's driving this wild day of trading we were down now we're up bob has more from the floor of the new york stock exchange. bob? >> hello at the highs for the day, i want to show you the s&p into day here i circled a key moment to show you how much political risk is in the market. we're heading south just prior to 10:30, drifting lower again as we've done so many times in the middle of the day. around 10:25 a.m. eastern time we had the head of the counsel of economic advisers say essentially stop worrying about it and the markets stopped dropping it didn't rally big. it stabilized. you can see it impan after about an hour of drifting sideways, a slow move to the up side the stabilizing was important. we were about to go completely negative we haven't seen heavy volume there's a key difference

still, at least the stabilization was a good thing you see the political issues that go on here. we've got some extreme readings. we keep telling you about the numbers. 38% at 52-week lows. a p.e. ratio, 14.6 that's the lowest since june of 2013 the yield of the s&p is up at 2.3% broad rally. a respectful move across the board. energy, tech, banks. look at that even they're participating industrials strong great retail numbers we've been telling you about this since this morning. 19% growth online. really good numbers overall. great holiday season kohl's, abercrombie, ross. all up four, five, or 6% and finally icing on the cake, a nice fang rally. they're not the same anymore

the story is two years old already it's nice to see them moving because they're a big influence on the market. as they move, the rest of the market moves back to you. >> bob, thank you very much. we'll check back with you. a slew of headlines out of washington adding to the market volatility the white house reassuring investors that jay powell's job is safe. we are joined live from the white house with the latest. >> reporter: today we heard from kevin has set, the chairman of the economic of advisers he said jay powell's job is not just safe but it's 100% safe that phrasing really jumped out at everyone, especially coming after president trump's public comments yesterday saying that despite the market volatility we've seen, he still has full support for most steven mnuchin and jay powell >> do you still have confidence

in secretary ma newspaper snn. >> -- mnuchin? >> yes, i do very smart person. >> what about the fed chair? >> we'll see they're raising interest rates too fast that's my opinion, but i certainly have confidence. >> reporter: now, on the shutdown president trump said he is not sure when the government will be able to reopen today hasset said the shutdown or a short term, not long-term problem for the economy. on the democratic side presumptive house speaker nancy pelosi said she plans to hold a vote to reopen the government once the democrats take control of the lower chamber i am told that a vote will happen on january 3rd when the house reconvenes and the new session of congress begins the question is what does that spending bill look like? will the house take up a so-called clean short-term spending bill or will they try to do something more comprehensive? that is all part of what they're going to have to negotiate and hash out once the senate comes back in session tomorrow back to you.

>> on that point, the way i've heard it, it almost seems like people are taking it for granted that as soon as the new congress comes back into town, the government opens back up is it that simple or are democrats and republicans going to have to come to a deal to get the government open again? >> it is not that simple, and it's unclear how fast it will actually happen. the house will have to vote to reopen the government. they would have to go to the senate the senate would have to approve the measure and president trump would have to sign it. it's clear democrats would have the votes topaz pass a measure. would the senate support the bill and will president trump hold fast to his demand that he's not going to sign anything until he gets money for a border wall a short-term spending bill may not cut it for the president if he's, indeed, determined to carry out that pledge for border wall money >> it's not exactly like january 3rd means everyone is back to work >> not at all.

>> thank you very much how about the markets. the dow is up more than 450 points we're up more than 500 at the highs. staggering stats to put today's rebound into perspective the dow has lost about 5,000 points from the recent record high all 11 s&p sectors are on track to end the year with losses. and new data from the investment company show, is it time to start buying yet in we'll ask a chief strategist and the founder and president with icahn advisers brian, probably vindication with the rally today. is it your view this selloff is over now >> well, we've been thinking that for some time in terms of fundamentally. we've been humbled with respect to being bullish the screens are green today.

we feel pretty good about it we have underestimated the amount of emotion and rhetoric that's been driving stocks this year on your outflow number, that's absolutely correct last week keep in mind we've seen net outflows the entire year of 2018 when everyone has been worried about recessions and peak earnings and markets this is a market aching for a broking. for a while it broke we think markets are headed higher investors just got a heck of a deal in terms of buying we think excessively oversold sectors like financials, industrials and technology >> craig, what do you think? for a long time the mantra was buy the dips lately it's been sell the rallies. what are you going to do >> we believe we're in what we call a volatility event like 1990, '98, 210 and 2011. in those cases the market dropped 17 to 20% over nine to

12 weeks then it rebounded and the market resumed the long-term up trend we expect that this time as well >> any idea when or what the catalyst is to begin it again? >> it feels like a bottom to us now. if this turned out being the bottom, it would look like 1990 did. and similar to '98 and even 2010 and 2011 >> there's no reason for the markets to sell off here it's just -- what you're almost calling it is a market storm of volatility you don't see any reason stocks need to be repriced the way they have been? >> in the four previous volatility events, six months later all the fears at the bottom proved to be wrong and irrational i would expect that to happen this time as well. >> brian, we heard from scott who is expecting maybe a rate cut next year. how do you think the market would take that if that were to be the case? >> well, unfortunately didn't

hear what he said. >> he said there's a 50% chance the fed could cut rates next year as opposed to just raising them twice >> yeah. i think that might send the wrong message. what does the fed know that we don't know if you take a look at where earnings are through this pullback bill, what i think is interesting is that forecasts have only gone down about 100 basis points the growth rate has been 7% since 1990 they were worried about earnings going down even if it's an 8% earnings growth rate at 3% treasuries and 2% gdp, that's actually a pretty good environment to own stock. i think the fed cutting without knowing exactly what the methods is and why they think 50% of why they would cut, that's the wrong message t. the better message is this is a volatility but since we published our 2018, i'm sorry 2019 year ahead piece,

we've been going around talking to investors around the world. and they are the most bearish we've seen since 2008. people are scared. they don't know what to do >> do you blame them >> i don't given the fact that has been an emotional rhetoric filled selloff that we think has nothing to do with fundamentals, the united states stock markets in terms of earnings and growth is the most stable in the world. we think this has been a volatility event that's been led by pure speculation and rhetoric >> craig, do you think there's d.c. dysfunction to worry about? yes, we were told powell's job is secure. let's say it's not or say the president is upset with his treasury secretary look at the government shutdown. is there a real quandary for investors? is there damage to this economy? >> i'm a value investor. i don't pay much attention to the government

i go where value pulls me. i do agree with the response earlier that the -- it's a great setting for earnings stocks and seems all the fear is currently build in >> give us your single favorite name before we go. >> oh, bank of america >> all right one of the many hard hit banks this year. thank you both good to have you on. we have a news alert on the bond market. five-year note auction how did it do, rick santelli >> boy, oh boy i thought monday's auction of two-year notes was iffy. the five-year, worse i gave the auction a d minus hard to get around it. 2 .652 is the interest rate at the dutch auction. and it was a grand total of 13 billion. here's the problem today the high, the high in the one issue, it was around 263

265, higher yield, lower price 2.09 yield to cover. weakest since july of '09 the only number that was close to its ten auction average or a little better was 9.6 on directs. the primary dealers sick 36.8. tomorrow we clean it up with 32 billion in 7-year notes. i don't see how it couldn't go better. >> quickly this means people don't have the appetite for these yields. they want to see them higher before they get in >> i think there's some of that, bill, but i also think we have to be acknowledge the notion that the markets are a little light this holiday week. but yeah, i wouldn't have thought that even that would have made it this big a deal there's also a lot of demand out there but as you say, we're looking at some of the lowest yields depending on maturities since either april or around

july of this year. >> very good rick santelli. thank you as always. >> as we mentioned, retail stocks enjoying a post holiday bump reversing a down trend that happened even as the holiday sales were strong. why the disconnect that's coming up plus how did the shippers do getting those boxes delivered on time the shipping score card is coming up. and check out the fang stocks despite volatility netflix and amazon are showing decent gains for the year, so to speak. congp.mi u

welcome back to power lunch. the presents have been opened and most of us are left with cardboard. how did the shippers do with getting all the boxes to people on time? frank as the official numbers for us >> we sure do. the presents have been opened and some of the shippers are getting a holiday present of their own with good performance. the week before christmas and christmas eve is the super bowl for the three major shippers today we have their report card. grades are given out based on on time delivery. the post office giving on time at a 99% rate. they're out on top with ups and fedex just behind a few ticks. anything above 95% is considered excellent.

overall the shippers saw their best on time rates since 2013. they also saw a record amount of e-commerce deliveries. 2.5 billion total this year. 32 days between thanksgiving and christmas. the highest numbers of days possible and during this month leading up to the week before christmas which includes thanksgiving, black friday, and cyber monday ups has the best performance including returns and exchanges for a lot of people doing shopping people seeing a post christmas surge in the stock price fedex on trend for its best day in a month a really good day after christmas, after some really good performance >> i am still waiting for a package from ukraine, of all places i didn't realize it was coming from there until after i hit purchase >> was it on amazon? it wasn't amazon okay, it was etsy. >> that's happened to me too >> yes >> i'm waiting for a map to come

from a different website i don't know where it's coming from >> you guys are in the 1%. >> yes otherwise it all turned out well frank, stay there. holiday sales were the strongest in six years according to a mastercard report out today. retail stocks also rallyingwit american eagle, kohl's and nordstrom among the big winners. the retail etf, the xrt also rising today the last month has been a challenging one. he said stating the obvious, down about 14 % for that indeck. here to make sense of it all for us, the ceo of roger's nifen worldwide and a c nbc contributor. >> you were on the high side with your estimate 5.1. you said 5.53. would it have been your number if we hadn't had the softness in december >> that's a good question. i have said i thought there would be some impact on the high end from the crash in the market if that's true, we were going to have one heck of a good christmas without it when you have the best christmas

in the last six years growth wise, that's a good year we know the bottom end of the marketplace, the walmart,ing targets of the world were strong we might have been a tenth or two better had we not seen the market crash i'm not going to guess if it was true or not. that's what i believed was going to happen. i said this could be harder in the upper end. >> what about the extra day? is it because it's 32 days this year versus 31 last year that just put us over the edge >> yeah. i always say we had 33 this year now we're selling on thanksgiving we used to only have 32. now you get 33, and you get one that runs for 36 hours it's great and yes, that does make a difference but remember, every year we have one more day until we lose a lot of them. last year we had one more day than the year before that. this is the most you can get in theory, it should be the best on the other hand, i remember many years in the business where we would say yeah, we got one

more day to mark stuff >> i know the big push this year was to get people to buy online but pick up in the store to save on the shipping costs. i saw those sales were up 47% this holiday season. >> it's hard to imagine that we have 47% increase in coming to the store to pick up the package. i had people say to me why are all the stores doing this? who wants to go pick up the package? i'm like all the customers tell us that's what they want well, they proved it this year 47% increase and that's the best thing if you're a retailer. if you're macy's and sell it and ship it and it goes to the customer's house, that's expensive. if you get them to the store and maybe buy something else and carry it home for you, that's as good as it gets. everybody is pushing that side of the business. and it's working the customers like it. on christmas eve -- >> who wins in that category

>> that's a winner for kohl's, macy's, nordstroms and target. they win that game >> what about the cost of that the stocks themselves, a rebound today. they're hit hard over the last month and the year the investments in order to make that work, does that overwhelm the earns? >> great sales in the third quarter and compression on the bottom line. it was all driven by the fact that so much business was online we'll see that in the fourth quarter. this more you get them to buy online, pick up in store, the less you get hit that will get better as more and more people perfect the buy online >> before you go, what happens after the holidays now are we going to get back to reality? will the retailers suffer, go off a cliff? >> no. it's going to be interesting we're going to have strong sales post christmas if we look at the next week or two nobody is going back to work until the 7th except for us. we're going to see strength in the stores that's going to be good. my concern is about the second

half of 2019 the first half should be benefitted by everybody getting tax refunds. en. >> you think the tax refunds are going to be mega this year >> yes we'll see record tax refunds people did not change their withholding. that will be great for the fourth quarter it will feed to the second quarter. >> or because they with4eheld to much >> yes in the third and fourth quarter, it has to stand on its own we have a new minimum wage amazon set it at $15 that's going to be great for 2019 >> thank you >> thank you we just want to point out jcpenny just fell below a dollar for the first time >> that's the flip side of the story. >> not among the -- you never want to see the change bigger than the price >> that's true it's down almost 2%. another area of the economy depending on consumer spending is restaurants it held up okay this year. we'll talk about what's ahead

for 2019 the trump administration saying fed chair powell's job is 100% 'rtaing the fed, the shutdown, and all the d.c. drama straight ahead eep] you should be mad your neighbor always wants to hang out. and you should be mad your smart fridge is unnecessarily complicated. but you're not mad, because you have e*trade which isn't complicated. their tools make trading quicker and simpler. so you can take on the markets with confidence. don't get mad. get e*trade and start trading today.

2018 turned out to be a pretty good year for restaurant stocks that sector up about 4 % outperforming the broader market kate rogers is looking ahead to 2019 and what we can expect for that industry.

>> the restaurant industry is serving up growth thanks to diner demand, value, and m&a as 2018 trdraws to a close, hers what to watch. more restaurants are pushing into delivery and mobile order and pay as consumer preferences continue to evolve starbucks just inked a deal with uber eats as players like chipolte and mcdonald's continue to expand offerings. the partnerships are also increasingly important to company growth value wars rage on deep discounting is expected to continue as players compete for consumer dollars promotions will be in important in 2019 and investors will be watching to see if inflation pushes companies to pull back on offerings and discounts. deal making will continue. we've seen several sales and acquisitions from sonics and others in 2018 analysts say the trend could continue into the new year, especially as private equity

firms show continued interest in the space. that's our kate rogers with a look at restaurants. meanwhile we have a huge rally on wall street right now the dow is soaring in part as the administration has been calming the markets by saying that the fed chair will not be fired. the markets up 431 right now and that's only one piece of d.c. drama out of the way. we still have the government shutdown in the fifth day. all the washington news that's affecting markets and your money coming up right afteth qck eak.r isui shield℠ annuities from brighthouse financial

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2019 investor play book. shopping your strategy for energy, banks, brexit and more "squawk box" tomorrow 6:00 a.m. eastern cnbc >> the update is sponsored by comcast business beyond fast. welcome back let's get a check on the markets. right now if you're just joining us, another day of wild moves. nice rally on wall street. the dow soaring more than 560 points at the high for the day. the nasdaq actually having the best day in about two years. oil also moving big today. crude up about 7% in today's session. but it's still down 35% in just the past three months. big numbers here facebook soaring up about 6% we had short sellers sit ron research saying the stock could

hit $160 in 2019 we'll keep an eye on that. here's contessa with the latest headlines. >> here's the news update for this hour. the corporate owner of wynn is accusing a company of building a casino across the street and copying the building design. it says it's too much like like what wynn owns it's filed a federal trademark infringement suit. speaking at a graduation ceremony for new air force pilots benjamin netanyahu praised the country's air force after russia criticized an alleged israeli air strike in syria. he repeated the pledge they would not allow iran to have a permanent military presence in syria. people are stranded after five days at sea because no

european country will let them in the migrants are from africa britain's lining up outside shops on london's oxford street for boxing day sales it's observed the day after christmas and considered the busiest day of the year for shoppers in the united kingdom that's our update at this hour back to you here >> we have solved the problem for the company that built the building across the street from wynn if they don't want to be affiliated with wynn, call the building lose. >> who will want to stay at one called lose? >> that doesn't work >> short sellers >> does that exist in gambling >> i don't know. i have no idea a big rally after a four-day drop it pushed stocks into a bear market the dysfunction in washington which has put markets on edge has investors wondering about the president's showdown with the fed and congress >> i can't tell you where the

government is going to be open it's not going to be open until we have a wall, a fence, whatever they'd like to call it. i'll call it whatever they want. but it's all the same thing. >> more on the d.c. drama now with nbc and msnbc political analyst mike murphy and christopher smart. gentlemen, welcome to you both mike, let me start with you. the reports earlier this hour from elon moi were suggesting the government is not going to reopen january 3rd just because pelosi comes to town with the newtow congress. they still have to strike a deal >> i think it's dim. i don't know how much of a deal it will be this is very much a 1914 kind of scenario they're in a situation neither side really wants to be in but other forces have pushed them to where they can't back down the president is afraid of looking weak, pathologically, but especially to the conservatives in his party who are demanding a wall

his core constituency, and the democrats can't be seen as backing down, and they don't support the policy and they think the politics will work out. next week they hold all the cards. this is going to be a contest of how much pain the republicans are going to want to take, and the president, his brand is not backing down i don't see a short ending >> christopher smart, we're -- every day we try to come up with a reason for the market selloff. you point to the usual suspects and often we point to the what's going on in washington here. but realistically, that's not having an impact on the fundamentals in corporate america, is it >> i don't think it is although, this is an unusual turn of events in washington to have the president at locker heads with his own majority in congress and the groft shovernm shutdown with no end in sight is new. it's worth pausing over the

resignation of secretary mattis. you're right mostly markets respond to economic signals the economy is still strong. we've seen that in retail sales today. if anything, the outlook for the fed going into next year is more dovish than before the selloff in settlement and october. but i think we're seeing a number of more technical issues. it's in some ways the revenge of the robots, the increased prominence of passive investors who are trading. transactions are being made more on momentum than on economic fundamentals, and not pricing in future expectations as much as price momentum from yesterday. >> you're jumping ahead. we'll talk about that next hour with the guy who wrote that piece in the journal today mike, let me ask you the president is insisting he gets funding in the border wall. he could have had $25 billion if they struck a deal about it over the summer what's he doing now?

>> i have to say it's hard to predict. he's kind of a chaos machine i think when in doubt, it's emotional. if you look at the revolving door at the white house, the departure of secretary mattis, it was the most respected cabinet in many ways perceived as the reinsurance policy on the president's foreign policy, quitting for reason, and the humiliation of having the republicans lose the election that was a referendum on the president. all these things have come poupded and caused the president to use an untechnical term, wig out a little bit with the democrats in the house, it's harder to get a deal because they're now holding a lot of the cards you couldn't even give something through a conference committee going forward. i've been in politics a long time i don't see a strategy here. i just see emotion >> how does he wig back in, so to speak who would you like to see him surround himself with? is there more turnover that could bring in the kind of fresh blood that you think would have

the institutional knowledge and push his policies forward, help the president achieve some of his goals and also reassure investors and wall street and main street? >> well, that's exactly right. and that is in his interest and the republican party's but the problem is donald trump is the atomic clock of being donald trump he doesn't change. most presidents get thumped as president said in the midterm. they change. even if you bring in the best advisers, they won't take the job, and they don't think they'll be listened to i heard my friend kevin today talking act reassurance on chairman powell. that's the right policy. since when does the president listen to his advisers if the market continues to decline, i think he'll try some method to shame, measure, or get him out of office. this president is not in the adviser business that kind of check mates the obvious solution >> if this goes on, the shutdown, it could have an

economic impact. the government spending is part of our economy >> absolutely. i think it's the real impact from the government economy and the government spending directly it's also impact from just expectations about who is really running the economy? what can we expect from fiscal policy going forward what sort of relationship, if any, can the new democrat majority build in congress i think the questions will be important in the months ahead. >> do you think this goes longer than the recent what was it 16 days under president obama does it go longer than the one in '94 >> you know, it's hard to tell i do think the president eventually will know and he's done this in his business career when it's time to stop bluffing and take the hit it will be what kind of cover he can create i'm not sure it will go a full 16 days. the sooner he gets hymn out of this, the better it's donald trump. you never know

>> chris, do you want to weigh >> mike is right it's hard to see what will bring it together. the president has found something to distract us with in order to cover a retractable retreat. all the forces right now as mike said, the democrats are holding most of the cards going into next year. and it could well go on for quite some time. >> thank you both. mike murphy and christopher smart. thank you. >> the trade war, fears about slowing sales, pressure from president trump, it's been a rough ride for the auto makers this year. shares of gm and fiat chrysler down more than 20 % this year putting them in bear market territory. ford down twice as much. what's twice a bear? two bears, i guess we'll look at what's ahead for the big three in 2019 as kelly ponders that deep question look at financials a rough year for key names

goldman sachs the biggest, down nearly 40% see that's funny, i thought you traded options. i'm not really a wall street guy. what's the hesitation? eh, it just feels too complicated, you know? well sure, at first, but jj can help you with that. jj, will you break it down for this gentleman? hey, ian. you know, at td ameritrade, we can walk you through your options trades step by step until you're comfortable. i could be up for that. that's taking options trading from wall st. to main st. hey guys, wanna play some pool? eh, i'm not really a pool guy. what's the hesitation? it's just complicated. step-by-step options trading support from td ameritrade

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revolutionizing. aerospace industry. it's an entirely sustainable approach. any questions? when you rethink education, everyone can put smart to work. 2018 has been a rough rear for auto maker stocks. ford is down nearly 40%. tesla down only 2% what's in store for them next year phil has the playbook. >> 2019 could be a bumpy one for the auto industry. first, expect auto sales to finally hit the brakes after the best four year stretch of auto sales in u.s. history, americans have bought more than 50 million new vehicles and many believe the market is saturated. that may be. but as of now, buyers cannot get enough trucks, suvs, and crossovers next year smaller pickup trucks

will see bigger demand ford is bringing back the ranger while jeep gets back in the pickup game. mid size truck sales are up 22%. buyers clearly want smaller pickups. finally the headlines will keep coming from the must-watch executive in the auto world. elon musk. his model three production push paid off with tesla turning a profit and he's not slowing down next year he's focussed onramping up sales in china and racing to build a plant in shanghai, but he'll make plenty of news with future tesla models add in the race to roll out autonomous cars, and they'll have their hands full trying to steer through a challenging year in 2019. >> that from our phil. just more evidence of how auto stocks are hitting bumpy roads

the s&p auto sub sector underperforming the overall s&p. michael ward is senior analyst at williams trading. michael, happy new year or happy -- >> happy new year, thank you >> next year, challenging is the word that phil used. with all the change and strategy, we're hearing from general motors and ford and others what are you expecting next year >> the auto industry is always challenging. i always tell people when you look at the auto stuckocks, high competitive and highly regulated. >> kelly and i talked about this during the commercial break. i think not that anybody asked, that the auto industry next year could have the kind of year that retail had a couple years ago. the realization came about that they were over capacity and had to downsize and really retail stores were closing left and right at the time two years ago. what about the auto industry

next year? how will it manifest it? >> i'm a bit more optimistic i think people are missing something. revenue continues to increase for the industry because of light trucks even though unit sales are flattish this year, dollar revenue is up. you've had the biggest increase in licensed drivers over the last three years we've seen in 40 years the millennials are moving into the prime age buying house and cars they're buying them like the past millennials are buying cars and houses when you look at some of the other events in 2019, i'm a bit more optimistic. >> i'm your poster child for that i'm thinking about the ge n zer who aren't getting licenses at all. what about heavy trucks? every time i change the channel there's another commercial for worker vans. why is there so much

competition? is this a lucrative part of the auto market? >> no question when i look at the commercial side of the business, i include punishme pickup trucks and large vans they've gained share this is the sixth straight year. the vehicle of choice for the industrial side of the economy are pickup trucks. and pickup trucks are perfect for that type of environment back to the licensed driver issue, the biggest increase in the percentage of licensed drivers goes from 20s to 30s the millennials are following the same track typically there's not a high percentage with people in their 20s to drive >> we cannot ignore the largest automobile market in the world that would be china. we know that economy has slowed down what does that do for these guys >> nothing positive about that number one, you hope you get some resolution to the trade deal and number two, general motors and ford are both in china with self-funded joint venture.

there's not as much financial risk you look at general motors, it's going to be a 2 billion after tax contribution to general motors earnings. and it's on an equity basis. it doesn't -- they're not on the hook for the capital aspect of it but the chinese market, it's been down pretty much further when people expected over the last couple months you hope to see resolution and positive signs the good news is inventory is in good shape in china. >> why is gm your top pick for next year? >> a couple reasons. the first one, when you look at the trends that took place in 2019, gm is on a higher earnings track than people realize. they'll have near record earnings in 2019 i think china will turn and at least stabilize. gm has a capital market day scheduled for january 11th in new york and that's before the detroit auto show. we could hear some discussion about them spinning out to

shareholders we know that's valued at $15 billion. gm's market comp right now is $45 billion. if you look at it, it's a net cost to gm as it stands today. you're getting the rest of general motors at about one times 1.5 times ebita. >> coming up, we're watching this big market rally today. the dow up about 530 points as we speak oil is soaring it's up more than 7% yes, it's down more than 35% for the fourth quarter is this a turning point? amazon's also having a big day did the retail giant deliver this holiday season? we're looking at that stock throughout the year and what's ahead for 2019 today's gains are doing little to erase this month's losses is this just a technical bounce or is there reason to believe santa brought a rally? shield℠ annuities from brighthouse financial

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since march, nasdaq it's best for two years. carter, what are you watching just broad strokes here? have these markets bottomed? >> i think you hit on it the issue is, today's move you can't even see it if you're looking at a chart more than two inches from your screen. if you say what's happened, we know we've had an important sell off over a three month period. it occurred from a moment in september when you had near record bullishness in many ways, it's not such a bad thing. what's wrong with a reset? the cult of equities, and now a give back in many ways, obviously, those who look at valuation, not my area, think that things are properly valued here i think the key is this, is that this draw down is really quite ordinary if you look at statistics in history in terms of all 20% plus draw downs.

>> we're not going -- are you expecting a bottom of some kind for thisparticular move? >> not at all. >> typically after this kind of a -- when you consider going back to early october to today, that's been a vicious down side move here. what happens typically after that >> right so in principle, the first of two things i would cite is there's an adage from the tlu40, sharp indecision is resolved sharply. this encourages, maybe it's over, i think maybe i found the bottom, it's probably cheap. you really do need a -- >> you don't think we've had that yet >> i don't think so. look at today, as good as it is, the key areas, financials, industrials are both lagging that's not such a good thing there's nothing wrong with a reset. maybe valuations are better. maybe it belongs here. but here's the real thing, how do you climb back just to get to new highs?

that's a herculean effort. is this a more enduring and important top? by all accounts that's what the charts would suggest. >> you don't think we're going back to those highs anytime soon >> no. how about more than a year at most i'd rather have him go first, remember the chartist is very cowardly right behind you, you go first dangerous game picking bottoms. >> speaking of going first, i wouldn't mind going in behind ajit jane. >> that's right. >> do you know what i love about that he spent $20 million and got a nod. got 67 shares. >> remember, that's promoting your own book, right >> exactly >> right but, i mean, one has to see, it's an important rerating for equities it was led by a global basically sell off that started in january and has never gotten better. the fundamentals, the economic data is weakening. >> so your point of view of is

whether you look at the charts or the fundamentals, things are weak out there i trust you on the charts. the fundamentals seem okay we've seen these kind of pockets of volatility. this rebound has been hated all the way up to 2009 is it different this time? >> that's skrus it we've had three meaningful draw downs, 2011, 2015/16 people. some people call that an earnings recession and then this one. each is very sort of similar in many ways in looking at the percentage of stocks below $150 million average or any overbought or oversold condition. we've come from much higher price and we've drawn in that much more money. again, this kind of volatility is outsized given the preceding condition of low volatility in 2017 we were just on autopilot heading higher and higher. that has way of complacency has a way of creating mistakes that's what's happened now. >> i just wonder if people's

skepticism it's going to cause a catch up scare, especially as people look at the january effect and new money coming into the market from the 401(k) plans sdp plans. >> that's january. do they close the doors and is it the final murder? that's the real risk >> stay tuned. >> cool. >> carter, thank you so much >> thanks, carter. much more on the big rally today. the white house said fed chair's job is 100% safe whou what about the next time who is driving the sell off? humans or machines the second hour of power coming up duncan just protected his family

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don't be afraid, come on in. it's okay. the huge rally is going on right now on wall street we've seen some fast and furious moves as a matter of fact. the algos, are they to blame for the meltdown what am i talking about? we have both sides of that issue coming up in just a little bit meanwhile, it was a happy holiday for retailers.

meanwhile, amazon says it had a record breaking season, but the stock had one of its worst week in years, it's down 30% from its all time highs is amazon looking like a deal itself rising rates, soaring prices and a tight inventory. what's ahead for the american housing market in 2019 the second hour of power lunch gets underway right now. lunch do you know where your dow is? it's hard to keep track of the dow up 603 points. pretty much at session highs here the nasdaq wiping out those big losses from monday to have its best day in three years. we are talking major percentage gains for all the major averages what is going on here? >> a little bit of stupidly

oversold readings. i mean that sincerely stupidly oversold combined would maybe a little less political risk. i want to show you the s&p 500 we've had what we've seen so many times, a rally and then a fade and then before 10:30 time we had some comments, said stop working about powell the market stopped dropping. it didn't immediately rally. it moves sideways for about an hour and then started lifting on fairly light volume compared to what we've seen. this is a sign that some seller exhaustion, after all it's been absolutely nuts, i want to emphasize the really extreme readings rarely will you see 89% of the s&p below the moving average 38% at 52 week lows. we had north of 600 lows last

week 13.6, that's the lowest in many years, we've been typically 15 to 17. the only good news is the dividend yield is up at 2.3% when you get a violent rally like this, the major sectors move essentially the whole market lifted 3% without a lot of differentiation. if you look carefully, in the most beaten up sectors, energy and banks, the highest beta names have the biggest moves today. we've seen nice moves up for example of some of the energy stocks these tend to move more with the rest of the market mobil, conoco philips. the higher names that are in the regional banking area, all moved more than the overall market

we've seen extreme readings. the readings in the past have been associated with bottoms the one thing we know about overshooting the market on the upside and downside is it's very hard to read an exact bottom you can overshoot by a big margin this is quite a violent snap back. >> thank you, bob. the d.c. dysfunction adding to the volatility. day five of the government shutdown president trump said it could last for a long time here's the latest at this hour >> reporter: nancy pelosi is saying she will introduce a bill to reopen the government next week once democrats take control of the lower chamber i'm told that vote will happen on january 3rd that would be the first day of the new session of congress. what i'm hear is that the most likely scenario is that the house takes up a so-called clean short term spending bill that would be a straightforward spending bill, no strings attached it would keep the government

open through february 8th. this is the same bill that the senate passed last week. the house had rejected it. so we know that there are votes in the senate, however to pass this the question is will mitch mcconnell bring it to the floor? of course, no one can guarantee whether or not the president will actually sign it. which is why we're here in the first place. yesterday president trump told reporters in the oval office that he does not intend to back down from his demands, but any government funding bill include money for a border wall. he said that he does plan to visit parts of the wall that are under construction in texas. he'll take that trip next month in january i want to point out that now that we're in day five of the government shutdown, there are local restaurants that are stepping in to offer some help to federal employees who might be working without pay a local pizza chain handing out free pies to anyone who shows up with a government badge. guys, there's also a local bar that has shutdown themed

cocktails. one is entitled mexico will pay for this it has tequila back over to you. >> bill? >> my daughter's going to be ruing she's not back in d.c. right at this point. thank you very much. the white house is weighing in on the federal reserve and jerome powell today. we have steve leishman here for more on what may have sparked this monster rally. >> i'm going to send you the verbatim the president's top economic advisor says the president does not entire fire jerome powell. is the fed chairman's job safe h hassett says of course, 100% yes. that's correct yes. somewhere along the line, that was the beginning. question arose after numerous

weekend reports said president trump angry at the fed for raising rates had been asking advisors if he has the power to fire jerome powell that story was never contradicted trump nominated powell to the post in 2017 on christmas day the president continued his battle with the fed, but perhaps softening the attacks. >> we'll see they're raising interest rates too fast that's my opinion. i certainly have confidence. i think it will straighten they're raising interest rates too fast because they think the economy is so good i think that they will get it pretty soon. >> pretty soon the president's problem is technically not just with jerome powell take a look here it's trump's fed with which he's fed up of the five members of the federal reserve board of governors, four were nominated by trump the president's own remarks mark the beginning of a truce

of the many worries behind the recent sell off markets, you can cross one off that worry christmas list. >> here's the question, is secretary mnuchin's job safe >> i don't think anybody is safe in this administration even when an official comes out on the record and says somebody's job is safe sanders, the press secretary will be safe and a month later they're fired. the issue with powell is bigger than that. other people who have left the administration, there's been no question about the president's right to fire them this idea that a fed chairman might be fired or the president is even considering firing him for effectively doing his job, when we don't even know that the federal reserve act allows for that to happen it creates a certain amount of turmoil. i'm not saying that turmoil is responsible for 5,000 points in the dow. you have a trade war you have a secretary of defense leaving and a little bit of craziness over there

you've got concerns about a weakening economy. the administration should at least remove the instabilities they can remove. questions about the fed chair is one of those it's within their power to remove and we'll get to the other stuff later. >> fed, fed up. >> fed up with his own fed. >> i like that. we're rallying today, but will all this d.c. dysfunction continue to weigh on the markets? let's bring in the chief investment strategist. good to see you. thanks for joining us. what do you think? first of all, what do you make of the snap back i guess you could say it's about time. >> it's clearly overdue. you look at the internal conditions of the market, it elicited that all the signs that suggest we were due for a ricochet rally of some sort. the keyer obviously is whether it's sustainable or not. i think ultimately it will prove to do. i'm not sure we found a durable

bottom to claim this correction is over. in the meantime, to your question, i think continued dysfunction out of washington is going to keep the market back on its heels when it's grappling with the issues of the day that have yet to be resolved, namely trade negotiations with china. clearly, a fed regardless of the behavior of chairman powell or not, is advocating a stance in which they're likely to continue to raise interest rates because the economy is sufficiently strong to warrant it not to mention the machinations coming out of washington >> do you have a list of stocks you think have gotten too cheap that would be good values here >> yeah, take a look at the utilities, some of the consumer names seem to make sense tome. any kind of sector play along those lines would make sense we still like the united states

better than the rest of the word one of the big sheering points this year has been the disconnect between foreign economies and oureconomy we've said a bunch of times that our economy is very strong and that's why the fed is raising interest rates look at the rest of the world. the rest of the world is not so strong we've got weak data recently out of china, industrial production, et cetera. there's a clear separation between growth here and growth around the rest of the world when you put it in that context, it's easy to see why 2018 was a much more volatile year than a coordinated growth 2017. >> we do have to look at the global economy, that's for sure. mark, i mentioned earlier david tepor was saying he was nibbling at this market after the big declines we saw. visa and walmart i guess on the retail side, and then disney which had the three top grossing

meetings for 2018. disney studios has been very strong this year. >> content is king and disney is acquiring it the other two, are consumer facing given the fact that our underlying case is for the economy to continue to post positive gains over the balance of 2019 and that the consumer is in good shape and is more likely than not to continue to spend, we saw strong holiday sales indicative of the strength of the consumer we want to take advantage of that >> kevin, are you concerned about the security of fed chair powell about the loss of the defense secretary? some of the turnover in washington or not >> i think so. all of those things can seep into the minds of the public and the investing public i think ultimately the fed

chairman is going to be fine to remove him would be, as steve leishman pointed out, a bigger issue. ultimately, any of these things that create uncertainties in the minds of investors are going to be something that weighs on markets. ultimately, if investor sentiment kuznot come back and we don't see more confidence and it bleeds into corporate decision making and hiring plans, et cetera for next year, that can be a bad thing for the economy. ultimately i think it does subside, but filling in some of these missing blanks would be helpful. >> very quickly, yes or no, scott minerd says there is a 50 chance that the fed cuts rates next year? >> too high. >> kevin >> yes, it's -- i would give it a coin toss given what we're seeing in the data right now.

>> interesting all right. >> thank you both. we'll talk about these markets which are at session highs the dow is up 625 points helping to undo some of the deep damage that we've seen from the past couple of months. how about some deep discounts in retail? today is the day for that. but forget heading to the mall, we've got amazon down 30% from its all time high. is that where shoppers should be adding to their shopping list? plus, what's driving all this market volatility man or machine or both we're going to debate straight ahead. next a look at the best time to make your move in real estate >> lulu lemon is up 50%. power lunch is back in two

welcome back to power lunch. in the uk today is called boxing day. here in the u.s., today's the day when people return the presents they don't want, when they use gift cards, and when they look for deep discounts on everything else. we're live in woodbridge, new jersey >> reporter: that's right. we're here at the mall in

woodbridge, noouew jersey. today is expected to be the eighth biggest shopping day of the entire year. we asked some of the people what's your reason for being here here's what that had to say. >> i'm just doing some christmas shopping with my dad every year we come the day after. he gives us money and we splurge. we take advantage of discounts. >> i had to return a coat and i was dreading it because i thought the lines would be awful. it's been great. >> i'm here to spend some gift cards for the kids. >> reporter: so there you go those are the three main reasons you traditionally see. it's those returning the want unwanted sweaters people don't like, spending gift cards and of course, the savvy shoppers know this is the day to get those big discounts. we walked around the mall, there are sale signs on basically every single store as much as 80% off in some places

that's the big thing today of course, maybe the markets figured out, too, being up 3%, we're seeing record numbers, whether it's from amazon, ups data or the mastercard spending data saying it's the biggest retail season in the last succyeasucix years. is the dow getting more people in the stores today? or is it vice versa, everyone's shopping and everyone realizes they're starting to buy stocks the day after christmas. >> thank you, eric very much. such a nice guy, don't you think? >> i caught that nugget where the woman said it's not as crowded as i thought it would be. >> they're online. >> win-win. >> a big part of the online thing. amazon, a big winner this holiday season the company is saying it's having a record breaking holiday season shares are rallying today, but last week the e-commerce giant had one of its worst week since

2016 that stock is down 29% in the last three months. where does it go from here joining us, michael packter. on one hand the fundamentals with urstro were strong. >> i think it's a problem of valuation. i think, you know, when the s&p 500 is 15 times, people get sketchy about paying 60 times. that's where amazon trades, 60, 70, 80 times you saw the same thing with netflix. multiples contract because investors are valuing these guys relative to any other investment all the other investments dropped, so the high fliers came down the highest i don't think anybody is worried about amazon growing or delivering profitability it's a question of what you are willing to pay for that. >> i'm curious as you look at the markets, do you see a rebound taking shape and a lot of bargains and great valuations out there or not

>> i cover growth stocks, so not a lot on my list i think are bargains you know, i own a bunch of stocks that are trading at 10-14 times. those are bargains you know, the cheapest one on my list is facebook it's trading at 14 times that's a relative bargain. google, alphabet. >> that's actually been one of the names surging today. i'm sorry to jump in, but we have breaking news at the white house. >> reporter: president trump is no longer at the white house or even here in washington. sarah huckabee sanders tweeted that the president and first lady are now in iraq she said they left late last night in order to visit with members of the military, thank them for their service, wish them a merry christmas reuters reporting that he is at al assad base in iraq. he went to a dining facility in order to meet with service members. you can see the picture of the president and first lady

surrounded by members of the military the president had been criticized for not going over to visit with the troops earlier over the holiday season. now he has done so we also haven't gotten a lot of clarity around the president's schedule, partly because of the shutdown we believe. they have not been putting out a daily list of his whereabouts and public events. he had been awfully quiet on twitter over the past day or so. now we know he is in iraq meeting with members of the military, back over to you. >> all right a big development there from the white house. thank you. back with michael here, so we brought some of these high fliers down. are they fairly valued in your view at this point >> no, i actually think amazon has tremendous growth potential. >> i understand that, but is the valuation expecting more than you're going to get from this company? >> i don't think so. we're looking at earnings growing by $15 this year from

roughly $5 to roughly $20. the consensus has it going $5 next year. that's crazy it's probably going to grow $10 or $15 again these guys are delivering amazing earnings growth. that's what you pay the multiple for. that is sustainable. >> i want to quickly ask you about netflix, which has come down along with the rest of them that's where you're still negative, right? we talked about disney and how well it's done and what a good year it had at the box office, is that why you wouldn't recommend netflix? >> i was seven years early netflix doesn't control its own destiny until it creates enough original content that that's the only reason we as subscribers go there. that's just not true disney and fox are about 20% of the hours on netflix, about 40% of the hours viewed. that stuff is disappearing in the next year.

when disney pulls its content, fox follows, and then they launch their own competitive service, i don't think netflix is going to be on the growth trajectory it's been on. you don't see that with amazon no vendor is going to pull content, pull product from amazon but when you see the lifeblood of netflix pulling its content, how does that company sustain its growth i don't see it happening. >> all right very interesting thank you. coming up, amazon has declared another record breaking holiday shopping season. as we said, the stock is having its worst week in years and it's down 30% from its all time high. what's in storfoe r investors? we'll get into that, next.

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retail in rally mode major retailers, macy's, kohl's, nordstrom and target all higher today as the industry enjoys its best holiday season in years is this the beginning of a comeback though? we're going to talk about that

matt, look at retail as a sector, it's up big today, maybe 4% but down 13% just this month alone. so does this have any kind of staying power, this move today >> it's hard to know if it's going to have a lot of staying power over the long term over the next few weeks it should be very nice when you look at the charts when you look at the weekly chart retail atf, it's just below $38. and that was the lows we saw in 2014, 2016 and 2017. so it's a very key support level. but more importantly, also you look at the weekly rsi chart, it's the highest oversold it's been it usual so i think this one day bounce will last several weeks and we'll take another look as we move further into 2019. >> beaten down stocks getting

some relief but ultimately it will come down to the economy and the consumer how would you play this? >> i think that this big number, this big retail number is consistent with the fact that we have been in an expansion for the last two years and we're expected to continue to expand but we're starting to slow coming into 2019 and it comes down to a matter of valuation rather than outlook. it becomes a relative play more than an absolute play. retail actually was having a bounce at the end of the year before it had a really, really hard time in october along with everything else. i don't think it's necessarily cheap enough to sort of hold up against let's say utilities or, you know, some of these other healthcare plays we've seen. it's not bad so that's a wishy-washy answer, but i would say that there's probably some technical support that's going to support this

but the longer term is that we're going into a slower economy for the next year and the markets are going to start to price that in it's going to become a valuation play. >> maybe a slower economy and the retail business isn't getting any easier probably, either thanks a lot for joining us today. appreciate it. for more trading nation, head to our website or follow us on twitter at trading nation. kelly is here as well, shall we play some stump santolli? >> if you could do that in 20 seconds, i'd be in for it. >> now we get back to our video, it's man versus machine, a look at what's behind the recent volatility and what it means for investors. as we head to the break, here's a look at the 30 dow components, all it's n the green today. back after this.

welcome back let's get you a check on this big stock market rally this hour the dow soaring more than 630 points the highs are up 603 right now the s&p and nasdaq wiping out monday's losses. the nasdaq is having its best day since august of 2015 with a 3.8% gain. contessa brewer has more with your cnbc headlines this hour. president trump and the first lady traveling to iraq late christmas night to visit with the u.s. troops the president thanked them for their service, their success and their sacrifice and he wished them a merry christmas according to white house press secretary sarah sanders. petro porchenko told his cabinets that the ukraine had

significantly boosted its defenses during 30 days of martial law. there was a fatal plane crash on christmas. >> i can confirm this morning we have a second fatality, so two facilities out of the crash. at this point, the ntsb has been contacted and their process is underway that includes a contract company who will be in at some point to help recover the wreckage that's left behind. >> multiple homes had debris in their backyards on christmas that's the cnbc news update this hour i'll send it back to you guys. >> thank you very much. crude prices have been soaring along with stocks today. the oil market closing for this day. >> that's right. surging crude prices indeed with gains in both wti and presebren. wti up more than 8.5%.

4,616. wti had the biggest gain today since november 30th, 2016. more than two years ago. this is largely a by-product of today's risk on environment, that same optimism that's moving those equity markets higher and has trickled into the energy market now, the u.s. benchmark plunged to an 18 month low on christmas eve, more than 40% below highs reached a few months ago deep into bear market territory, despite today's moves to the upside. >> even this week it's not positive yet on this big move. thank you very much. stocks rebounding big time today, but before that it fell for four straight sessions that pushed things into a bear market is computerized trading to blame? take a look at this article from the "wall street journal."

bob pisani is here with us i struggle to understand how the retail investor is hurt by algorithmic trading and everything you're describing by the robots, let's just call them accept by fe except by fear of them. is there anything to be afraid of >> let's be clear as people may have misinterpreted our story today. we're not blaming them for the huge sell off the last few months there are tremendous fundamental reasons, as you discuss every day. they did contribute to the placid markets we've seen in recent years obviously markets were volatile about the the quans and after the the quans. they are a big part of the market as we discussed in the story today and a big component for all quans, not all quans a lot of them have momentum as an important input especially ctas and they're

bigger than ever they're accelerating things and it hurts the small investor if they're short term in orientation. >> i know lots of guys there on the trading floor is not exactly thrilled about the algorithmic trading and the machines that account for 85% of trading right now these days, right? >> yeah, if you talk about algorhythmic trading, it's 100%. even someone types in i want 100 shares of ibm through an e-trade broker is going to be using an algorithm. 25 years ago specialists down on the floor were too slow, the open outcry was too slow we needed to move the markets along faster and they got what they wanted. we brought in ems, now there's lots of complaints it's moving too fast i know it's disconcerting when

you get a 500 drop of the dow in four or five minutes when people want to sell, they're going to sell. when you have an october where you've got concerns about the fed raising rates, trade wars, and a slowing global compaecono, people will find a way to sell it's not that much different than it used to be a long time ago. >> is there evidence it's more volatile these days? again, if it moves more than is justified, that should be an opportunity for people to say, hey, this stock is too cheap and i'm going to buy it or maybe vice versa so, you know, what should people be afraid of what is the big concern as far as you're concerned? >> obviously, a robotic crash happened abruptly and can be blamed on computers. bob makes a good point that in some ways they help the market it's important to keep that in

mind also take a step back. why are there more hedge funds why are they bigger than other why are investors shifting to them everybody else, many who are blaming the quans, have under performed for years. we all knowledge behavioral economics and the mistakes that investors make both pros and amateurs the idea is that using a model, a preset input perhaps can handle those issues a little bit better there's a lot of good reasons why we've shifted towards this type of investing. there are down sides they accelerate to some extent trends that are already in place. >> it coooccurs to me these computers were not introduced in the markets just in the beginning of october when this decline began. nobody was complaining as the market was going up about computerized trading which is human nature, right >> exactly right the last few years, remarkably placid again, you don't want to give all the credit to the quans for

that you don't want to give all the blame to the quans today they do accelerate existing moves i would argue. there is some mean reverting type strategy, all kinds of quans out there. but a lot of those kinds of people don't trade when there's a crazy market, when there's volatility surging a lot of people don't intend to buy a program to take a step back it does add to the volatility. >> the rise of passive, you know, too, we have to think about that and the way which that kind of moves things more to the upside than they should and maybe more to the downside. >> why is it that active managers are the biggest complainers about passive investors? i can't understand why it matters so much. >> here's the thing about algorhythmic strading. you certainly -- it makes people a little bit disconcerted because of the speed at which it happens. there is no autonomous robbie the robot lost in space machine that's making completely

autonomous decisions humans program every one of them even something as simple as sell when the s&p 500 drops below the 200 day moving average we saw many instances of that in the last two months. i see the volume spike here. those are machines programmed to do that. a human has programmed it to do that 20 years ago, humans said we're going to sell and they had to call down on the floor now it just happens faster but it is humans. >> you know, you run out of space in the newspaper, we run out of time on television. >> happy new year. we have more news out of the white house. >> reporter: bill, president trump making comments to reporters while on the ground in iraq reuters saying the president is preparing for a lengthy shutdown and that he would do, quote, whatever it takes in order to get border security. he also blamed the shutdown on incoming house speaker nancy

pelosi saying nancy is calling the shots. on foreign policy, president trump says he has no plans to pull troops out of iraq. he said they could use troops in iraq in order to do something in syria. he didn't say exactly what that something might be now this all comes as defense secretary jim mattis is set to depart the white house by january 1st. president trump saying he's in no rush to replace him and that the acting defense secretary who will replace jim mattis, patrick shanahan could be there for a long time. now, this is the first time that president trump is visiting troops in a combat zone since taking over at the white house he will be visiting an air base in germany on his way back to washington. >> thank you very much. rising rates, rising prices, affordability problems, tight inventory and add a slowdown as we head into year end. what's ahead for housing in

2019 we will find out when we come back some big winners in the healthcare space this year

welcome back to power lunch. a nice rally on the street this hour the dow up 600 points. and some new cues today. home prices are up 5.5% from a year ago still, price growth remained flat in october for the month. here to make sense of it all and share her housing predictions is darryl fair-weather. >> thank you for having me. >> you're saying you see more of a slowdown in housing next year, but not one that hurts the economy, is that true? >> at the beginning of the year the housing market was very hot, rapid price growth it wasn't uncommon for buyers to face bidding wars. starting around july the tide turned and we saw a slower market prices were growing but not at the same rate and sellers started coming down in their prices going into 2019 we expect the trend to continue. that could be a good thing for buyers, they'll have more time

to tour homes. sellers will have to adjust expectations it will have a minimum effect on gdp. >> fewer homes to be built has been a problem for a while those that are build would be starter homes, which has always been a problem, right? >> going into 2019 we expect builders to back off a bit they won't see the same return on investment because price growth has stalled they'll turn to homes they know will sell and those are typically starter homes, entry homes. >> are people able to get loans for those entry homes? that was an issue a couple years ago. >> right so after the financial crisis, it was much harder to get loans. mortgage rates were lower, which was great if you were approved for a loan but the requirements to get a loan became stricter we think moving into 2019 that will start to change a bit there will be more credit going into first time home buyers and people with less than perfect credit scores. that's because interest rates have gone up and mortgage lenders need to expand their

customer base in order to get a profit. >> what does one do as the senior behavioral economist at amazon >> that was a while ago. so i worked on issues related to employee engagement. making amazon workers happier. >> yeah, i think amazon would know a lot about my behavior, but maybe that's a different story. actually, speaking of which, we've heard about millenial household formation, how much is that going to be a factor >> it will be a boon to home ownership. >> maybe not enough to off set some of the other factors right? >> we'll see i think that overall 2019 isn't going to be that bad of a year once sellers meet buyers on price we'll see more transactions happening. >> as it goes. thank you so much. >> thank you >> you're still asking those non

sequitur questions. >> when i see that, i'm like, i got to know. >> what is behavioral economist. >> kudos for her for telling us about it. >> coming up next, as netflix goes, so s&p, and if you look at the chart of both today, he's right, and -- and write that down, steve grasso i said that you were right about something, and he'll jn oius to tell us what he sees in store for the markets after this put your data to work on the cloud that drives business. the ibm cloud. the cloud for smarter business.

just over an hour to go until the closing bell a strong rally heading into the market the dow soaring more than 630 points at its high today the nasdaq and s&p having their best day since august of 2015. so what levels do we need to watch? what do you ask when you want to know that? where do we go from here steve grasso, cnbc "fast money" trader and the director of institutional sales joins us to tell us what's in store for the markets in 2019. how are you, my friend >> so great to talk to you and so happy that i get a chance to do that today. >> we'll talk later. >> every time i hear the lead-in and it's nice, i have to

reciprocate. >> what's going on >> kind of interesting when you look at these charts, and when you have that conversation earlier, is it the computers or is it human beings, i think that's a lot of human beings using computers, and that's why these levels are more important than ever to know, so why don't we just take a look at this. you have to go back to the real substantial bottom and a real substantial top. that's going to come out as 1810 in the s&p cash and run that up to 2940, the all-time highs in the s&p cash as well so when you spit that out, retracements, fibonacci retracements, they give you this level, 2375. you always get sort of an overshoot, bust. where did we stop on christmas eve? we stopped at 2351, 2352ish, right there so you had the overshoot level. the problem, is this is the balance level. 2375 down to 2242, so we're

capable of still seeing these lower levels, but going into year end, what do you have pension fund rebalancing what do we have this time? a huge one when i mean huge, it's 80 billion, could can be 90 billion. some projections have it up to 100 billion going back into equities that's why the market is lifting, and that's why we're rallying going into year end they wanted to get the last bit of it out on christmas eve you had that massacre and now you have sort of a bounce level here i'm hopeful. >> we were talking to cart werth earlier, whether we were expecting a "v" bottom you sound like you are, no >> i'm expectinging it the next couple of days that's the way these levels look if you look at the levels where we came from, bill, we can have a substantial real we could have this "v" bottom and trade up to this level all the what i back up 2674, but look at where we've come from. >> yeah. >> the decimation to people's

portfolios and to investments. i don't know if that's enough, so next couple of days, we're out of the woods next couple of the weeks, not so sure. >> all right. >> i'm sure you'll see me in front of this chart. happy new year. >> and we look forward to that at some point. thanks, stevie. >> steve grasso at the big board. >> and "check, please" is next. >> oh,oy b rebekkah: opioids has taken everything and everyone i've ever loved away from me.

everything. i blew my ankle out and i got prescribed pain pills by my doctor. if making my detox public is gonna help somebody i'm all for it. i just wish i would've had a warning.

welcome back as we check on

markets on a monster rally on woman street didn't start that way in a pre-market session but headed that way dow up 600 points and s&p 66 and at nasdaq, bill, 235 points for a 3.8% gain. facebook in particular, amazon, a couple of areas leading. all of these markets higher. >> and oil >> oh, my goodness, up almost 9% in one session today the speed of the snapback has been as brett taking as the mag tustd decline. >> been a pleasure anchoring the rumors of a feud between us were all true and we've burr eat hatchet and gotten over us. >> that's up to the producers. >> our executive producer wonders whether this is a one-hit wonder we're now a famous one-hit wonder and who could forget the "macarena" from the mid-'9. >> are you going through them one by one.

>> "mamba number 5" and i was fog say "who let the dogs out," seems appropriate, to do "power lunch." >> four famous one-hit wonders. >> and this is why bill does the play-by-play and me the color commentary thanks for watching "power lunch," everyone >> and a show called "closing bell" is next. >> we have companies that are doing the best in the world. record kinds of numbers so it's an opportunity to buy. >> president trump says stocks are gift at these levels i'm sara eisen at the new york stock exchange welcome to the "closing bell." come up, we'll discuss today's big real and where investors should still be looking for bargains one area they may want to watch is healthcare as big-cap names suffered double-digit declines pharma industry ved r pharma industry veteran brea