syndrome the concern is we are rerunning it to me you never run the same movie swies. >> yes >> thank you for watching power lunch. >> closing bell starts right now. >> thank you both very much. good afternoon welcome to the closing bell. >> this is the final hour of trade where literally anything can happen it has been the case let's get straight to the markets. we need a rebound in the last few moments or so. still a triple digit decline after yesterday's historic rally. the major averages back on pace since the worst of november 2008 it was minus 500 it is now down minus 357 >> all are still lower

prak trying to get back to positive all s&p sectors remain lower as well the dow at the moment and s&p having the worst since 1931. down 373 points. coming up dan will join us and explain why we could see a rally into year end. also, stock black, why he says she not buying any stocks at all right now. >> but first we have full team coverage of this market sell off. bob has more with what's driving this bob, any explanation? >> in the old days the netflix moved or amazon moved the market here we are seeing a little bit of a lift here in some of the technology names, some of the industrial names that have been fairly beaten up here.

we were down we took a slight leg low are after consumer confidence numbers and hit our lows on the day and it balanced it really well here. almost 200 points in the last 20 to 30 minutes. let's look at the dow. apple, for example, i was coming up here 10 to 15 minutes ago it was all of a sudden 152 united technology, i had that, 101. 15 minutes ago exxon was sitting down there at 9065 or so and now you see 66. so microsoft, i don't have that. you can see a whole market is lifted roughly a percentage point or so. i would be relative out performers walmart more defensive tone to the outperformers here what's next, i think the question here is what are we doing here are we selling rallies

we are getting a little bit of both today we sold the rally early on they are trying to buy the dip a little bit the one thing you want to watch is the wednesday lows. we are a long way from that. breaking that would be a bad sign here. the year end rally hopes i think the story is do we get buy back? the reports are buy backs are there. they are overwhelmed by selling pressure the end of that is really complicating things. i think it's still a fact or we are seeing short selling and short covering i think was a factor yesterday bottom line a lot of year end gyrations are making it very complicated to figure out any of the fundamentals i can't wait to get into january. back to you. >> thank you forthat

the conference boards falling to a fooi month low of 128, the biggest decline in more than three years. if you come over here this is the decline we are talking about. zoom on in okay but then again you go wider again and you see where sort of at a very elevated level and what we did is we put the red recession bars in here it does decline but for several months before you get to your recession. we'll zero in ten months before the recession is when it started to come down seven months before the 2000 and six months it is a sustained decline. we are not there yet it was the beginning of it certainly not confirmed by these kind of things if you want to zero in on a

place like this we have false indicators as well some times its does not give you that signal. that's the data we have worth mentioning new home sales did not come out today because of the government shutdown we don't get that tomorrow but next week the market will have real date to to consider primarily because it is private sector data. we want to watch those because the fed was a bad number we will watch that no data market is closed on tuesday. thank you very much. manufacturing pmi on wednesday this is pry vivate sectors. it will come out and manufacturing is a private group. construction spending not happening because of the shutdown vehicle sales will come out. the services pmi on friday

so why this difference the market is expecting recession. call them x factors. >> i have another one, steve >> yeah. go ahead >>so when the federal reserve and other central banks were involved in years it's not that it was reflecting a boom, that's the mechanism. it would drive up asset prices and flush money into the system. that's coming out from the fed and the other major central banks are starting to taper as well with the contraption isn't that a way because it wasn't like that on the way up >> i think it has to be part of the reason i will point out they announced the plan to reduce the balance

and then they did actually reduce the balance sheet by half a trillion it went up during that process it seems like -- >> and the -- >> so this market seems to be spooked f spooked by the plan of the fed to follow through next year. i'm doing 600 billion dlarsz, a full year at the max reduction and the idea that it will not be to economic indicators it is something john williams told us would not necessarily be the case it is a little bit contradicting. what's missing here is a mechanism is hurting the market. if you look at bank lending that's doing pretty well it seems uneffected chltd and then you look at interest rates. they are way down now. the fed is out of course there is some reduction in liquidity you know the numbers as well as i do we had an $800 billion balance

sheet before the crisis. i went up to 4.5 trillion and now we are down and going to 3.4. we are still going to be, you know, something like 2.5 to 3 trillion where we were before the crisis a lot of liquidity out there maybe not as much to justify. >> i think it will continue to be a debate. thank you. >> joining our closing bell exchange now to disdoes todcusss market selloff we have heart andan rick does this tell us that this was a bare market bounce or too earl tloi say >> a little too early.

if they close down over 500 points it negates what happens yesterday. now, what you're looking at here is raw psychology. it trapped door may open cht it did not appear that inspired some people to begin nibbling away. around 2:00 you get the first look at the market on closing. given the way the market had been acting they were clearing billions and billions for sale what happened was around 2:30 it looked like there was maybe less than $200 million for sale so they came in and started buying them. it resulted in the 200 point move that you spoke of now we are back in the testing

area you start to weaken again. a lot will depend if the market on close exchange. viewers should pay attention to what happens between now and 4:00 >> does it make you distrust yesterday? >> i think we never trusted it to begin with. it is that of liquidity. the market is moving and the market is moving on technicals and not so much on fundamentals. we did think that the magnitude of the run-up we had was a bit over dp overdone i will say watching the technical levels is really really important the reason why we rallied i think so much yesterday is because we managed to hold that very key 20% down level off the peak so if we continue to hold that today i think that should be a positive development for the market if you think about typical draw downs in a secular bull market

they tend to be around 20% here we are 20% off the peak i think some value starting to immerge here >> what is your take on the renewed selling and equities and some of the action that's being confirmed in bonds and the dollar and what it tells us about where we go from here. >> i think the treasury market is as skeptical as art is. i think he gave a great description about how the session played out there was give back in stocks and give backs in treasuries it made it all the way back to the 280/81 level technicians love when you test midpoints. right now here we are at 275 we were down to 273. we haven't closed at a 273 level. two year note yields now, should they closehere

they were testing levels we haven't seen since early july. it could be a recession. most of the recessions i have seen over the last 38 years or so have been also paired with a fundamental logic, a deterioration. i don't see that deterioration everything has gone global including the stimulus you brought it up. it isn't only about announcements of taking the candy away it is when you actually take the candy away it isn't just when the parents give candy it is when all of the relatives give candy we have a cumulative attraction at a time when cumulatively it hasn't tried hard enough to normalize and they may have missed if boat because we are already seeing a slowing all of this is taking a toll there was a time we are seeing

the downside of that now >> yes how off haten have you seen this >> you had volatile markets before until you made the bottom in march of '09 the s&p had 13 different 4% moves within a day. we have had that kind of volatility not usually back to back for this long. it is disruptive i'm encouraged the markets aren't too bad we are moving a little bit better here. >> i think we need to see a couple of things we probably need to see a

reversal we are seeing globally the second thing is the change of trend in the u.s. dollar. if we see this in 20 19d19 i thk we can see u.s. equity markets that is our base case. >> we are seeing that a little bit. >> i think we should see more of that >> fiscal stimulus >> okay. we'll leave it there thank you very much. still ahead, scott black says he doesn't seek sooe any value plays in the right now and after the break, mad money's jim cramer sounding off on what he see as a major risk to the market. listen to this zb >> i need the fed to shut up

>> up next we'll discuss which other factors could be to blame for the volatile swings. the closing bell will be right back dow recooperating, down 50 at the moment -- 250 at the home -- moment

he took the presidency by surprise in a way that was really brutal. he took congress by surprise he has to start doing that i have these monthly meetings that are what i see. not about forecast he did the concern a great concern. i think he has to start talking about how powerful his words

are. >> that was jim cramer earlier on squawk on the street. joining us now is peter. very good afternoon to you if i start with you do you think that he is ignorant to how powerful he is >> i think the fed chair is p aware. he understands that the feds has power over the economy and the markets. i think his communication at the press conference came off around the auto pilot, if you will, on balance sheet normalization. i think what market participants have become more accustomed to

is doing whatever it takes to support the economy. i think that part of the kplun case was a bit of a misstep relative to what market participants had expected. so that is also a big part of the story. >> i agree it clearly beyond just the straight kplun case of the auto pilot with the balance sheet, it felt like they were disappointed that the fed chair seemed to be missing some slowing in the economy and signals about what is coming up next. do you agree with that what is the fed missing? >> i don't think it goes beyond he doesn't say the right words he has the wrong approach. he thinks that it is something

separate from monetary stiegtenning the market believes by some of the estimates it's 1.5 to 2 rate hikes alone. the markets worried it is too many then you come out and say look, we will auto pilot half of the rate hikes in the form of the balance sheet. that is why it sold off so hard every time he said the word auto pilot. i hope they get it i hope he understands this is a form of tightening he didn't get it they need to understand what auto pilot means >> peter, we have another fed meeting with press conference before too long in january can the fed chair correct his errors simply with rhetoric in that next meeting or do we need action now

do whether it is a clear change or even in interest rates >> well, i think clearly there will have to be a walk back. i agree with jim what it is is not much different from managing short rates. qe is permanent omos meaning that the exercise is longer duration part of the yield curve. i don't think it is lost on him by any means i think he may feel an obligation while the economy is good the problem is that the data which he is relying the backward looking. i doesn't take into account the reflective nature which is that monetary policy has created the

good economy the moment you remove it is when the real economy begins to respond. >> would you tell people to buy stocks could we see a bottom until we see any acknowledgment from the fed? >> i think it was part of what was the bounce of yesterday, the market thinking we have done enough damage that the fed get it and they will start walking back remember, the natural state of an economy is to expand. the reason we have recessions is breaking it. that is what the market is worried about. it is the principal reason we have had the most recessions in the last 100 years it gets very nervous we have seen this before you'll raise rates too much.

something will break and we'll have a recession i hope he gets it and we'll see it walk it back and the market could rally if we do >> all right thank you. good point we are seeing a turn around. we are at session highs for the dow. only down 196. we were down 611 points. the s&p was down 2.6% earlier. we are down less than a percent. >> you have been there with the market >> yes >> if you want to thank that we'll have more on this market move and whether we can trust the turn around. bottom line is didn't add to the 5% joins, what to do with all of that we have a line up of key wall street voices dan tells us why there could be a rally in the final trading

days of the year and scott black explains why he doesn't see any value plays in the market. we are back in a couple of minutes. i've always been amazed by what's next. and still going for my best, even though i live with a higher risk of stroke due to afib not caused by a heart valve problem. so if there's a better treatment than warfarin... i want that too. eliquis. eliquis is proven to reduce stroke risk better than warfarin. plus has significantly less major bleeding than warfarin. eliquis is fda-approved and has both. what's next? reeling in a nice one. don't stop taking eliquis unless your doctor tells you to, as stopping increases your risk of having a stroke. eliquis can cause serious and in rare cases fatal bleeding. don't take eliquis if you have an artificial heart valve or abnormal bleeding.

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welcome back the dow down only 121 points down 611 at the close of the day.

is this a volatile session in consumer diskecretionary saw the worst hit. there is the dow less than 100 points >> yes and only one sector now in the green. it is still in the a poz fif day of course. we are down and still quite broad for sectors that are lower. significant improvement in the last 45 minutes. >> really a lack of headlines. we haven't seen anything major in terms of a fundamental region a lotover people saying it was conditions we continue ton this pump by

ride apple may start making the top end iphones in india in 2019 it would be through the local unit and would mark the first time they will have made the product in india apple trading lower by 2% which a lot of people have looked at i thought it was interesting that they would make phones there. >> yeah. >> between the u.s. and china. you know, you hear about places like vietnam india is a huge consumer market if they start opening factories there. >> yes at least from the chinese perspective it's not changing suppliers. >> supplier opening of factors >> yes >> the securities and exchange commission will pay over $135 million to sell charges of improperly handled transactions

involving foreign company shares jp morgan, i mean stepping away from that story which made it perform differently today really recovering significantly from its lows today it is down only a third of 1%. goldman sachs down 37% jp morgan, still an ugly year. it is down 11% year to date. >> the dow is only down 59 points >> remarkable recovery in the last 45 minutes. >> still have a half an hour to go >> anything can happen >> it is the high down 59 points morgan has this for us >> here is what's happening. iraqi lawmakers demanding leave the country in the wake of president trump's surprise visit. they denounced a a violation of iraqi sovereignty.

he has no plans to withdraw the 5,200 troops in iraq five monks assaulted police found the monks tied up, one with head injuries nearly three hours after the assault. police ruling out a terrorist attack a tsunami hit over the weekend. 430 people were killed with more than 1,400 injured thousands were left homeless heavy rains and high seas have hindered the search and rescue effort the federal trade kpligs is warning netflix about a new e-mail scam. they are asking recipients to confirm payment details. they say log onto your account from the netflix web site. that's the cnbc news update. i'll send it back to you guys at the new york stock exchange. what does the wild moves we have seen in markets mean for

long term markets? steve has the big picture view over there over to you. >> how are you >> i'm very well >> particularly better off >> it's a pretty impressive rally. if you look at the levels we are looki looking at right now yesterday we had a significant bounce off of the 2350 level. that's where you're putting this in sort of perspective if you look at where we were today you go from -- you have to put in your high and low and where you think you'll retrace to today the balance you can see we are about 50 handles off the zone the bounce zone was 2407 all the way down to 2392 you know where we got? 2396 is where we basically did that little hydraulic bounce to get us another 54 handles off the loan what should you be concerned

with yesterday's low which was 2346 right? so that's the key. what we are seeing now in the marketplace right now -- and i expect to go green on the day, is the pension fund coming in for year end these guys buy it. they don't have the luxury of waiting. you get that level and these levels are all from this low back in 2016 up to the high, the record highs you come up with a bunch of retracements thee these are significant. everyone is watching the same level. >> so we are still down. you think we'll close down and end the day positive >> i would like to see us end green. i think it would be helpful. if we ended right here and we don't give this back this is a win. i expect tomorrow to be a tremendous up day and i expect

the last day of the trading year >> can we read into anything >> i think what this has shown us is you can't forecast out in this market more than basically three hours. it is -- you have to see where you're going to rebalance, what's going to be bought. i would look for maybe continuing strength for the next couple of days >> we'll have to get you on in the last minutes of the year's trade. two tremendous up days >> yes >> thank you very much for that. 26 minutes to go here in the session. let's look at some of the biggest in the day bob, let's start with you and this little recovery we are seeing >> yes it is p thatting again in the middle of the day. remember where we started here 2466 i think we closed at yesterday. we broke through 2,400 at one point. so down 60 points and

essentially back 60 points in the s and p. where are we in i have been holding this all day i'm not sure where we are. i think it's a very good thing let me show you here what are we doing? are we selling the rally or are we buying the dip right now? i think it's a good thing. the last two weeks i could tell you what we are doing. we are selling the rally that comes through. today, well, you know, we are buying this late in the day. suddenly this is what sloppy bottoms look like. we need to hold the low 2347 we are a long way from that right now. to show you a couple of names, united technology. we are 101 an hour ago we are 104 now the market has lefted. we were at an eight year low on exxon mobile here.

we were what 66 on my notes here this was 30 or 40 minutes ago. united health 235 an hour ago. what are we now? we are up $6 in an hour. remember, this was $290 stock in the beginning of december. so this is not they are going for tech stocks. this is a general lift up in the market i tend to agree with his point here about what might happen in the next day or so if we hold here that's a very good sign. >> you tend to agree you're as confident as he is in. >> not as confident. if we end up down 100 points i say that's by the dip. >> we are down 14 points right now. >> there you go. >> i say that's a win. >> thanks for that let's check in on what's happening. hi >> hi. this is really incredible. you can see the market turning

around the dow and nasdaq are tracking very closely together. at session lows we were down now you can see downright now just about a half a percent at this point that's not to say that there's not some negativity in the marketplace. some of the tech stocks are getting hit. having the biggest impact today it was amazon, apple, microsoft, google and also facebook most of your fang names are the ones to watch. some of that sugar high is starting to wear off retail hit hard pretty much. fourth quarter expected to come in but first quarter could issue some troubles. you can see weakness as well people are looking forward if you look at as opposed to of the lower end retailers that's usually a berometer. take a look at dollar tree and ross stores. they were trading down less than

a percent at this point. of course the the stand outs today, take a look those are steep losses back to you. >> all right check it out dow has gone positive. you heard the background noise, but people cheering on it's a remarkable come back. at 2:17 p.m. it was down we have climbed all the way back into positive territory. up 24 points lead by 3m, ibm and goldman sachs. >> we have had big cheers. yesterday it was a thousand points >> sit a milestone of its own.

>> what do you do in a market like this? jeff is here, chief investment strategist welcome to the closing bell. this is kind of a moment we are seeing right now the dow raising a 611 point decline. what are you telling clients should they be buying? >> yeah. i think today shows you when you have a vix over 30 then anything is possible. that is just volatility. i think this last week or so has ban glifrpgs of they say we are not stepping in. so i wouldn't -- i'm not sure i would share that enthusiasm. i'm not sure i would carry a lot from that because it is such a thin time of year. typically we would look for a

low when two things happen i'm talking about the '08 low and the low earlier this year. you get a low in the market but you don't get a new high on the vix. so on monday we had a low on the market and a new high on the vix. i think it's a more convincing signal >> what would be the new high we are watching >> it would be about 36 or so. >> all right >> jeff, what's your view? are you more infused by the bounce we have seen? >> it is encouraging we already took action we managed about $27 billion we looked at this as an opportunity for investors. nothing i haven't heard before but when we see no signs of impending recession and you have an emotion driven selloff it is to watch that is an opportunity. >> and where have you been

deploying that cash? >> mostly to u.s. equities and we see best opportunities going forward in health care that's the right evaluation dividend and growth. >> what's your safest sector >> i think utilities are good spots. i would have a little gold. >> okay. the s&p has joined the dow in positive territory with 19 minutes left of trade. we are up 57 points on the dow s&p just positive. let's see if the nasdaq can get there as well. >> a number of sectors lifting us higher. coming up tech investor dan niles says it could carry over into the final trading days of

the year and whether it can carry into next year as well when closing bell returns.

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an almost 800 point turn around the dow is two-thirds of of a percent higher nasdaq in positive territory as well up next, dan niles says the late-day surge could continue from here. he'll tell us why after the break.

two more trading days left yesterday tweeting from christmas to year end the s&p average of 2.2% returns. should we expect to see more upside than that in the last two days he joins us now. thanks for joining us. extraordinary turn around we have seen in the market in the last hour and a quarter or so. do you expect it to carry through for the last two trading sessions >> yeah. i think it's a tough call over the next two trading sessions. when we put that tweet out yesterday morning our view was the market is down 19% it is the worst start to a fourth quarter since the great depression and through 1987. there had been only seven worse

times in history things are really bad right now but i think we can agree it is not great depression bad or when you had banks failing. it seeps excessive which is why we put the tweet out yesterday was more than we could have expected in a single day. i think what you should see is as we get towards year end that, you know, you probably will see a little bit of a pick up continuing into next year but then i think things get tougher. there are problems but we got really over sold the good went down with the bad. everything is coming up. you have to start getting selective again. >> so dan, i usually think of you when i think of technology where does tech fit into that overall market call of the good and bad and whether you should be buying right now? >> that's a good question. we have got really positive areas. we heard i think yesterday that

we have got a really good holiday sales and retail sales were the best in six years they were up from about a year ago. so that should be good for the emersion playe e-commerce areas they have starting up for the first time since march which is nine months. china is the biggest end market for video games. i think those are ones we think are good having said that there's a budge of negatives as well i think smart phone sales don't seem have been good. auto demand in china seems to be weak it looks like it is down about 20% year over year in the month of december. china auto sales will be the first down year since 1990 it

will be pretty bad you'll have to clear all of the inventory for unsold autos in addition i think you have had customers order in advance because they were worried about going up on january 1st. you'll have a lot of inventory to clear i think it will become very important as we get into the new year if if you screw up you're getting punished pretty badly. >> i now you can't talk specific stocks but when you joined us a couple of weeks ago you made it clear that you much preferred social media stocks with your tweet two days ago you were warming up have you deployed that specifically >> yeah. that is a really good question that is the space where if we

are looking at that you have stocks trading below the market multiple you know, obviously there is spread of regulation and all this stuff at the end of the day you platforms that are, you know, dominant nobody is going to replace them. you platforms that are incredibly dominant. those are still areas where consumers are spending more and more of their time relative to watching traditional tv. that's where add dollars are going to continue to flow. from a risk reward basis those are some of our most favorite areas to be deploying capital as well as sort of the video game sector as well >> 10 seconds, are you still shorting apple it was a good call when you came on and said you were two weeks ago. >> what i would say is that, you

know, the smart phone sector has been beaten down a lot i'm looking for stocks to bounce more if they do my plan is to reshort that under it because i think you're in this period of time where, you know, smart phone users will be down for the first time since the industry began and i think you'll see profits starting to compress you can't keep raising prices and hope to gain market shares where people can't afford to spend a thousand dollars on a smart phone. i think it will go through with the pc industry went through you go all the way back. the pc industry units shrank for six years in a row through 2017. i think smart phones, you you know, you're selling a billion and a half smart phones a year

i think what you'll see is unit sales will be depressed for the next several years >> all right thanks for joining us. >> my pleasure >> not taking the bait >> no. >> you came on early november. >> wouldn't take the bait on the specific stock but he said he would reshort that in the future that says he covered it. he has seen enough of that to come off of the space. now we have six minutes left to trade. we'll be back with the close coming up. ♪ ♪ put your data to work on the cloud that drives business. the ibm cloud. the cloud for smarter business.

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by being on time everytime. and if we are ever late, we'll give you a automatic twenty dollar credit. my name is antonio and i'm a technician at comcast. we're working to make things simple, easy and awesome. welcome back we are looking at a positive close. we have six or seven stocks up s&p sectors for you pretty attractive instead of performance frm all of those were lower as we look at the s&p

sectors which are coming out consumer staples all up sharply. so we have seen a fantastic rally. what hasn't changed course during today oil prices are still lower they haven't seen that to the same extend. they remain down and the dollar as well, we are not seeing that same turn around in the last hour or two. the dollar is down it is an extraordinary close >> this is the characteristics very sloppy extreme action the last two days look what's happened a thousand point move and today we were down 611, around 2:15 eastern time we saw the big move to the upside here. the question all day i have been posing is what are we doing? are we selling the rally or

buying the dip it looked like sell the rally might prevail and the answer is we are buying the dip. it is a very positive sign overall. i don't know if it will be a bolt tom of any sort it wasn't like oh, text tooks back united health which has been destroyed this month went up it is a whole market you could say it is finally pension funds coming in. we don't know. the volume has definitely picked up >> yesterday we closed up a thousand points higher we are up 200 points we moved over 800 points it is an extraordinary thing >> yes and the important thing is this is the first buying volume surge that we have seen. two days in a row of buying volume surge that is something we have not seen for the entire month of

december we are almost 900 points, that does it for the first hour back to you. up 200 points. >> i told you anything could happen how about an 865 point swing up. welcome. i'm sara take a lack at how we -- look at how we are finishing a crazy day on wall street this is up 253 points. it is 255 points more than a percent after being down as much as 611 points at 2:17 p.m.

s&p closing higher all sectors did finish the day higher including consumer discretionary. the nasdaq went green as well in the final moments of trade closing up and this russell 2000 lagging behind the other major averages, managing to eke out a gain this is actually the first back to back gain of the month of december note to value investors, scott black will be here he doesn't see value out there let's get to today's massive market comeback. bob is here. tracking the numbers at the nasdaq let's start with you, wow. >> this was the most fun i have had since yesterday. it has been an awful month 865 points

it is 88 points and the s & p 500. we broke 2,400 we started at 2460 or so the s&p we went below 2,400 in the middle of the day and started the long slow move to the upside here. the whole market lifted. i'll show you a couple of stocks here if you look at 3m it was 183 at 215. that is an hour 40 minutes exx exxon hit an eight year low. it was $89 closing at $92. what's next? all day long i'm sticking to my story and i think it was the right way to look at this. what are we doing? are we selling the rallies or

buying the dips? for two days there a row we are buying the dips. this is a kind of sloppy action. we are a long way from wednesday's lows of 2347 back to you. >> thank you very much for that. the nasdaq down more than 3% it rallied in the final hour of trade. we have a look at how it finished up. >> it was an amazing turn around today. the nasdaq did turn around closing higher what was so particularly interesting to me watching the action all day is how closely they were moving together even at the steepest. when we saw this turn around happened but at the last minute the dow was able to rebound over a percent. the nasdaq wasn't able to do it. let's take a look at some of the bright spots here and where we ended up with trouble spots. i think that's what investors will care about. on thebright side we finished

with some of the chip socks a little bit higher. it was kla-tencor. monster, pepsi seeing nice gains on the day also on the consumer side you saw walgreens a get a little bit of a pop there still, fang was a trouble spot for this market. all of the faang stocks were lower today. we know how important they are when it comes to the waiting on the nasdaq the big chips, they weren't able to turn it around either so intel and advanced micro and nvidia, closed down. back to you. >> all right thank you. joining us to talk about the market day and what to do next, michael from third seven advi

advisers what just happened >> i think we are seeing yet another day where this is volatility they had an 865 point swing to the upside all i can say is it's healthy. this is not health dpts y. these moves -- >> it may not be healthy but a lot were waiting to see whether there would be fallout through buying we got the back to back confirmation within the s&p. we haven't seen that in a while. if what does it mean >> we were able to tack on a second day of gains. we are finally getting through that we should have a little bit of clear now for the rest of the month and into that first weekover january now that all of the selling of all of the losers make that across the board is finally washed out >> do you think the data has

justified today's rally? you have been keeping an eye on it >> the big word i have, longer term i'm very bullish here i don't think it's slowing to the point that we'll see a recession however i'm a big believer that it does drown the data i'm concerned about tomorrow's chicago pmi. consensuses around 62ish i think coming in below 60 they are watching stock holdings go lower it is making them nervous about spending money on the job, if you will we have the manufacturer into the new year yes we had the richmond fed which came in. that was the biggest drop we have ever seen things like that worry me.

>> isn't it in the market? >> what if it gets worse it can keep driving that lower i don't think it's going to. that is the big risk here. the market is driving the data which drives the markets and so on in a negative cycle >> you mentioned the effect that tax selling has had. do you think it has been a big calendar effect on the selling and across into the new year >> yeah. it has been very important if you look at the top ten they were down 23% in the month of december through the 24th versus 14 for the market. you do have a classic january effect it is one of the strange commodities but does see small cap stocks rebound in january you can paint that picture to the next ten days or so. >> i can't figure out what you're saying. seasonal factors playing a role

in the crazy market dynamics, are you saying it offers a new opportunity to buy or to sell? >> that is the question. i know we have seen this and it has been profound. we are going to get it bounced we'll have to rely on the weaker data to begin to pull into a more dovish stance come the new year >> that would be bullish >> do you agree? >> yeah. i think powell already is dovish i think he flubed it a bit last week markets were looking for an excuse of i think he did i have been calling that far long time. they were saying four or five hikes i said the state is going to slow down let's see if that is what plays out here let's see what happens maybe there will be a cut. i don't think it is priced in now. >> if it is bad enough is that

good for equities? >> certainly not but we do get a scenario remember, we had the bad is good the bad is so good it will keep the fed accommodative. the wild card here is that the president is stop with the border wall, get a trade deal done and work with the other party to get stimulus done >> are you buying equities for the next couple of days? >> in general i am still picking away here. i have to say, year end could be the end. maybe it was today maybe it is going to be monday maybe it will take a few days. i want to market to get boring here far few days. i want to be here saying yeah, the dow is up 40 points. it would get me excited. we need a few days of that >> new data toes growing

apprehension money flowing into mutual founds guys, none the lease, people talking about how it offers a 2% alternative. >> it is in terms of bonds and cash and providing that safe return the issue is twofold they are still the most important number to watch. the second is that persistent move to capture invesing which is tough on active asset

managers it makes it feel like it's on auto pilot than it should be >> what effect do you think it is having? >> shutdown. >> i think it is this. i don't think it's a big factor here the one thing it will do, we'll start a hearing about the slowdown because at the end of december we see slowdown in activity i think what we need to remember there will be a pick up in terms of a lot of timing we have seen that happen before. it is a minor phenomenon we could see some sort of pick up right now we'll see how that plays out >> when you see this volatility do you get worried we are going back to comparisons and the run-in to that >> the thing i say about that is this it's not 2008 but it is 2019 we need to be concerned with that

one thing that's not get ago lot of attention is all of the loans being held, what's going to happen with that i have been thinking about financials all year. i'm waiting for an opportunity to get more toztive on them. let's see how expectations are looking. it is a big factor it's not going to pushing into a 2008-type scenario let's see where it all goes. i don't -- i don't think we are looking at recessions here it is a very likely scenario >> i think of your research and your work as sentiment data. we have a good feel of what people are looking at. how bad has it gotten? >> the first is regular retail investors are googling things like dow jones at levels similar

to what they did in february they have been nervous all yearlong it is definitely on edge there they googling recession by 50 to 100% more. there is for the first time in the last five, six, seven years the worry and population that the volatility will drive a recession nextyear

>> i like health care and i also like real estate given my views on the curve i'm negative on financials as i mentioned earlier. i'm negative on industrials. >> which are you watching? >> defensives. we are pretty cautious even though health care would be an effective group it is right up at the waiting of the s and p. we are nervous about that. it is better to hold off, let this volatility wash out >> thank you both very much. >> thank you >> the dow saw the biggest comeback in a decade after yesterday's record rally following yesterday's record rally. >> record point rally. >> up next value investor scott black is a well known stockbroker but doesn't want to buy a single stock we'll explain why.

>> we are six dayis i way from 2019 we'll see how it is related to tax law selling. markets in turmoil tonight at 6:00 p.m. eastern right here on cnbc certainly markets in volatility. we'll be right back.

today's comeback comes ton heels of yesterday's historic 1,086 point gain >> joining us now is scott black. extraordinary swings in the last couple of days some people taking positives from the last two days in particular you are not deploying cash into stocks, is that right? >> that's correct. i'm not a technician i think the problem is have been

started by president trump it is a self-inflicted wound until we resolve the issue i think the market will be in flux from a statistical standpoint the s&p is the lowst it has been in years on today's close we are at under a 15 pe. we haven't seen that in a lot of years. the historical norm is 16 times. >> earlier in the year most are over 20 times earnings from evaluation standpoint things are cheap it is now dominating the markets. that's the real issue. individual companies and earnings don't seem to mean that much a lot of companies are in free fall >> so what evaluation would be enough to make you look past that macro headwinds >> it is not really the pe

ratio. it is eight times next year's expected earnings. it really has to be resolution of the tariff issue. you know, if you look historically isolationism and nationalism didn't work prior to world war i and didn't work prior to world war ii. world trade crumbled it was down 67%. what mr. trump has succeeded in doing is overturning from 1950, nato 1949 and sis rupted the total supply change which is important for lodgestics, auto and auto related stocks and general manufacturing. it's not like we can reseed into the lower 28 and hope there are no repercussions

>> so as a value investor you must be licking your chops if we get some sort of tradedeal the other one one the number one drug in the world, humira. stock has been crushed it is, you know, positive free cash flow. they don't expire until around 2024 it should be very cautious on this market until it really is stabilized it's like an earthquake. the initial one may be 7.8 but

there are after shocks it's bet tore wait the aftershocks could be dis disruptive >> okay. i don't think we'll have a recession but i think we are going to ease back from about 3% this year but i think europe slows to around 1.5% world gdp including the immerging markets will slow. i think we will go into a recession in 2020. i think corporate earnings are slowing and people are factoring that into their models the consensus is up over 8%. i'm at around 5% t with earnings dropping quickly it could be flat

you could be really at $157 in earnings which will be this year >> it is for the year. it puts a little bit of pressure on equity evaluations. i think until it is resolved i don't think the stock market goes any where >> i think it was a theme people plays early on i think the general market move dominates everything i can say 95% of my companies came in with record earnings i doesn't matter even if you own nine or ten multiples they all went down systematically

one of the issues is there were only 3,600 stocks. when i started there were 11,000 most of these companies find their way in and when the baskets get solved they go down simultaneously it's not like individual stocks that do outstandingly well that is more of a technical factor than a fundamental one. >> thanks for joining us much appreciated we are in day six of the partial government shutdown and getting new headlines about how long it might last we have this latest from d.c >> it will last in the 2019. it was open for about four minutes before adjourning. they will not be back until wednesday. that means no votes will be held and that means that lawmakers are essentially throwing up their hands and kicking the can down the road until the me

session of congress takes place on january 3rd now, this is something that was knowledged by the number two democrat in the senate he tweeted this earlier today. he said no end in sight to the president's government shutdown. he has taken our government hostage over demand for a $5 billion border wall that would be wasteful and ineffective. >> she said the president does not want the government to remain shut down guys, all of this is bad news for the roughly 800,000 federal workers that will be without pay

indefinitely earlier today the government's office of person personnel put out a sample letter to creditors that government employees could use. that letter said i'm a federal employee who has been furloughed because of this my income has been severely cut. they suggested they contact their personal attorneys during this time. back to you. >> it is. >> it's a reminder of the gridlock and disagreement starting a new congress what sort of policies was wall street expecting congress to get done eventually they will have to raise the debt limit >> eventually they will also have to try to look at the trade

agreement with canada and with mexico i think what this does is push back the time line for any policy priorities for both republicans and democrats. >> thank you very much we appreciate it still ahead, the dow seeing the biggest comeback in a decade the s&p, the markets are not yet in the clear we'll head over here i'm excited about this >> have to do it >> is it your first? >> it is the goal here is to compete with your last one. nth. >>eier of us can compete with mine. we are back in a couple of minutes. don't go any where

>> welcome back. let's take a look at how we finished the day slightly higher. down 611 an hour and 20 minutes before the close all of those seeing massive turn arounds. time now far cnbc update >> here is what's happening. attorneys for one of the boston marathon bombers -- they argued maetd it impossible for him to get a fair trial plan to meet with top level

executives hinting that some seem to be backing away from commitments related to teen access fda commissioner tweeting there's no reason manufacturers must wait for the fda to support the epidemic >> they will be able to see the liberty bell this weekend. most of the buildings in the national historic park have been shuttered. officials say they are giving the part $32,000 to reopen for three days preparations for new york's new year's eve celebration are taking ship which include 192 new crystal triangles on the time square ball to give it a new sparkle. the ball measures 12 feet in diameter and almost 12,000 pounds god bless all of them standing out there for all of the hours to see all of that in person

back over to you >> you picked the right show thank you very much. >> another volatile day here there are still risks ahead. sara has a look at the key market headwinds >> so here is something that investors are increasingly obsessed with. remember during the post financial crisis the federal reserve pumped money in it bloated the balance sheet stocks shot straight up because all of that easy money was sloshing around. that is reversing and it is reversing pretty rapidly here is a chart courtesy of david rosen berberg it shows you how many trillions of assets in bonds that it has it was on the easy money period.

guess what i will draw now to show you that in 2018 which is right now that is shrinking at a rapid pace the federal reserve letting $50 billion run off the balance sheet, letting the bonds mature and not rebuying them. it is creating a tightening in the economy. it could be weighing on asset prices like qe propped up asset prices now i will blow your mind with a second one i will show you globally it is happening kind of at once. it is the balance sheet assets of the four largest central banks. you could include bank of japan, bank of england. everything shows you it was all in expansion it was all of the easy money everybody was easing and stimulating their economy. guess what's starting to happen towards the end of 2018?

it shows you that it is finally shrinking and contracting. that contraction started in october. that is when u.s. stock markets started crumbling. the easy money from all of the central banks around the world is either getting tapered. or actually getting shrinken like we are seeing it could be a big factor as to why we are seeing so much volatility >> and it pains a picture. >> it will only get worse. the offset, lots above the line now. do we have lots below the line to come. it is that the fed for example has not indicated it will go back to where it was it will not shrink the whole amount we are already quite a long way through. >> they spent millions of dollars on their balance sheet

we don't know what normal looks look and we don't know if they will pause i think that's why they are saying we are on auto pilot. it was so worrying to investors. they want to see there's some flexibility and maybe they could ramp it back up in terms of qe if things slow down. that's the background here >> overall good result >> all right 2019 is a few days away. up next two financial advisers join us with how to cut tax bills. president trump banning companies from using equipment what that means for the future between the u.s. and china coming up.

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welcome back we have a news alert on sears. >> yes saying that sears could face liquidation in the next 24 hours. according to this report the last shot at survival put

forward to buy the company out of bankruptcy. here is the catch. as of thursday afternoon he had neater submitted his bid or rounded up financing according to people familiar with the situation. esl is the only party offering to buy sears as a whole. without that or another like it it could break the company into pieces the deadline to submit is tomorrow for more on all of this head to cnbc.com for more. back to you. >> all right thank you. it was a volatile year for the markets. investors have two days left to sell losing stocks. on investor can minimize or

eliminate capital giains tax bill tax selling is common at the end of any year but even more so because of the magnitude and recent downturn. it is difficult to know what portion of the recent market selloff is attributed but it feeds on itself of the more people that sell into the market for tax purposes the more exacerbated it becomes. i have spoken with advisers and retail investors that say that both types have been doing it for weerks now it prohibits from buying before or after substantially similar security has been sold far tax loss to capture this investors need to be careful of reaching that rule and they must place their

sell order by december 31st. so only two more trading days to go which could create downward markets until then, guys >> thank you very much for that. let's discuss this further financial adviser joins us thank you both for joining us. if we start with you the extra selling that we have seen recently, do you think it is a year-end tax phenomenon? >> yeah. i think they will see if they can't maximize any losses on those positions. it might be creating a little additional pain. we could see a little more selloff. i wouldn't say that's what is leading the market down. >> is it a bigger dynamic because of some of the tax changes that will go into effect because of some of new laws and everything like that going away? >> i don't think it has a lot to

do with it i think we run up over nine years. we probably have more gains than losses if you're seeing losses it's probably due to trades you placed rather recently i don't think they are correlated as many think >> what are your tips in terms of what they should be doing in terms of final trading sessions of the year to best prepare for tax plans going ahead make sure if you can't through your payroll system sock away as much as you can in our retirement assets to get taks reductions and to take advantage of a very low market right now great time to buy.

>> what's the most important thing investors need to be doing to get ready for 2019? >> i think they need to havea plan. >> what have you told them someone that rang in the last two days and what's the answer been >> no one has been asking that the reply i'm giving them is take a look at the uncertainty we have around us and what it has done under the nine years. >> maybe you should reconsider >> how much anxiety are you hearing? what are you telling them? >> same.

we are looking at kind of where they are in their life cycle so if you have the long-term strategy this is kind of day course even for my retirees and we have been planning for this for the journey. this is what financial planning is all about, making adjustments as needed. >> okay. thank you both very much you have some well constructed portfolios >> thank you >> up next, reports say the u.s. and china could hold face to face talks next month to discuss trade. that's next.

we have a news alert here. >> hey, that's right it is according to filings from both of those companies. you'll recall stepped down earlier this year. on p and g's filing the company said it made the decision in order to allow more focus on a range of activities in the next phase of his life.

there is no indication and no filing that would suggest he is leaving that board nonetheless we have reached out to both ibm and facebook we are waiting to hear back from both of the companies. back to you. >> okay. thank you very much for that still ahead, reports gearing up for a high stakes sit down as president trump conditions an executive order. it could have a major impact on two major companies. what it could mean for markets coming up. e rsdespite today's big reversal thwot is yet to come for the market stay tuned at 5:00 p.m

welcome back a face-to-face trade meeting

could happen between the u.s. and china next month according to reports this would be the first in-person meeting on trade between the two countries since presidents trump and xi met in buenos aires metier this month. >> on the heels of another report saying the white house is considering an executive order that would ban equipment use by hau wau and zte. what this could mean for trade tensions here is gordon chang from the daily beast is this progress or not on trade talks. >> certainly there is progress when you have the delegation going to beijing but sara, you got to remember this is a low level delegation on our party it doesn't signal a lot of eagerness. i suspect that we're not seeing any progress if there is any progress at all until the last couple of weeks of february. as bump up against the 90-day truce. with regard to in huawei report, the administration has been thinking about this for about

eight months now i don't know how real this is. but if it goes forward of course it's having an impact on the trade talks. and that impact actually might be positive. because it will give the chinese something to negotiate about. >> that said, gordon, if it is true that the u.s. is willing to go far enough to fully ban huawei and zte that presumes something more going on than on the surface than in the past than the generic trade dputs that could warrant a bigger punishment from the u.s. than on the table if they've been secretly stealing data off users in a very cloak and dagger way the last couple of years. >> you know there are a lot of rumors, wilfred, about huawei. but meng, the cf detained by the canadians. she was probably involved in more than just violating iran sanctions. there have been hints about other bad acts

with regard to zte, you know, zte has now been caught violating the second settlement agreement with the u.s this is twice they violate add settlement agreement at this particular time i'm sure the trump administration is running out of patience because zte looks like a thoroughly bad actor. >> i wonder if the dynamic changes at all now the u.s. stock market is down double digits from the highs. not fully bear market but down 15% on the s&p 500 china has more bullets to stimulate its economy, doesn't it fiscally and monetarily and with the u.s. it was always your economy and market is getting hit. now we are feeling it. >> chinese economists say that beige something running out of bullets, because, you know, they have put so much money into the economy, especially since 2008 that it's not having much of an effect you have the university proves ner beijing saying the chinese economy is growing no more than

1.67% and may be contracting and that corresponds with a lot of anecdotal data we have. we grew what, 3.4% in the last quarter. we'll grow a little less than that this quarter. but clearly the u.s. economy which is so much big are than china's is growing faster than china's. that gives us actually a lot of leverage in talks with the chinese. >> i guess what i'm getting at, gordon, though is we have a president that likes to watch the stock market stock market and judges his performance on that now that it faults sharply does that censusivize him to try to make peace on a deal with china. >> as everyone says he is absolutely focused on what the dow is doing so any time the market goes down that's going to be an incentive for him to make a deal but there are a lot of other factor as well one is that the chinese market as bad as our markets performed in the last couple weeks the chinese market is really terrible this year the chinese are hurting a lot more and you know, the markets --

they don't like anything but short-term thinking. spo i don't think it should be that important but, yeah, i realize what you say about trump. yeah he focuses on it. >> yeah. they're down 35% off the highs, a lot bigger decline gordon, thank you. gordon chang. >> thank you. >> up next general electric sank in 2018. while pot. company cronos soared. turns out both are favorites of millennials. well tell you other names on the list. >> ge? >> ge. ♪ what would you like the power to do? ♪ listening to people answer that question, is how we find out what matters most to them. for a business, it's the power to grow.

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well welcome back, a market flash op canadian cannabis company, i don't the name adidi dopes. she tells us about it adidi. >> hi there, which will of that's right green growth brands is launching a big four takeover for of a canadian based cannabis company. afria shares shooting up 18% right now. here are the details of the offer. the offer will provide the shareholders with 1.7 common shares of green growth for each share and represents premiums of 45 pft 5% over the afri price on the toernt stock exchange. that is obviously big news

we are seeing a lot more consolidation in this industry analysts have been projecting that, that is this industry matures we will see many more bigger players trying to eat up the smaller place in the business back to you. >> thank you, adidi. akydy roy. and speaking of pot stocks robin hood out with a survey on the investing habits of millennials this year. and they were buyers of cronos and can't barriepy growth. seeing the biggest jump in ownership ofs those between 22 and 37 years years old amazon a microsoft, and ford and ge rounded out the list. the two surprising names. >> ge, interesting for them to be buying. robin hood, 4 million users now. that's the other factor i'm interested in. >> young investors. >> mainly young investor zbros buying into weakness, especially in facebook. >> but that's how many users they have. we have 30 seconds left. extraordinary turn around has to be the headline.

down 611 on the dow closing up 260 in the last hour and 20 minutes. >> we'll see if there is confirmation the first back to back gain of the s&p fieftd still an awful month for stocks we'll see if we can get more buying in tomorrow. >> cnbc special 6:00 p.m. eastern time before that, "fast money" which starts now >> reporter: "fast money" starts right now live from the nasdaq market site over looking new york city's times square i'm melissa lie. tonight lineup brian kelli cart are wirth steve grasso we start with the come back, a 900 point swing. the dow selling off at the open with losses accelerating throughout the day down more than 600 points at the lows of session but in the final hour the buyers stepped in and kwikd wiped out loss as down some the dow ending up more than 250 points are the buyers back in between yesterday's big rally and