customers. we like this. >> john najarian. >> farmer jim? >> they're all lining up in times square to buy intel, scott. >> josh brown? >> amzn, sticking with it for 2019. >> thank you so much thanks for sticking with us as well "power lunch" begins now. >> thank you, scott. hi, everybody. i'm kelly evans. interest rates are sinking again and oil is trying to stay positive what will 2019 bring your play book straight ahead. tweeting positive news on china trade and the dems are preparing the plan to end a government shutdown don't forget the fast-approach ing deadline media, deals reshaping hollywood as netflix, google,

facebook and amazon all make their mark in a big way. what to watch in the new year. "power lunch" starts right now. >> indeed, it does, kelly. thank you very much. welcome, everybody, to the last "power lunch" of 2018. i'm tyler mathisen glad you could join us driving gains you see there today, 1% move for the dow industrials. barring a huge surge, though, the dow and s&p are set to post their worst decembers since 1931 and their worst overall month since 2009 the beginning of the financial crisis a decade ago. a december to remember uh-uh. treasury yields are moving lower. ten-year back below and amazon,

news that it will expand its whole foods service and canada goose, what is driving that luxury coat maker. kelly? >> let's get straight to the trading action this hour, bob pisani is joining us from the floor of the new york stock exchange bob? >> take a look at sectors, health care, one of two sectors that are up. also up today, modest moves, amazon up 2% and banks, second half of the year not participating in the modest rally. energy also flat s&p the last two weeks is basically a v shape. we are 6% off the bottom 2351, the old bottom that was back on december 24th. we've moved 6% since that bottom the day before christmas market issues, we know what we're dealing with trump was moving the markets here, tweeting on china trade negotiations being positive. pmi was weaker over there.

that will be the bigger issue, china weaker with or without tariffs. the divide is very simple. do you think we'll have growth or no growth if you think it's going to be no growth, one piece of good news, tendency of the market to move up the last five days of the year first two, moving up 3.4% since the rally started. more than double that. last five trading days, first two of the year. as for 2018 it's very rare when you get this sector dispersion energy is down more than 20% health care up utilities. the only two, tech, flat financials industrials down 15 several other sectors down 20% or so. unusual to get such a differential between the highest performing sector and the worst performing sector. however it's been an unusual

year. >> you could say that again. bob, thank you planning to reopen the u.s. governme government, ylan mui joins us. ylan >> the first order of business is to vote on ending the shutdown two bills, the first would fully fund all the agencies except department of homeland security. the second bill would leave funding unchanged and last only through february 8th both bills are expected to pass the house since democrats will have the majority. from there it will be up to mitch mcconnell whether to decide to bring them to the floor of the senate. his office wouldn't talk about the dem proposals specifically his office did tell me it's simple, he won't send something to the president that he won't sign beyond the shutdown, china is on

the president's mind, speaking with xi jinping over the phone and the president said big progress is being made in trade talks. chinese news agency seemed to agree, that teams from both countries have been actively working to implement such consensus and hoping that they can meet halfway the xinhua news agency said xi characterized the negotiations as being at a vital stage. >> ylan mui reporting. thank you. s&p 500 and dow is still on pace for its worst december since 1931 as we get ready to ring in the new year, how should investors position their portfolios? john merrill of tanglewood management welcome and happy new year jason, let me start with you

you seem to think that the year ahead depends on a couple of things one is the fed. >> one of the big overhanging pieces of the volatility and two corrections we've seen is the fed moving interest rates up too fast is that going to cool the economy, make bonds competitive to stocks? that's a reason for pe multiples to compress and stocks have more of a challenging path higher looking to 2019 if the fed were to come out and cool hikes -- we've seen in recent language from the fed and even jay powell, maybe two next year. maybe it's zero or one if they were to play nice and listen to the market more closely and change the policy, at least the path and the

expectation to continue to hike interest rates, that could be good for stocks next year. >> i would like to get your reaction to what jason just said but point out as an investment next year, you like -- this suggests that the market will do pretty well. you like an index fund that invests in the total u.s. market, vanguard, whoever. >> right no, we have a little bit different view we're a long-term investor even one year is a pretty short timeframe. 2018, it provided two wonderful opportunities for long-term investors. back in the beginning of the year, we had a blow-off top from an extended bull which created a wonderful opportunity for getting more defensive and in the last week total u.s. market was down 20% while earnings were up 20% for the year, which created a meltdown in pe ratios and melt up in

market attractiveness. even if this isn't the bottom it's a very attractive entry point for adding aggressiveness to the market, to your portfolio. as we look ahead to this point from where we are today, for the first time in several years, i'm happy to say that i can say the next three to five-year expected real return from the market is above average. i haven't been able to say that in quite a while. >> real quickly, why do you look at the total u.s. stock market instead of the s&p 500 >> because it has the mid cap, small cap component. you're capturing the entire market right now i think that's more important than perhaps earlier in this bull market simply because the small caps and mid caps have trailed. they have better earnings momentum right now versus their prices so i think the total market -- for long-term investors, you want to make sure you capture

the market move. so not your whole portfolio but certainly as a core it makes all the sense in the world. >> jason do you agree with john that there's better opportunities in the market now if you have that medium term verizon than you've seen recently >> yeah. like john, we're long-term investors here and we think there's been great opportunities to buy good stocks and diversify ed investment tools. looking at what the market has given us, volatility is uncomfortable when it happens. if you look at the chart, every pass correction, it looks like an opportunity in every current correction feels like risk the reality is that there's a lot of opportunity for those who have a long-term view and we've been taking advantage of that as well. >> jason, talk to me about technology shares that have been so bruised in this fourth quarter of 2018. >> momentum works both ways,

right? those stocks have been outperforming every year the past nine years and eventually there will be money flow that will trip up those high-flying stocks when we look at the underlying businesses, of the fang stocks and other stocks like visa, which we consider a technology stock, pfizer. these are great businesses that are trading at pretty solid discounts, talking 35% in some cases. if you have a longer term view and want to own the best technology businesses this country has to offer you have a great shot right here. >> visa up 16% year to date. anybody would be happy with that kind of return jason, thank you very much, and john merrill. >> thank you. >> happy new year to both of you. >> happy new year. >> happy new year. thank you. disney and verizon, their own shutdown showdown. what their deal means for media companies in 2019 and beyond

that's coming up plus, will netflix and amazon continue their content arms race and "bird box," that smash hit all the media madness when "power lunch" returns.

welcome back millions of files customers, yours truly, by the way, will be able to watch the playoff games as disney, verizon have reached a deal to keep espn and other

networks on that system. disney shares rup more than 1% today. verizon about 1% as we head into 2019, this raises the question of how much customers are willing to pay for all this content steven battaglio from the washington times welcome to you both. >> good to be here. >> good to see you. >> the answer to your question. >> go ahead. >> is pretty simple. they have to have espn if they expect anybody to watch. and it's really curious that verizon, which has, with the new ceo this year, advertised heavily the fact that they don't have any real interest in content, that they want to be a distributor and stick with the pi pipes while their competitors at at&t and elsewhere are loading up on content. >> but the market, porter, has been rewarding that strategy they're concerned about at&t if you look at the share price and think that verizon has the way to go. >> with a single revenue stream

it's not the way to go and it's taking a little while for the whole media market to shake itself out but it's all going mobile, streaming, digital, video and verizon is going to be left at the gate i think they'll change their tune and come back they made overturs last year about acquiring both cbs and viacom it's not out of the question that they come back and knock both of those into the verizon pool. >> steven, i want to talk about netflix, the beg dog in this party, steven, for a long time how strong are they? how is the moat around that company? in other words, others will come into streaming hard in 2019. so how is the netflix monolith >> the test will begin in 2019, when you have disney launching

an over the top streaming services and one thing that protects netflix somewhat in the short term is that media companies have become accustomed to selling their content to netflix. it's keeping a lot of tv programs on the air and profitable it's also extracting a lot of value out of the libraries of tv studios. look how netflix paid 100 million dollars for the rights to stream friends, which you can watch free on television several times a day on a number of channels yes, we hear a lot about netflix signing big name producers, making award-winning films people really gravitate to the content that they know and love and netflix is paying a lot for

that. >> and netflix shares -- go ahead. >> what happens when they decide to take this content and run them on their own streaming sites? it gives them leverage going forward when negotiations come up again for these program. >> i was just going to mention netflix shares are up 5%, the best in the s&p 500 right now. porter, steven raises an interesting point that at&t might be on to they're taking $100 million from basically its rival, netflix, to give them the content. the journal suggested, i think, over the weekend maybe all these media companies should not try to compete with netflix and instead say pay us for the rights to this content porter, is that the way to go? say, look, we've got content just pay us for it. >> in the very near term that's not a bad strategy long term disney and the other major content producers are pulling their content off netflix and going it on their

own. there's no question if you have a library of immensely popular content r content, you're going to draw a crowd no matter what everybody is looking at netflix and the 45 million peoplewho supposedly streamed "bird box. had it gone out as a theatrical feature, it would have been the biggest box office hit in the history of motion pictures it can't continue and netflix is reported for its last quarter a $3 billion negative cash flow. their off-balance sheet debt is mounting and when they have to go out and continue to pay huge amounts for top talent, they're going to soon hit the wall. >> it's not just -- i'll come back and ask you the same question i asked steven. how healthy is netflix, if you paint that kind of picture and look at the kind of expenditure,

some of which are truly excellent, how healthy are the financials i don't mean to make this whole segment about netflix but inevitably, that's where we have led it. >> netflix will have to decree ought a revenue stream or raise their prices in the past when they've tried to raise their subscription prices, their membership and subscriber lists have plummeted right through the floor. they're in a very tight corner right now. major content producers and talent that has been giving them a lot of headlines, it's going to run out of -- it's not a sustainable business model. >> do you agree with that, steven >> another thing that netflix has to worry about, studios and content providers are developing, they kind of have to

be there they have to do this because of core cutting disney, warner brothers and other media companies are going to want a way to reach the consumer's home right now over the top is growing rapidly generation of viewers has become accustomed to this being the way they watch television as compared to the traditional bundle you need a line in there -- that's a question already, there are researchers who say that subscribers are fatigued patch together if they want to avoid cable. core cutting continues and you need to -- every media company is thinking about how i can get into that home once the cord is cut. they're developing products, depending on their brands to keep them in front of the consumer going forward

even if the distribution model changes. >> our own parent company down 1 1.5% today thank you for joining us to talk about the media landscape. >> happy new year. >> and to you. did you notice those i was off, kelly even i noticed them. >> i think we ended back where we started from if you didn't pay attention in the middle. >> big round trip. biggest gain for the dow ever? hidden culprits behind all that volatility and we'll go to the new york stock exchange for a time-honored new year's eve tradition. you won't want to miss it. the music will be wonderful. st wh ayitus

welcome back there's the dow at session highs. bond yields, tyler, going the other way. yield on the ten-career treasury note 2.7%, sinking all day. >> a lot of reasons you could point to for the recent volatility in the markets. one you may not be thinking of is pension fund rebalancing. i spent my vacation thinking about pension fund rebalancing. >> i know you were, sitting there by the beach it's normally a sleepy week on wall street. one investment behemoth has said to take the market by storm, pension funds. they rebalance monthly and

quarterly, meaning today is a critical one for them to get their portfolios in order. as long-term investors, pension funds pay particular attention to asset allocation, weightings of equities versus bonds, alternatives, private equity and hedge funds. because equities declined so much in the quarter, pension funds exposure to equities shrank as well they needed to buy and sell stocks before the end of the year to make their target allocation wells fargo puts the number at $60 billion. that's how much capital pension funds took out of bonds and put into equities. this rebalancing is being called unprecedented and historic and may be responsible for part of the large swings we saw last week and partially some of the gains we're seeing today, albeit more muted than we saw last week. >> when do those moves close,

next year, if they make moves today? >> depending when they execute the order. >> when they execute the trade >> yes. >> thank you very much happy new year. >> placing some orders before -- >> exactly. >> d.c. drama sure to continue next year as a host of democratic hopefuls continue to line up to run against donald trump. who actually has the chance to be the next president? carousels spinning fast today. who just got thrown off? and hot canadian company takes its gear to china. will that be a win for canada goose? all that and more coming up on "power lunch."

welcome back, everybody, to "power lunch." a tradition that goes back many, many years bob pisani is on the scene bob? >> pace of change is accelerating i think we can all feel t some things don't change. the christmas tree is still outside and the traders still gather at the end of the year to do christmas carolling and barber shop quartet, including singing the oldest song of all,

wait till the sun shines arthur cashin, take it away. >> on the count of three one, two, three. ♪ wait till the sun shines nell ♪ by and by >> happy new year. arthur, david, happy new year. we've been singing this with you for 25 years and one of these days we'll get around to singing the other verses in this you'll surprise us "the santa clause" rally is

happening. >> santa claus got here late its sleigh was almost empty. we're hanging on and we'll all have a happy new year, especially all of you. >> 3.4% up since "the santa clause" rally started december 24th the average gain 1. %. let's hope it stays that way arthur, always a pleasure. happy new year thanks for coming down here, everybody. lot of old traders come down here just to spend the last day and have lunch across the street of course, arthur will be leaving immediately probably on that one guys, happy new year pleasure to be with you as always. >> thank you so much hello to everyone down there and thanks for letting us be part of that bob pisani with arthur cashin and the rest of the gang sue herera has our headlines. >> indeed, i did do. a texas judge who ruled the affordable care act unconstitutional has issued a stay on his own decision, allowing the law to remain in effect during the appeal process. in explaining his ruling, the

judge said too many would face uncertainty about their health care if the law was not upheld starting tomorrow, california will be the first state to ban pet store owners from selling so-called puppy milan males. governor jerry brown signed a bill in october requiring stores to sell dogs, cats and rabbits only from shelters or rescue groups three, two taken for a practice run before tonight's big event. it is adorned with more than 23,000 l.e.d. lights and 3,000 waterford crystals. >> happy new year! >> and it is already 2019 in hong kong, where a massive fireworks display helped ring in the new year before a crowd of some 300,000 people. you're up-to-date. ty, back to you. >> they're all from new jersey or the outer burroughs.

>> exactly. >> happy new year. >> you, too, my dear. >> see you next hour stocks are up on this last trading day of 2018 as you see right there. the dow sitting near session fur percentage losses since back in the heart of the financial crisis in 2008 nasdaq's down year will be its first since 2011 check out some winners and losers this year merck, up 36%. goldman sachs, that one the worst, down about 35%. amd gets the honor of 2018's best performing s&p 500 stock, up about 75%, as you see right there. somebody has that in our stock contest. and cosmetics maker cody, having lost about two-thirds of its value. >> that was the kicker, the punter done quite well. >> that's right. >> nick loweery.

>> exactly. >> senator elizabeth warren launching an exploratory committee for a presidential bid. still no deal with china the president saying he has had some good talks with president xi with us now to break down what to expect on the political stage in 2019, economic policy analyst and cnbc editor at large john harwood. welcome to you both. jimmy, let me start with you on the elizabeth warren news this morning that she is forming this committee and is going to run. what impact will this have on politics >> i think her message is a message you're going to hear a lot throughout 2019 into 2020 from a lot of democratic candidates one, democracy is broken elections interfered and people who can't vote and especially for elizabeth warren, she's going to focus on capitalism is broken and we need to fix capitalism there's too much monopoly, too much control by big companies, too much inequality. she has presented a bill in

congress that would put go government control or regulation on boards, who can sit on boards those two things you're going to hear from her and probably a lot the next two months. >> this all comes as democrats say they've got a two-part vote set for when they come back into session on thursday to fund parts of the government. as the party is kind of pulled left by the entries into the 2020 race, how does that complicate their ability to make a deal with president trump and get this reopened? >> i don't think it complicates it, kelly. look, we're in a process of figuring out how president trump backs away from his pledge about building a concrete wall we saw his former chief of staff or his outgoing chief of staff, john kelly, trying to cover that retreat, his interview with the l.a. times, saying we haven't been talking about a wall for a long time. and then the president refuted that on twitter today. this isn't about money it's about recognizing the reality that there isn't going to be a concrete wall. and the president, his rhetoric

preserves that possibility even though it's not realistic. one way or another the thing will get settled in the next ten days or so, i believe. >> how so, john? >> i would expect, kelly, when congress comes back thursday, the house will pass what they've out lined as their strategy. the senate will probably add a little bit more money to it, go from 1.3 for border security to 1.6. senate democrats have already agreed to that number earlier. that money is not for a wall but border security. then they could send that back i think the house would pass it. and i think president trump could say well, i got another $300 billion and the democrats would say yes but not for the wall and i think that's a way out for everybod everybody. >> we were talking about medicare for all and how realistic it is that that

becomes part of the conversation again, is the democrat ic party willing to give that token to the president? >> i think they will be. the themes that elizabeth warren has outline d about politics being broken will be dominant themes in the race i don't expect that she ultimately will be the strongest candidate to carry those themes. but when i did my speak easy interview with her a few months ago, she talked about that she said i'm a capitalist. i believe in markets what i don't believe in is theft. she'll make some arguments that by reforming capitalism it will be more fair to average people i do think those will be ubiqutous arguments. i don't believe the drift of the democratic party, onset of the presidential race will prevent democrats from ultimately finding a way to end the

shutdown with donald trump. >> jimmy and john, for both of you -- jimmy, you first. what did we learn in 2018, particularly from the midterm elections that will inform the next 24 months >> i think that democrats have a very active base that wants to see them fight and we'll get the mythical legendary infrastructure bill and democrats think we can take the white house in 2020 so let's be clear what we stand for, the kinds of things we would like to do, if we would gain the white house and the senate and let's go out and do that that will be their message rather than we need to get such and such done over the next two years. >> john, what is the democrat -- same question to you, what did we learn in '18 that will inform the next two years, but what's the democrats' message and who is the person who can articulate

it best? >> well, first of all, i think that we learned in 2020 -- excuse me, in 2018 that democrats were able to mobilize their base in a more effective way than some had expected in a midterm election that doesn't mean they'll do it again in 2020 but it suggests the possibility that they will i don't think there will be a lot of legislating in 2019 or 2020 i agree with jimmy i think there will be a lot of framing of arguments but i think the democratic message will be one, reigning in and resisting president trump and they'll get help from the mueller report if that happens and then the second is going to be how can they adjust the rules of capitalism, tax and spending levels in order to allow more people to share in the fruits of american prosperity? i think that will be their argument medicare for all is a version of

that argument. i think that's going to be a difficult thing to ultimately enact because it costs a lot of money, require tax increases of a significant amount, even though on net democrats will argue that it's not more expensive than the existing system i think that will be a tough sell in terms of the best messenger for the democratic argument, i look at the field right now, i think that beto o'rourke is the most effective messenger he has a unifying message, a hopeful message that is also progressive but not alienating toward a lot of people who have been turned off by the democrats in the past. we'll see if he actually runs and if he can sustain that appeal but he showed tremendous potential in that 2018 senate race against ted cruz even though he didn't win. >> what can we expect now with this president and this congress this year? >> i think the big news coming out from will be things that trump does on his own that he

doesn't need congress to do. that's why trade, i think, has been the dominating issue. it would not surprise me if all these tariffs were still in place a year from now. i think the question is, do we get more tariffs any deal they sign with china, it will take a while to verify are they complying with the tech transfer stuff this will be another year we'll see more tariff man. >> all right, guys. >> and, kelly, just to close out, the other thing that will be significant is the rising possibility that we may either, by the end of 2019 or some point in 2020 be moving toward recession. that will up-end everybody's political -- >> they're debating that already. thank you for joining us to talk about 2019 thank you very much. bond market, where rick santelli is tracking the action at the cme yields lower, rick >> yes truly, rates slid into the new year and they dipped right at the end of the look at june

chart of two-year note yields, we haven't been down this low since that point we lost the 2 1/2 handle, trading a whisker under 2.50 futures close. cash contract will be closing shortly atop of 2:00 two-day tens, lost the 2.70 handle here at 2.69. open the chart up to early january and what you'll see is we haven't been at these yields since the very end of january, early february one week of the dollar index, it slipped as we moved and lost the rest of 2018 on the last trading day. and even though it's not down a lot, it's still holding above 96, as you see but it has continually lost momentum finally, the last chart, early november with the dollar index maybe the most important point is many believe there are a lot of sell stops under the 96 level. traders will be looking at that when they come all freshened up

to trade 2018. tyler and the gang, back to you. >> thank you, rick. 2018 ending on a sour note for nfl coaches. the latest on those firings coming up. stocks continuing last week's momentum. all three averages still down at dthe year whoes 2019 hold? looking ahead when "power lunch" returns.

the nfl regular season ended less than 24 hours ago and six coaches already have been fired. more with now on the nfl's black monday. >> black monday. any sports fan knows today is the real black monday, after the nfl regular season ends and it meeps coaches are getting fired. we're already up to six coaches who have lost their jobs new york jets, adam gase, vance

joseph, marvin lewis from cincinnati and steve wilks from the arizona cardinals, all being let go in the past few hours they join hue jackson from cleveland and mike mccarthy from the green bay packers. they lost their jobs during the season several weeks ago eight coaching changes for the offseason. this kind of carnage typically average. tenure is four years and eight changes every season, historically right in line wilks had only had their job for a year while others like lewis had been working there for 16 seasons. if you're an s&p 500 ceo, the coaches make less money, their tenure is shorter and thousands of fans, newspaper articles and radio shows that try to get them fired all the time. >> i wonder who has the worst travel schedule. >> nfl coach or ceo? >> yeah. >> ceo has a much worse tassrav schedule is it over do the guys that still have their jobs feel safe today

>> most of them can because usually you get the firings in the morning. >> quickly >> very quickly. >> we're a month off from the aaf launching, the spring football >> alliance of american football. >> couldn't they go find a job in that league >> they already have their jobs and almost all of them are former nfl or college coach. >> guess they'll have to wait r a year or two or when the xfl comes along. >> maybe you could coach the jets you've got the green. >> only person less qualified but that's not fair to todd bowles thank you very much. end of the trading year with all three major averages set to post losses for 2018 end of september, s&p 500 was up 9% through the first three quarters of the year then came red october when s&p went down 7 p%. now add december that would be the first time

ever that the s&p 500 will end the year down after being up through the first three quarters jeff hirsh is the editor in chief of the stock traders almanac. the january barometer, directing -- indicating the direction of the year. up 5.6% in january, now down. >> first five days were up trifecta. >> best month of the year, usually december this one is the worst. >> that's right. >> lots of confounding signals. >> bottom came later this year, probably pushed off by the tax cuts, dereg and the policies coming out of the government we're looking at, you know, a better setup for 2019. >> how are things setting up >> it sets up better with this correction i would have been more worried about 2019 had we kept running through there. we're still looking at potentially negative scenarios

if the fed doesn't tone it down a little bit. >> if you were to go positives, negatives, walk me through the positives and walk me through the negatives. >> positive are interest rates are still relatively low negative is that they continue to rise. we've been contending that the fed is the biggest risk to the economy, the market would not be too farfetched to pause and reflect after so many increases, or several increases in a row. there's still growth, though it's slowing positive, still earnings growth, corporate growth, gdp growth they are slowing down. the fed itself is raising rates yet projecting longer term growth to be slower. politically, we've got a shutdown never great. but there is a chance for some people to work together, perhaps, with a house that's gone democratic. mr. trump could tack to the center, no guarantees there. if we could get some things through with a less contentious political situation, that would be our best case scenario.

no guarantees, though. >> let's fast forward here to wednesday, the rest of this week the first five days of january, what do you expect them to be? >> we've got santa claus rally everyone has been talking about the santa claus talking abou it since halloween it is up 2.9% since yesterday's close, up more today that would be the first positive move. >> that's the santa claus rally? >> discovered in 1972, last five plus first two not a trading strategy, it is an indicator, if things are up and it is bullish which we are getting now, that's a sign that market par 'tis panticipants ard going into the new year. >> he discovered than 1972 what's the latest? >> the three january indicators were put together. three of them together have been stronger last year wasn't great, but

nothing is 100% perfect. adding the three together, we shifted the small cap effect which is what people are talking about, january effect of small cap stocks outperforming large caps in january. shifted back the last two weeks of december mostly. >> and they have been underperforming. >> they have been. setting up for a small cap rally. we are constantly changing things january itself used to be one of the most bullish months. it is part of a three consecutive month period taking it on the chin, last 21 years, s&p and dow were negative for january. we have choppy trading in january which futures traders have talked about as the january break. >> so strong last january. >> did have a big break in january. >> and then 1600 point drops, yeah >> positive here, we seem to have temporarily or for now bounced off august, '17 lows, back on monday, christmas eve.

if we can hold that, that's encouraging. but i'm not saying it is all over yet you know, we're concerned we could hit that low soon or early 2019 that would set up a better chance for 2019. >> see it many times in the new year. >> hope so look forward to it year end rally on wall street, it is rare for the dow to end higher in recent days on december 31. today's gains adding to last week's turnaround. the dow is up 1500 points just since christmas. and it is cool to be warm. canada goose, making a bigov me overseas we'll tell you about it when "power lunch" returns. (drumsticks clatter)

shares of canada goose are rising as the company finally opens the first store in china a 5% gain. >> we debate whether the economic good times are over here and abroad, you look at consumers lining up for one,000 and more coats, shopper spending looks good shares are up 4% for canada goose, reports that a store in beijing had shoppers waiting an hour or more to get in hong kong had a canada goose location since earlier this year, this is the first store in

beijing. in new york city, similar lines popped up at the canada goose store in soho, with many shoppers in line, asian tourists did you political watchers, consumer demand is interesting you have the social media campaign in china, calling for chinese consumers to boycott canada goose products because of the vancouver arrest of a ceo that was arrested. that's a violation of u.s. sanctions. in the last months, shares of canada goose lost a third of value, in november they raised 2019 guidance, is optimistic about the future if you look at the lines, that's probably why, whether it is in the u.s. or china, despite these geopolitical complications, people want the puffy coats. >> and that patch on the shoulder >> yeah. >> i notice on the streets, you notice a lot of these. a lot of knock offs, too

it has the patch. >> similar >> all right, we'll see you. coming up, second hour of power. sears, will the company still be around this time next year place your bets. and split year for faang amazon and netflix did fine, google was flat. facebook slumped what can you expect in 2019? we'll tell you. and everything you need to know before you place a bet on casino stocks. ring in the new year with "power lunch. we'll be right back. (drumsticks clatter)

welcome back to the last hour of power for 2018 i am tyler mathisen. let's shut the book on 2018 quick. it started as gang busters but ending it with a tired and wounded bull on our hands. the outlook for 2019 is straight ahead. speaking of beaten down, facebook crushed like a grape this year, apple seriously bruised. netflix and amazon took investors on a quick upturn. how will it be next year and check out the mystery chart.

this sector posting healthy returns in a volatile market key hint there is healthy. a number of stocks are up 20, 40, 70% in 2018. will they still be a red hot play next year the second and final hour of "power lunch" for 2018 starts right now. welcome to "power lunch," everybody. i am kelly evans under two hours of trading left for the year stocks are trying to end on a good note. we're up 142 now if major averages close up, it will be the first time since 2013 that they have been up on the final trading day of the year despite the gains, dow, s&p, nasdaq have the fullest declines since 2008 yeelt yields on the benchmark note falling by low 2.7%. a year of multiple record highs

and stomach churning lows, wasn't it, dominic chu. >> it certainly was. as we look at how the year started, things are promising. in janay louary alone, we had a series of 14 record closing highs just to start the month in january. wasn't until august that we saw the next closing high after that tumultuous february, march, spring season. then we finished off here with five more between august and september 20th that was the last closing record high we finish the year with 19 record closing highs, although as you can see here, we're far below those levels we have seen since september 20th one other way to think of it, the way volatility shaped up it has been book ended with bouts of high volatility we were 37 here, closing basis

of the volatility index. you draw it hear, we're around 36 now everything in the iddle, near record levels and all of a sudden a move to record highs again. 36, 37 levels in the vix early on, had an inter day of 50 on the vix because of structured products tied to low volatility that blew up those trades, very much part of that story in the beginning. very much, tyler, book ended volatility early, volatility late see if 2019 gets calmer. >> following 2017 when volatility was his tore cli low. >> the next answers are in the earning reports. here's bob pisani with a closer look bob? >> hello, tyler. 2019 estimates are coming down for the s&p 500, but only very slowly they were about 10% at the start of the quarter now they're a little better than 7% today, 7.2% 17 companies reported earnings

for fourth quarter and while numbers have been good, first quarter estimates have generally been coming down, particularly after comments from micron and federal express they noted while the u.s. was strong, international trends were weaker. and that's been a big issue. unfortunately, the fate of earnings may be in macro issues that are difficult to model. that's why markets are having a tough time traders are weighing several issues firg first, can the fed avoid policy error, hiking in a slow environment with low inflation number two, other risks, ecb is ending stimulus. what impact will that have on european profits third, will there be clear progress on trade talks. and finally, how much is china slowing with or without tariffs as an issue. how strategists and analysts interpret impact on earnings depends how they feel about markets in 2019. if you think earnings growth will be zero, chances are you'll

think the s&p will be dead money in 2019. if you think earnings will be negative, many people think the market has further to drop if you think earnings are still growing in the mid single digits as the majority do, mostly the markets should rally we are trading at a 2019 multiple of about 15 we were as low as 14 and a half ago that's the low end of where we have been in the last decade back to you. >> thank you very much investors are keeping a close eye on washington today. president trump tweeting about progress in trade talks with china and the government shutdown drags into the second week but we could have some progress. ylan m ylan mui joins us. >> the democrats settle on a plan to open the government and dare republicans not to go along with them. the democrats will introduce two bills thursday when congress is back in session. the first would fund all of the

effected agencies through the end of the fiscal year the only one left out would be homeland security. that would be addressed by the second bill that would leave funding for home land unchanged and last until february 8th. assuming the bills pass the house, then we would be headed for a showdown in the senate where mitch mcconnell said he won't bring up anything for vote unless the president will sign it here is trump's latest take on the shutdown on twitter this morning. he wrote i'm in the oval office. democrats, come back from vacation now and give us votes necessary for border security, including the wall president trump also tweeted about china over the weekend, saying he spoke with president xi and big progress is being made in trade talks. china's state run news agency seemed to agree. reported that teams from both countries are working on the consensus, expressed hope both teams can meet each other halfway. he said president xi

characterized negotiations as being at a quote, vital stage. we'll see how discussions move forward the next few weeks >> thank you. what will 2019 bring for investors? jeff kravitz and jordan posener join me. welcome to you both. quickly on the issue of the shutdown, jeff, that she was just discussing, do you still see no impact for investors broadly speaking >> we don't see big impact on the shutdown investors are focused on three issues they're focused on earnings, the economy, and on trade and the fed. that's what they're looking at the shutdown will probably be a temporary blip for investors. >> jordan, i know at some point it could get complicated with the debt ceiling we are reminded early last year,

the stock market went up even more valuations matter, don't they? >> we always think that valuations are probably the most important thing, if you're an investor in individual stocks. and with earnings growing this year pretty dramatically and continuing to grow in 2019, and the market prices of stocks are coming down, valuations have compressed that's made many stocks much more attractive now than earlier in the year. volatility has been the word of the year last year was low, this year it has been higher than average that created cross currents and opportunity in individual names. if you have a long term time horizon, six months or preferably 12 or more, there are exciting opportunities across a bro broad number of sectors. >> let's list them those that were bad are better this week. give me a couple of names quick. >> some names we like across the

broad spectrum of industries, stocks like cbs, state street, gilead sciences. businesses are performing well they're trading between 7.5 to 9 times forward earnings we think that's generally cheap and in this market extraordinarily cheap. even schlumberger, you have an opportunity to buy the best name in old field services at a low valuation, and they're going to be a continuing survivor and taking share. >> jeff, what about you, what is your picks for 2019? >> we like health care and technology health care did well this year, it is a defensive sector going into 2019 it's also a growth sector. and we favor the area of biotech

and medical devices. that's one area. and then technology that led the market higher during the year, had a very difficult past few months, we're still in the game with technology. the thesis of growth and consumers and businesses upgrading hardware and software platforms, that's there and being driven by artificial intelligence, e-commerce and cloud computing themes. >> do you have specific names in this space that you like or in other words, can you not give them to us or is that not how you look at it >> we don't really look at that granular level, we look at the sector level i would say we like companies which are levered to those investment themes, and on consumer discretionary we like companies which are levered to e-commerce and ones which have good in store experience those are the type of stocks we're looking for in 2019.

>> i wonder about sectors, jeff, sometimes. i think charlie monger said he never met a rich sector trader >> well, at some point you have to get down and we have our equity team that finds the best symptoms in those themes. >> you do granular wunls you get down to it thanks for joining us. 2018 took a bite out of some of the biggest names in tech apple lost close to $400 billion in market cap. amd. we walk through the best and worst of the tech sector and who is positioned best for 2019. after buying treasuries and bonds, the fed has $4 trillion on the balance sheet as they unwind assets, bond traders raise the alarm. the runoff could cause chaos in

the financial markets. ve> and a last minute bid could sa sears from liquidation. we'll bring you the latest after this

it was the best of times and worst of times for faang stocks. titans like facebook, google, alphabet negative, and netflix and amazon soared. josh lipton joins us from san

francisco with more. >> kelly, in total, faang members lost more than $1 trillion in market cap facebook suffered multiple scandals from user data to security breaches. the stock is down 25% this year. rw bared says facebook is a buy, given strong fundamentals, no decline in usage, advertisers still flocking to the platform apple, another name in the red can apple shift that narrative from iphone units which have authorities worried to total revenue and earnings growth, and faster growing services and wearables businesses amazon and netflix, they were clobbered in the quarter, still up strongly. alphabet will finish 2018 flat microsoft is up 20% in 2018.

they're poised to finish with a distinction, crowned as the largest publicly traded company. >> amazing renaissance going back to apple, we have a great story by todd hazelton on the website, he talks about one product missing from the lineup, that charging pad that samsung and others offer why has apple not gotten around to that? >> yeah. what you're talking about, kelly, that's a great piece todd wrote, talking air power, wireless charger, charge multiple devices at once apple said it would arrive in 2018, obviously that doesn't look likely. we reached out to apple for comment and they didn't respond. we don't know what the issue is. there were reports apple was having certain technical challenges with the product. i think the issue for investors, is the product cancelled all together or delayed.

if it is delay, in the past, delay hasn't always spelled doom air pods were delayed, and since then it attracted a lot of fans. they estimated that apple sold around 18 million of them to date at this point, we don't know we'll try to keep everybody posted do you have the air pods >> i don't >> i like them maybe they're worth the wait josh, thank you very much. let's talk about tech in 2019 we are joined by mark mahaney. welcome, good to have you with us last hour we had a rather spirited discussion on netflix one guest said 2019 would be a year of challenge as more competitors get in the streaming business, some withhold content from netflix do you see it as a year of challenge or opportunity for netflix? >> i think it is a year of

challenge fundamentally, opportunity for stock. the stock corrected 40% off highs. clearly the financial market's view is year of challenge. the facts are they'll have three ott launches over the top launches disney, apple, at&t, time warner we think, however, netflix fundamentals will power through this its global presence, the scale of its offering and exclusivity of the offering allows netflix to power through i think people will reach for a couple of ott services, we're sure one in the newly reconstructed bundle will be netflix it is one of the top picks for 2019 >> you're not worried about production spend and debt? >> well, both things to worry about. the question is are they going to be able to correctly match the amount of content they need against the sub growth that is required look, they have been able to do

it last five years every once in a while they screw up, hard to be perfect every quarter. generally have a good track record of doing this, and as the leading player in an explosive category we think in terms of debt, without specific comment on debt that the company has, we think the leverage ratios are reasonable by traditional media standards and don't see anything unusual there. >> two hurting stocks, facebook and the other snap if you had to buy one today, which would it be? >> facebook, no question about it facebook, you talked about faang stocks i look at those, i think the fundamentals for amazon, netflix, google have been shockingly consistent over the last year, last two, three years. have kind of accelerated up. we had record high margins at two companies. i think the fundamental trends will hold intact going into next year facebook is the outlier, we are

seeing declining satisfaction with users and advertisers but that's more than priced into the stock now, has the best risk reward with 12 month outlook we may not see movement of stock until back half of next year, but growth rates can stabilize if you can be patient, you can make good returns on the stock buying it here. >> mark, people talk about regulatory threat and say big tech is in the cross hairs now this will reinforce monopolies, isn't it >> it could. it is a good point it could they have been in the cross hairs increasingly the last two, three years. google has a line in p and l expenses, european commission finds, as if they're going to continue in the future clearly there's regulatory action here, and there should be people should be scrutinizing these large companies. i'm not sure regulatory scrutiny gets worse in '19 than '18 this was as bad a year as you can have, when you bring the

execs to capitol hill. that regulatory fear factor which is legitimate, i think that's pretty well priced in. >> the more the regulation comes to bear, short of breaking up the companies, the regulation comes with a cost that only the biggest players can afford it will make it harder for anyone else to compete seen evidence with google in europe already. >> i think you're right. i'll give you another point. a lot of the data privacy concerns have to do with use of third party data, buying it from other people, commingling with their own data google doesn't need to do that facebook doesn't do that, they have enormous first party data, people go there and say what they're searching for, what their interests are. they don't need third party data smaller sites do, and they'll be most likely negative impacted. >> mark, thanks for your work this year with us. >> happy new year. over or under appearances

this year, 60. >> we cut him off. health care up 4% for the year makes it the best performing s&p sector should you bet on that hdieang into 2019? we'll debate it straight ahead on "power lunch. an act of kindness. an old friend. a new beginning. some welcome relief... or a cause for celebration. ♪ what's inside? ♪ [laughter] possibilities. what we deliver by delivering.

health care ending on a high the s&p sector the biggest winner for 2018, one of two positive sectors, eli lilly, merck and pfizer with gains. craig johnson and geina sanchez join me. you let the winners run? >> you can see we pulled back to the support area on the february lows we never broke it. many other sectors and the market in entirety below february lows. right here, we're not seeing it. two stocks that caught our attention in the health care sector, medtronic, and also tandem which pulled back to the rising 200 day moving average. those are names we are buying in now and stick with the health

caretrade. >> i guess one of the questions is will it continue to be a market that rewards safety, defense and stable businesses like health care or not? >> i do, but i think it will be an interesting year. we are -- you want to get into defensive sectors for 2019, and health care fills that bill. but there are segments that will be growing next year, segments like biotechand quite frankly digital health care with congress starting to warm to it. there could be some growth stories in health care ultimately it is a defensive area and that's where you should be we think you should stick with something like health care for 2019 >> defensive area with long term trends in its favor. craig, gina, have to leave it there. for more trading nation, head to our website or follow us on twitter. >> mike, thank you very much. the bond market fearing the

fed, not just worries of rising rates. could the fed big balance sheet unwind throw the markets in turmoil, or is the danger overblown. we will look at that issue ahead on "power lunch. now your trading nation stats of the day and word from our sponsor.

hello, everybody, i am sue herera here's your cnbc news update at this hour. in his final day on the job, defense secretary james mattis released a farewell letter, urging the defense department to keep the faith in our country. he resigned earlier this month after clashing with president trump on priorities. many colleges require a meningitis vaccine for students,

a new cdc study is raising flags about the b strain of the disease. college students more than tripled the risk of becoming infected than other young adults. the government may be shut down, but the uss arizona memorial is remaining open visitors are able to view the sight of the attack on pearl harbor, thanks to donations from several nonprofit organizations and 26,000 in emergency funding from the state of hawaii today is the last day to get your $2 frosty key tag from wendys that let's you enjoy free treats all year. 80% of proceeds go to the dave thomas foundation. get a move on. that and a lottery ticket. back to you guys >> sue, happy new year see you next year. let's check the markets as we head to the close of the final trading day of 2018. there's the dow, up a half

percent. the s&p 500 is higher. all in the green right now health care and consumer discretionary are -- real estate and energy, they are the laggards >> they're in the process of unwinding the balance sheet. could that roll back be adding to the foam volatility -- to the stock market volatility. >> said to reduce the balance sheet $600 million one of the reasons for the selloff. this is the fulcrum of the problem. critics have complained the balance sheet has increased liquidity shortage but haven't said what the liquidity problem is the fed grew the balance sheet

by $3.5 trillion, buying bonds and mortgages in response to financial crisis and low inflation and growth among things qe is thought to have done, lowered rates, boosted stocks as a result, dampened volatility and created real or imagined fed put under the market doesn't matter real or imagined. the fed argues the effects won't be as extreme because markets aren't in panic. the balance sheet is down a half trillion from 4.4. nobody seemed to notice. the fed has been cavalier about the effects. to the extent you were smothering volatility and open up the pot, take the lid off and all that boiling steam comes out, i think the fed underestimated that impact we'll see if powell gives a hint of slower approach to balancing

the balance sheet. the balance sheet plan before cutting rates. remember june 17th, they said we're going to have substantial reduction in funds rate before we change the plan what's weird to me -- >> if there was weakness, they lower interest rates before they do anything. >> byi implication, almost to zero couple things are weird. the fed has been talking about this since june of 2017. >> it should make them go up look at what's happened. >> look what happened to rates if we had like a 45 minute show,

i could tell you about the mechanics that are inside it, but there's a weird thing because of restrictions or regulations of banks holding high quality assets that may prompt banks to buy more treasuries there could be a weird reaction where interest rates are reduced. >> forces banks to buy safe assets. >> safer assets. >> bring in lindsey, thanks for joining us new year's eve. what do you think the effect of the balance sheet is right now >> well, i think the broad estimate of the effect of qe has been 90 basis point reduction on long term rates. we know the fed isn't intending to reduce that back to prerecession levels, less than a trillion dollars assets have to equal liabilities and equities, and the vast majority of assets are backed by

liabilities that the fed can't reduce currency, circulation, foreign reserve deposits, et cetera. at most, we expect that balance sheet cut in half. now 45 basis point effect on longer term rates. the fed also said they want to extend this process over a number of years, four or five years. really, you're talking about a muted nine or ten basis point impact on the market right now, pressure on longer term rates is not the balance sheets, it is about the fed hiking rates at a more aggressive or perceived more aggressive pathway than the economy can withstand. >> i was reporting the story that i delivered, a couple of folks talked about psychological aspects. there are the metro area tchani. here's the thing the idea that the fed stepped forward in a big way, put trillions into the system, nobody knew how it works,

honestly, nobody understands how it works on the way out, but they know they were in before, they're out now or getting out now. that may have a bigger impact than the fed is estimating. >> i think there's a psychological impact i think powell can counteract that by reassure the market that they're willing to adjust the pace of balance sheet movements, depending on the evolution of data reminding the marketplace that increasing federal funds rate is not the only tool to combat weak n ness, we can back off from tapering investment and willing to increase outright asset purchases should the economy show significant siengns of weakness >> lindsey, keeping on this discussion, this is what's interesting, steve the way powell talked about it, he made it sound like the balance sheet wasn't a tool. >> no. that's a big part of -- they got there i believe, my personal

opinion is part of a compromise between the hawks and doves. it allowed them on the dovish side to raise rates more slowly, and the hawks waennted that don and what lindsey is saying makes sense except for the fact it would be a massive reversal for the federal reserve to do that >> the market is saying they know they're playing a game of politics they know it has impact anyway. >> they do but my idea is this. the feds should announce a higher cap to where they're going to and let me explain and do the numbers. the fed started off before the crisis 850 billion we went up to 4.4 trillion by the way, got rid of 400 billion without anybody noticing variety of things happened now they're going to go down to 3.4. if the fed comes forward and says we're going to stop, we had

a range of 2.5 to 3 trillion, we're going to stop at 3, i think the fed would finesse the idea of not being policy reversal but saying we ought to get to three, get there sometime middle of the year, then stop and look around. >> that's parsing the language, adjustment that i was talking about earlier. again, just opening the door for more wiggle room in terms of how they'll address that balance sheet, whether or not reversal of commentary of using it as a policy tool, whether or not they want to acknowledge that, but softening ri jidity. >> you have bernanke, powell, yellen, we have lindsey and steve. >> three minutes, we figured out the balance sheet thing. call me, we'll do israel and palestine. >> we'll have the world's problems solved. >> thank you very much. sears has a 125 year history

as one of america's biggest brands, with legendary retailer to take thousands of jobs with it wi all last minute bid save it we will bring you the latest when "power lunch" wraps it up in two i don't want any trade minimums. yeah, i totally agree, they don't have any of those. i want to know what i'm paying upfront. yes, absolutely. do you just say yes to everything? hm. well i say no to kale. mm. yeah, they say if you blanch it it's better, but that seems like a lot of work. no hidden fees. no platform fees. no trade minimums. and yes, it's all at one low price. td ameritrade. ♪

sears employees breathing a sigh of relief, however brief it might be the company avoided liquidation friday, thanks to a last minute bid by eddie lampert let's bring in moody's retail analyst charlie shay and courtney reagan. start with sears what do you see happening in 2019 is it here a year from now >> i think so. i really do. friday is obviously the big day, if the bid is accepted >> why >> if the bid is accepted. >> lampert's bid. >> yes, i think there's a runway for them to stick around it will shrink. >> how many stores a year from now? >> let's say over or under 500

>> that many >> yeah. >> what are you hearing? >> i don't think it will be around we don't know the details of the bid, but it doesn't seem from reporting that it is different from a previous bid they did not accept i just think you look at sears and maybe walk away from numbers and think about what the company was, think about where it is today, think about where retail is going is there a viable place? do you want to do this to 50,000 employees? for what, a month, a week, couple months? >> what has it done to lampert's wealth >> that's a good question. >> he's been all -- he did well in the '80s and '90s. >> did well with auto zone, auto nation, two companies i covered a long time. he was a very positive -- had a positive impact on both companies. he was up near majority ownership of both firms while they were and still are rocking and rolling. both companies are doing extremely well

he had a quote, unquote nest egg to fall back on if sears didn't go the right way his basis in sears, if i am correct, was not that great. he was able to pick up kmart debt in bankruptcy cheaply, use that to convert to equity stake in kmart, use the runup in kmart and some real estate proceeds from selling stores to make the sears deal the basis was low. >> what's complicated is he is a big debt holder and big equity holder if you go liquidation, he gets paid, he will make some money, but maybe he would have lost some we just don't know exactly, right, charlie >> the term murky is really appropriate here you're on point. there are so many moving parts, so many iterations you have all of this stuff going on, it is really a bowl of soup

and you really don't know everything about it because again, it is so murky. >> speaking of bowls of soup, let's go to amazon and whole foods. they sell some nice soups. what are they doing? they're going to expand their footprint going into markets where they were understored. and they intend to use those locations as delivery nodes as i understand for amazon product. >> our premise for awhile has been that amazon needs more brick and mortar presence. the whole foods news is a rumor, we don't normally get involved in rumors, there's a hypothetical out there, will amazon expand whole foods. yeah, i think they have to, in order to leverage it, get it to scale, the food business was not scaling. that's why amazon had to buy whole foods. the food business is getting better amazon to compete with brick and

mortar, there's a huge battle going on now it is not anybody against amazon, it is amazon against everybody else and everybody has their eyes trained on amazon, and the brick and mortar guys upped their games. >> do the stores become pickup points for me to go to or delivery points from which amazon trucks spread out and deliver. >> i think it could be both. "the wall street journal" is reporting they're looking at expanding into areas, 475 stores that's smaller than a kroger, a walmart. their market share is estimated only to be 2% for food and think about damage that it did to equity prices of all competing retailers. i think amazon works in general like a flywheel, with all of its business they use that word all the time. they want each business to service another business and come back to each other. they want you to pick up items from the store, get items to you

from the store a lot cheaper last mile delivery is expensive, even for amazon. >> thanks very much. >> happy new year to you >> same to you >> who has more stores, whole foods or sears >> good one. >> i am betting whole foods. looking to roll the dice on gaming stocks. nd iher casinos have a winning han 2019 is still to come here on "power lunch."

if you're thinking about betting on the house in the new year, contessa brewer takes a look at what gaming stocks have in store in 2019. >> reporter: 2018 was a bumpy ride for casino stocks but optimists aren't ready to followed them and they're hoping 2019 and lady luck will bring about a reversal in fortune. watch macau, they all get major revenue from macau and the chinese economy will influence how much big players plunk ed down. look for the chinese government to postpone renegotiating concessions so it can tackle the

group in one fell swoop. watch japan, the government there is deciding how to dole out three licenses for integrated casino resorts, all the major players are spending major cash trying to get one. the question is, how much will it cost? billions for development of the resort itself, billions more for required infrastructure investment and how difficult will it be to get a return on that investment even for casinos that walk away winners in japan and watch las vegas. room revenue may be an early indicator of the u.s. economy as a whole. if they remain on a upward trajectory, the recession risk stays away but if room rates fall, it's an indication corporations are cutting back on group business staying away from expensive las vegas meetings and conferences. as always the real key for casino investors is knowing when to hold 'em and when to fold 'em.

our contessa brewer there and we have just over an hour of trading left in 2018. hard to believe. let's head down to the floor of the new york stock exchange and bring in the managing director at rosenblatt securities. did i see you doing nelly earlier? >> i've been doing that for quite a few years now. there's some nostalgia to it. i used to sing that to my kids as they were growing up in a bedtime song. >> i was looking for your face so i'll trust you that you were in the back. gordon, welcome. let's talk about the set-up here into the final hour and then are we seeing a santa claus rally that makes you feel better for 2019 >> i would say that one day does not a year make. we're doing okay here today. this week since, you know, wednesday since christmas feels more like a holiday so this wednesday to monday if you will has been a little off kilter

here has slowed down. it's been more of a holiday feel and today it's more that way. we'll have a close. there's going to be some volume coming into the event but overall the volume, the emotions muted and everybody's ready to take a breath and turn the page. all that being said, i don't think that there's a real change in the landscape going forward. the question is, what is the growth story what can you hang your hat on in 2019 i think investors seen more questions than answers, whether it's the fed having to figure out what's the right interest rate and trying to figure out how they're going to unload some of their balance sheet, couple that with federal debt and a congress that doesn't seem to be able to agree on much of anything there and then you also then look at china and try to to figure out which one of those to of the united states and china who's going to blink first. is china going to feel some

responsibility to open up their markets or is the united states, you know, just going to be unable to come up with any kind of agreement and we'll get into a tariff war and that's a consumption tax and that doesn't bode well for the markets in general. what we'll see is a more selective market in 2019. i also think it's a market that benefits the professional money manager, that people that have been just buying the s&p 500 or vanilla funds set it, forget it, won't do as well as we get into a more competitive environment. i think those people that are professional will do a lot better. >> quick question, quicker answer, please, gordon p what unfolded in 2019 the way you expect and what surprised you the most >> i think that the way they wound down the year. it just appeared that there was something out there whether it was just a big fund looking to

liquidate but way the market backed in so aggressive without any single news item hitting the tape that would precipitate that kind of change. when we go into 2019, what is the funds allocation going to look like and how is that going to affect equities. >> all right. thank you so much, gordon. >> pleasure, happy new year. >> happy new year. >> we've got one segment left in 2018. >> what could it be? >> it will be check please. n miteat's where i'm going in tenus. >> lucky you. >> oh, my gosh.

♪ i think that crowd has grown even since the last time we checked. >> i think so and i am going to be heading there in about five minutes to do "fast money." >> so the market -- >> for my sins. >> the markets close in one hour, the show starts in two hours which means you have 120 minutes to make it to the heart of times square. >> and, you know, look at that. it looks like its wet and raining, all of my friends from new jersey are there. they've assumed their positions. >> i was there at 5:00 a.m. and it was hard enough trying to get to the nasdaq market site. >> i need a go pro-to track this. i want to be wearing a gopro. >> you and all the traders. >> what a great year you've had. >> thank you for having me in your family. >> absolutely. good stuff and what a year it's been and the market's it crazy. >> in a way i hope it's just as

crazy next year but maybe in a good way if that's possible. we'll be tracking your progress through waze or something like that. >> norad like the santa tracker. >> god speed. >> same to you. >> thanks for watching "power lunch," everybody. >> "closing bell" starts right now. i'll see you on "fast money" at 5:00 if i make it alive. ♪ welcome to the final "closing bell" of 2018. >> we're running out of year. i'm mike san tolli and it is, of course a new year celebration in dubai. these are pictures of them ringing in 2019 in dubai from the world's largest building and, of course -- >> the tallest building. >> we're just nine hours away from our own celebrations here in new york. one hour away from the close of the markets. >> it's great that we get to