great insight and final thought today. maybe it's okay for russia and cuba to be involved in venezuela if our guest suggests they can get a negotiated settlement to get the maduro regime out of power and open it up for someone more democratic. >> tyler matheson, melissa lee here as well the shutdown showdown there. not much new there and the trade stocks and the talks, the state of play at this hour the massive christmas eve sell-off should regulators investigate what went on a hot area for years and a major slowdown may be coming

"power lunch" starts right now welcome to "power lunch. i'm melissa lee. stocks are under some pressure the dow is down more than 150 points earlier in the session. the shutdown in trade talks causing uncertainty on the street and s&p 500, closely watching the level of 2645 that's the correction mark higher than that, s&p is out of correction territory pfizer, coca-cola, verizon technologies the biggest dow at this hour for more, let's get to bob pisani on the floor of the new york stock exchange. hello, bob. >> the markets admit a bit of a wall in the last few days with very good reason look at today's headlines. congress secretary william wilbur ross said the u.s. and china miles from a trade resolution draghi said near term growth was weaker and poor economic numbers in europe and yesterday's earnings results, mixed today

overall. with positive comments from southwest airlines, we've had the positive comments. offset by more downbeat from texas instruments even though texas instruments is up nicely today. the market moving sideways the last few days. was it the december lows the bottom in technical analysis firm, lowry, analyzed with the s&p up about 14% from the december 24th low and a turnaround so rapid, occurred only 9 times in the last 80 years. lowry's conclusion is this those waiting for a retest, probabilities are historically against a market retest given these rare circumstances kelly, important thing here, a little bit of glass half full from lowry back to you. >> bob, thank you. bob pisani down at the new york stock exchange day 34 of the government shutdown the senate will vote on two proposals designed to end it but neither likely to pass

ylan mui with that >> not enough to get these across the finish line but shows there is a middle here the latest pressure point lawmakers are facing is that tomorrow, federal workers will be missing their second paycheck he sounded dismissive of their pain. >> they are and i don't understand why as i mentioned before, the obligations they would undertake, say, borrowing from a bank or a credit union, are, in effect, federally guaranteed so the 30 days of pay that some people who will be out is no real reason why they shouldn't be able to get a loan against it and we've seen a number of dads from financial institutions

doing that. >> white house economic trying to walk back some of those comments earlier today he said he understands that many of these workers are facing hardship, but he also repeatedly called this all a glitch that could be fixed in a nanosecond once the government reopens. so i'm not sure if kudlow is really doing damage control or just some more damage there. >> certainly people are scratching their heads ylan, thank you. not much of optimism on a deal either kayla tausche with the latest for us >> reporter: yet another back and forth, melissa secretary ross roiled futures today. u.s. and china are miles apart basically said that past grievances and deficits are one issue but protecting u.s. technology going forward is entirely another larry kudlow tried to clean up those remarks as well and what secretary ross meant is the two countries have miles to go before we sleep but even so,

kudlow said next week's meeting with the vice premier is not the end of the game. what's clear is the white house is in the game of expectation management and that while the president may have warmed to a deal a couple of months ago, advisers don't want to lose a very important opportunity to have china make long-term changes. they feel they are in that sweet spot right now in the meantime, capital hill republicans who are allies of the president's want to give him the ability to levee specific tariffs on countries and products with the single stroke of a pen congressman sean duffy is co-sponsoring a bill to do just that >> i'm a free trade guy. i don't like tariffs, but i guess i also want it to be reciprocal as well when the president says this tool is necessary and mr. lighthizer says i need this tool as well, i want to give him that tool for the american worker and the american future. >> reporter: he doesn't believe the existing tariffs in place are effective enough

too broad, caused blanket retaliation and thinks the president needs a scalpel and not a bludgeon back to you. >> thank you very much, kayla. so with trade concerns front and center, and the votes to end the shutdown unlikely to pass here in the next hour, so where do we go from here bring in melanie sanona and jeffr jeffrey. melanie, let me begin with you on trade it would seem that both sides need a win to reach some agreement, whether it's march 1st or postponed until some later time what does a win look like to the united states and can you see xi jinping and china going along with it? >> i think it's exactly right, like the shutdown fight. where both sides need to be able to claim a victory for president trump, he needs china to open up its markets, especially for those exports and those ad products. he also needs china to stop the intellectual property theft and the transfer of technology, the forced transfer of technology

and most importantly, they need to see some sort of enforcement mechanism so china can really honor its commitment to whatever deal is cooked up. >> you see the chinese going for that >> that's one of the main sticking points they've been debating over. not just the intellectual property theft but that enforcement mechanism and that's where we see a lot of apprehension president xi, one of the biggest things for him, of course, either having those proposed tariffs become entirely eliminated or having them sharply reduced. especially with president trump, it's unpredictable, in some cases, he does appear more willing to give up concessions like you saw with the north korea talks but other cases, when he feels like he has the the upper hand, he digs in like we're seeing with the shutdown fight. so it's hard to tell but not a lot of time and there are a lot of sticking points. >> jeffrey, when you hear the president speak, you can almost feel his eagerness, his desire for a deal in the way he speaks of his friendship with chairman xi in china. what if he gets half a loaf but

not the whole loaf you think he's likely to go for it >> i think it's important to distinguish between what they can do in the short-term so before the first of march and what will take months, if not years to accomplish. so i think we're likely to see a short-term sort of half a deal that will allow them to extend negotiations on the more structural issues that melanie was just mentioning, but in the meantime, gives trump a short-term win and probably some chinese pledges to purchase american agricultural goods and manufactured goods as well to try to reduce the trade deficit. >> when you look at what's going on with both sides, china with the economies, do you see this is a pressure point for either side or that doesn't play a role in this? >> i think both sides are quite clearly under pressure from the chinese side, there is obviously a slowdown that's

happening in the chinese economy and the concerns about growth there are very real. from the u.s. side, certainly, in the last quarter of last year, the white house became much more concerned about the volatility in the equity markets. some of that eased as the markets improved. >> it's ease add ld a lot. especially with the bounceback from the december 24th lows. >> potentially i still think the white house is acutely concerned about that stuff stuff stuff. if you look at the way the market moves on this issue, it's clear we're not making progress in the talks and calling them off, going to escalate tariffs, that would be a huge market event i think they're very eager to avoid >> did wilbur ross just create a land mine for the administration i mean, his comments about, oh, federal workers can just go get a loan, it came off as tone deaf, granted, it is true and there are credit union, you could get a loan in seven days,

doesn't appear very empathetic and may put republicans in a place they don't want to be and that's the party that doesn't care about the working class >> it's not a good look for republicans. it's not a good look in general for this country and not just where we are but day 34 of the shutdown we're not much closer to a deal, although, i will say, some signs of progress today and a little bit more optimism over the last 24 hours but at the end of the day, both sides are struggle to message this thing how can other side explain to the american people and constituents why for 34 days, the government has not been funded and these workers are going without paychecks and security is potentially compromised? it's a difficult thing to message on and i think that's why, especially with the next paycheck set to be missed tomorrow, we are going to see some movement. it's beginning of the end here and just a matter of how long that is going to take. >> you say the way the shutdown ends will likely be a national emergency declaration. i assume you mean by the president with respect to border

security and he will then go ahead and presumably have the army corps of engineers begin to build his wall >> i think trump needs a way to say to step down to say he won even though he's losing at the moment it could be an executive order or emergency, there's a number of ways to get there but given the way trump practices politics, just admitting defeat to nancy pelosi is probably not an option at this point. >> all right folks, thank you very much melanie zanona and jeffrey wright. how is the lack of movement on trade and the shutdown playing out in the markets we'll discuss that when we come right back and the big earnings, that's dell, intel and starbucks. "power lunch" is back in two

i'm ken jacobus and i switched to the spark cash card from capital one. i earn unlimited 2% cash back on everything i buy. and last year, i earned $36,000 in cash back. which i used to offer health insurance to my employees. what's in your wallet?

and the army taught me a lot about commitment. which i apply to my life and my work.

at comcast we're commited to delivering the best experience possible, 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. day three of davos, weighing in on the head winds of the local economy. >> look at december. 300,000 jobs you need about 80 to 100,000 to hold pace. yet, unemployment went up once a lot of people went in the market the economy hit china slowing of course but still at 6.4% global economy is still

relatively strong. the political whatever is still relatively weak. >> the issue is when you think about government shutdown, you think about the 90 day deadline on trade, you think about the negotiations of brexit you look at some of the bigger macro issues that are out there. you know, any one of these individually probably doesn't slow us down but a combination of things not going the right way will have enough impact on markets and sentiment. >> last year, the economy was like a fraternity party. it was 2:00 a.m. it had been going well monetary policy driving it and suddenly, someone came in with a new keg called a fiscal policy now closer to 4:00 late in the party, people start doing strange things volatility in the marketplace and chaos in washington. it doesn't necessarily mean you leave the party but certainly moderates. >> it means the sun is coming up soon. >> yeah, soon. >> quite a metaphor.

how much is the fed trade talk and the dc dysfunction amanda, co-chief investment strategists with financial services group and steve, the chief investment of equities with federated investors i'll start off with you. it sounds like you're rather bullish on the markets and what needs to go right and that it's not near closing time as the guests have said 3100 is your 12 month target on the s&p 500. 18% upside with the levels we're currently at does everything have to go right in order to get us there >> i do think the comment of how we're going, i would say by mid year, melissa, we'll get off the current talk and talk about global synchronized recovery we've come through a soft patch and already, draghi this morning, talking about rates and powell's off the table

i think that's the key driver and once we get this trade deal done, that will be stimulative to china and they're going to stimulate beyond that because their economy's clearly slo llyg good for europe. i think we look at global synchronized country the earnings season to me has been going stunningly well the banks told us the recession is not happening and now the tech stocks are showing us that the second derivative has turned things are getting a little bit less worse and look at the reaction to these stocks everything is oversold people are expecting a recession. that's not happening and when you get pullbacks like this of 20% like we had in nine recessi recessionary periods, six of these in 1960, you get pretty big bouncebacks, somewhere in the order of 30% our 3100 target. i know it sounds a little bit optimistic, but i think the consensus will move in that direction as we move through the next few months.

admittedly, you know, the trade stuff is keeping people on the sidelines. i think the market would be higher right now if it wasn't for that, but that's got to get resolved it's just a matter of when, not if. >> two things, amanda, jumped out to me when steve was talks just now the notion, and seems like maybe opinion, not a consensus opinion, by mid year, we see a global synchronized recovery because the data, at least the data we got out of germany and france this morning don't seem to indicate they're anywhere near a recovery at this point and the notion also that a 20% correction implies a huge bounceback that also implies that where we were before the 20% downdraft was a fair valuation for the markets. i don't know, maybe people don't necessarily think we should have ever been there in the first place. >> there's no question we started 2018 at pretty lofty levels from a forward perspective. five multiple points over the

course of the year and a little bit of uplift, obviously, on the earnings side from the tax package and then certainly, the market correction, you know, contributed to it. our view is that we think by the end of the year, we'll get to about half of that target. so call it high single digit returns and so with earnings growth projected at about 6% for the full year, 2019, layer on top of that, a dividend yield that gets you in the ballpark. the wild card is really valuations, so late innings of the cycle where we are today, hard to justify getting back to those lofty levels at the beginning of 2018 but at the same time, to the extent that some of these cross currents start to abate, we could see a little bit more upside from multiples, so. >> steve, i was just going to circle back to this commentary about, you know, recession coming the other thing james gorman said this morning was that his native australia hasn't had a recession in 25 years. so the idea we're so close to

dawn or whatever that metaphor was, what happens if this cycle keeps going? >> the market keeps going, however, we've got 3500, two or three years now. there's no reason. the only thing that really caused a recession right now is the fed making a mistake the underlying, other indicators we look at that, you know, typically incoming recessions, they're just not there and really, a recession is unlikely without a fed policy mistake the market was legitimately worried about that when powell talked about hiking until infinity, but he's, you know, walked that back substantially they're on hold until june and, you know, i really do think, as we get into the back half of the year, it's going to be more about, you know, maybe we've just been through a little soft patch called a down cycle. it's a new dawn coming and it's a new up cycle >> amanda, let me just, go ahead, finish your thought, steve. >> no, no, go ahead, tyler

>> i knew you were going to say something. amanda, of the risks out there on the horizon, which one stands out to you as the one that could cause the market to go back and test its christmas eve lows? >> well, if i had to pick one, you know, i really think with the fed basically off the table, that would have been the single biggest risk we're thinking that's off the table. it's really this political instability component that we're really starting to get concerned about. it's not so much an impact on very short run growth in terms of the shutdown. that's sort of minimal in terms of real gdp growth what we're really concerned about is how long this persist and begins to really erode corporate confidence we saw confidence start to rule over in november, you know, to the extent this persists longer on the trade front and the shutdown that's not great news for confidence, both on the consumer and the corporate side and so

ultimately the key to time and length and extension of the cycle if we get it is coming down to cap x, so if confidence starts to erode with the cap x plans can erode as well. >> amanda and steve, thank you >> thank you broader markets under pressure but there is one huge pocket of strength today chip stocks. the smhetf up more than 5% huge gains in xili -- that's xilinx intel reports. can it keep it going ngatn"omg ghinrit up

♪ hawaii is the first state in the u.s. to have a hundred percent renewable energy goal. if we don't make this move we're going to have changes in our environment, and have a negative impact to hawaii's economy. ♪ verizon provided us a solution that lets us collect near real time data on our power grid. ♪ if we can create our own energy, we can take care of this beautiful place that i grew up in. ♪

chips ripping higher today the smhetf rallies with materials and higher after profit beats from a number of stocks in the group. this ahead of mega chip maker

today. the semispike just getting started or ready to fade todd gordon with trading analysis.com and mark tapper with strategic wealth partners it's been an impressive bounce here pretty good move off the lows but seems like still some distance to where they traded let's say ten months ago how does it set up for you >> absolutely, michael a lot of precedence to the once wey seen significant corrections. this is about 29% back in 2011 this is 27 and just did another 29%. it's actually very much, it's very typical it's not anything excessive. i like this and think they've stabilized, heading into intel, earnings tonight, i like the look of this as we pop over here, beautiful level around the 50 level. look at how many times they try to break through the 50 level. top of the 200 day moving average. i just put an options trade on to take advantage of a possible

move here after earnings i like them higher >> mark, from a fundamental perspective, a lot of questions about exactly where the chip cycle is right now how does intel play into that? >> when you look at the semis, we prefer the companies with exposures to the cloud it's really all about who the end user is with these chips we prefer the episond user to b enterprise spending as opposed to the consumer. we'd be avoiding companies like qualcomm making chips for phones. >> we are bullish on the cloud and you have an opportunity to gain exposure to the cloud on a dirt cheap valuation it's evolved with the changes times and focused on data center makes up 30% of the revenues in growing. and more businesses are now focusing on these lower cost computers to boost margins and help with mobility there's much more pressure on the servers taking off those

computers and intel is focused on making chips for the servers. ahead of earnings, we expect them to benefit from the things they benefit from and we like the stock. >> intel has been on the defensive outperformer we'll see if their numbers can confirm or refute the enthusiasm here thanks very much and for more trading nation, follow us on twitter at @tradingnation. ahead on "power lunch," chaos in venezuela is the oil market at risk? plus, kramer's call. should regulators investigate the christmas eve crash? and renovation stagnation. what a slowdown will mean for home improvement stocks. we'll get to the nuts and bolts when "power lunch" returns. >> and now the latest from tradingnation.cnbc.com and a word from our sponsor. >> daily price fluctuations of individual stocks can offer trading opportunities. however, if you're unhappy with your returns while trading

actively, consider taking smaller positions over a greater investment time frame. evaluating trends over multiple weeks rather than hours can help a trader locate more consistelynt tradeable trends while possibly trading less frequently the future of technology investing lies beyond the tech sector. it's about technology transforming every sector. ♪ at pgim, our bottom-up approach uses a technology lens to identify long-term winners. from energy... to real estate...

to retail. finding such opportunities for alpha is the true value of active investing. and around the world, you have a partner in that pursuit. pgim: the global investment management businesses of prudential. the global investment management ♪ ♪ our new, hot, fresh breakfast will get you the readiest. (buzzer sound) holiday inn express. be the readiest.

hello, everybody i'm sue herera here's your cnbc news update at this hour. speaking in davos, microsoft ceo said he welcomes regulation of facial recognition technology. this to help the marketplace not be a race to the bottom. >> facial recognition is a piece of technology. it's just democktized and prevalent. ten cases that can improve human life i can come up with ten issues that are going to cause real challenges >> hamas officials said they will not accept $15 million in qatari aid this to protest israeli delays and blackmail. the money would have been the third in a series of payments to help ease economic and humanitarian situation in gaza the bulletin of the

scientists with the famous fooms day clock at two minutes to midnight the same level as the height of the cold war the clock reflects how close humanity is to a worldwide catastrophe. on that uplifting note, that's a news update. >> never moved it back, sue? >> not that i know hope >> hope springs eternal. >> thank you, sue herera let's talk about tensions between the u.s. and venezuela, they are heating up. president maduro cutting diplomatic ties with the u.s. after president trump said we are recognizing the opposition leader as the legitimate leaders of the country growing fears that sanctions could reroute crude oil leaving our supplies here. the cnbc contributor by the way, when did they move the atomic clock back? >> in the aftermath of the cold war. the lowest point if i recall correctly. >> now moved quite a bit

>> back to minutes from the button. >> speaking of doomsday, let's talk about venezuela and are these u.s. sanctions coming and would they help? >> i tend to think not because of president trump's apparent sensitivity to a higher oil prices while venezuela's oil production has cratered, it's still about a million barrels a day and actually 500,000 barrels a day very importantcrude oil to the u.s. gulf coast refiners actually five of them. >> the heavy crude, right? in fact, the light crude we now get from fracking, they don't refine so much, correct? >> can't use it. our refiners in the gulf coast, two are several others, built for that that's venezuelan. there's a homefield advantage there. part of the problem is that the other thing they would do is pop part of it off the market because they would be foreclosured from everything in the light oil they would use to

mix with their heavy oil to make it flow and be delivered and put on the tankers to go out to the rest of the world. not necessarily a lock because if we stop buying because of sanctions, they would probably not have the capacity to pump it and ship it and move it around because they won't have our dilu diluteants to make it flowable. >> it would hit the light crude and the ones that need the heavy crude. >> it will hit our transportation sector, commercial transportation sector the hardest. mostly into diesel fuels and jet fuel. >> could we substitute that if it wasn't coming from venezuela? could we get it from alberta or something? >> it's tight, that part of the market condensate that means really into gasoline

production, straight through it's an abundance. this medium and heavy stuff. it's actually come way up. in a nutshell. what killed the venezuelan economy and their oil business >> socialism >> socialism, corruption, massive corruption for sure. >> there was a case in miami with over a billion dollars worth from stolen funds from venezuela that accused that maduro himself of. he was never formally charged but it was a case earlier in the middle of last year that highlighted this and when you start taking a billion dollars out of any company, you're not doing too good. >> you would sell anypop in crude on the notion that sanctions will go into effect because you don't think that's going to happen? >> i would and again, this market has dealt with venezuela being out of the

market anyway. this would hurt a bit but yes, i would sell any pop on venezuela. >> john, thank you so much john from the capital. starbucks under pressure ahead of earnings after the bell today. shares rallied about 13% in the last three months. get back within range of record highs but wall street is divided on starstarbucks under half of analysts who cover starbucks have a buy or overwait rating with guggenheim securities, a neutral rating on starbucks. it could go either way on it good to have you with us is starbucks a major problem to china right now? >> china is reliant on the stores they want to open this year and two quarters ago, they were negative that will be watched. >> to what do you attribute that

and can it continue? >> some of the peers reported strong momentum towards the end of year in january and expectations for a little bit of momentum on the top line in the near term, so the consensus sales number is around 3%. i believe the sides might have migrated up to 4% and the pressure is on for a same store sales number. >> this one knocked me over. if i read this note correctly, 20% of starbucks locations are in the state of california where labor costs are going to pressure margins >> yes, so as of january 1st, the minimum wage went up there certainly in a very tight labor market nationally but you'll have structural minimum wage pressure in california so it has always been an affordable luxury but we are cognizant of them now expanding their demographic reach to that lower income consumer so maybe perhaps a more price sensitive

consumer maybe the pricing power they've enjoyed in the past might be eroded a little bit. they have to be more sensitive, i think, going forward the last quarter, drove the last check-up over 5% and this is now, so if you start to compound that, it gets a little bit of too much pressure or asking too much of your demographic to take on >> what do you want to know about china? i asked this thinking about not just the impact with the china trade war meaning the economy slows down in china but also whether or not this brand is boycotted at all on the local level by chinese people who don't want to buy from american company? especially when there's a viable competitor in china these days >> that's the more important part you can have disruptions from news headlines but the real long-term pressure would be the local competition. is there a player in there about a decade ago, they dealt with a lot of competition in the uk and that took many years for them to resolve and get a strong

foothold of market share there even in the united states, in the northeast, it took them a long time to compete against dunkin donuts. so if other companies are out there competing better than we have thought, that's going to be a head wind for what was seen as a market that was going to be a lot of green field growth. >> matt, thank you very much for your clear answers we appreciate it ma rick santelli at the sme hey, rick. >> a lot of action in the treasury complex more in the fx note yields. we pretty much tested what turned out to be the high yields shy of 280 and backed off, midpoint last year following stocks very technical but it's all about the euro today. versus the dollar and realizes the dollar sis up half a cent on the day and highest level in all of 2018. if we look at a mid november to the euro versus the dollar, you

could clearly see it has dropped. we talked yesterday. 113.5 was a big level. sliced through it but maybe more interesting. the euro and the pound look at this the euro is at the worst level since april and the important part to remember here is everybody's worried about brexit maybe worry more about mario draghi back to you. dow up 12% since the big drop on christmas eve. jim cramer is fired up about what exactly happened that day >> when stocks went the day before christmas, that should have prompted officials, maybe the treasury or s.e.c. say, wha happened here? >> did something happeor dn oes the s.e.c. need to investigate when the government reopens? we'll discuss that next.

when stocks went in the day before christmas, that should have prompted the treasury to ask what the heck happened here? how could stocks crash so hard on a day when there's so few

players? pretty simple. the whole game get out of hand and now it's the fans meaning you the investor who gets blasted. >> that was "mad money's" jim cramer raising questions what happened when the dow plunged taking more than 650 points on the session. he went on to say regulators should launch an investigation into the american stock dream. let's bring in teresa, law professor and former s.e.c. attorney great to see you great to see you on what grounds would the s.e.c. investigate? i understand this was very jarring for the average investor but wasn't a flash crash kind of drawdown that day. >> it wasn't but i think that's what they're looking at and secretary mnuchin said they'll look into this and when you have

the wide swings in the market. 400, 500, 600 points 2 to 3% that's a clear indication there's some sort of a market structure issue, so the s.e.c. has to investigate, i think, and look into why there's this volatility it's not fair to everyday investors or all investors, really, and it just goes to the fair and efficient markets we have >> the s.e.c. upda >> it's different. >> doesn't that speak to market structure as well? the same circumstances that lead to a rise in the dow of 3% on thin volume, why wouldn't you investigate that, if it's really on the basis of market structural issues, why not investigate that >> for one thing, it's about market loss. investor loss. while i think that's important to look at too, it's more important to look at the loss

because you have things like the high frequency trade-off, for example. you have traders to get out early and once they come around, to come up and buy in low so they sell high, buy low and the average investor will act more quickly than the highfrequency trader and lose more money and with volatility, everyday investors are confused by that they hear, oh, apple is doing well so maybe buy or sell and the average will act more quickly to minimize loss than they are to get a gain >> i don't quite follow that if they're front running, whether on the long side, either way f you' way, we talked about this years ago when people were poking into this in the first place. yes, it's one thing for investors to lose money, as you said, but if you can't buy something because it's artificially moved up. it's got to go both ways or it

doesn't hold water. >> i agree with you and i think that the bigger concern is that when investors lose a lot of money but i agree there's also an issue when investors can't get in because it's artificially high andrew sork this goes to yt is we're trying to find the real valuation. anything that negates the real vaguation of the stock is something that has an impact on the market integrity and the market structure so i agree, it's big ups and downs but the the s.e.c. and i think regulators are more concerned with the everyday investors and investors losing a lot of money rather than not being able to get money in the gains because there's more of an impact there. especially 500 or 600 points decrease but i think they need to look into both and this way, also, when you're looking at a decline, whether there's front running, whether, you know, some traders are able to sell high

and start a sell-off and anticipate, suppose, a big sell or a big purchase and get in front of that too. so those are issues where you can actually get to more of the manipulation and the fraud. >> looking at the day before christmas where there was an area of buyer in the house, not even a mouse, what does your gut tell you, very quickly >> i think that the high frequency trading is a big issue here and i think that the automated algorithms and those start a massive selloff and then the stop loss orders kick in and i think it's all of this automated technology we really. >> getting momentum. >> exactly, yes. >> we'll leave it there. thank you so much for coming on. we appreciate it >> thanks for having me. >> recent profit warnings from sherwin williams and stanley black & decker sending those lower and sparking concerns

about the whole remodelling boom is this the end of renovation nation the matheson household begins a big kitchen rental i am always able to hit the top tick, every time

oh, and there's the closing bell. (sighs) i hate missing out missing out after hours. not anymore, td ameritrade lets you trade select securities

24 hours a day, five days a week. that's amazing. it's a pretty big deal. so i can trade all night long? ♪ ♪ all night long... is that lionel richie? let's reopen the market. mr. richie, would you ring the 24/5 bell? sure can, jim. ♪ trade 24/5, with td ameritrade. ♪ ♪ hawaii is the first state in the u.s. to have a hundred percent renewable energy goal. if we don't make this move we're going to have changes in our environment, and have a negative impact to hawaii's economy. ♪ verizon provided us a solution that lets us collect near real time data on our power grid. ♪ if we can create our own energy, we can take care of this beautiful place that i grew up in. ♪ ♪

junior achievement reaches young people all over the world to prepare them for the future of work. we go into classrooms and we teach entrepreneurial skills and leadership skills. when you actually create a business when you're in your teens, it raises your self-confidence. junior achievement is really unique because they inspire young people to think creatively. the citi foundation's pathways to progress initiative helped us reach kids in over 50 countries. citi has also loaned us their executives and their employees to help us deliver our programs. our youth are three times more likely to become entrepreneurs and they're more likely to create jobs for others. they are going to bring an entrepreneurial spirit to making our world a better place. ♪ the company who invented car vending machines and buying a car 100% online. now we've created a brand new way for you to sell your car.

whether it's a few years old or dinosaur old, we want to buy your car. so go to carvana and enter your license plate, answer a few questions, and our techno-wizardry calculates your car's value and gives you a real offer in seconds. when you're ready, we'll come to you, pay you on the spot, and pick up your car. that's it. so ditch the old way of selling your car and say hello to the new way... at carvana. the home remodeling boom is slowing down it says here. diana olick has three reasons why. hi, di. >> reporter: hi, ty. rosing mortgage rates and fewer home sales and that last one's key because buyers and sellers usually renovate and spend 30% more, the buyers, than the long-time residents and with fewer sales renovation growth could fall to the lowest level of three years spending, however, will rise because construction costs are

still incredibly high. the slowdown will hit retailers like home depot, lowe's. sherwin-williams with a disappointing fourth quarter quote across the board and we're seeing weaker consumer sentiment in housing because feel like the homes value have peaked. tyler? >> diana, thank you. how would a slowdown in remodeling affect stocks like home depot and lowe's? here's an analyst with g-research welcome to you before we get started, is there a difference in your mind between renovation and remodeling or are we talking about same thing >> generally speaking about the market, you are speaking about both of them but talking about remodeling and the remodeling piece of and a break and fix

piece they're spoken about together. >> home depot and lowe's, stocks, so the argument is if home sales are dropping people aren't going to spend as much on fixing up that new house i can speak to that. we were those people not too long ago but if you're in the house and you're not going to move for other reasons and you're stuck in the house people say, well, they are going to renovate and remodel and a reason to own home depot and lowe's. >> that's correct. if you look at the average age of the u.s. housing stock it's 40 years plus and the more time you spend in the house the more you're likely to reinvest. and when you talk about average selling prices, it's not that average selling prices are going down it is that the appreciation is beginning to slow down you've seen house appreciation of about 5% to 6% over the last 3 years. we think it will come down closer to 2% to 3%, a fairly healthy level. >> so, let me ask you. there are rules of thumb

may not be exactly your area but if you do a home remodel, a new bathroom, kitchen, let's just say - >> kitchen. >> new jersey. >> specifically. >> addition. no if you do one of these projects in this kind of environment, are you likely to get back less of your expenditure at sale than you would have in another environment? or, will the lower costs for construction that may be as contractors have to compete could that compensate for that >> yeah. absolutely i mean, i think in the environment we are in you have seen some softness in the fourth quarter and first quarter and i think people continue to remodel their homes and i think you will continue to get a decent return. but over the next several months, we do see softness in the market and it's been pretty clear based on the commentary from companies that have reported as well as a macro data that's been published. >> in terms of commentary,what

does masco and stanley black & decker tell me about home depot and lowe's when they report? their close date on the quarters is later and sherwin-williams said they were seeing an uptick coming into the new year so what do you expect? >> yeah. well, i think going into the new year there's definitely going to be a little bit of a lack of clarity with issues hard to handicap going forward and what kind of an impact that will be including tariffs, for example but it was encouraging to hear sherwin-williams say that december there was an improvement and lenor in their quarterly report mentioned december was an improvement over november timing when demand will come back from this pause is a little bit challenging and i think it will take at least several months to sort of figure out where we'll fall and see that come through in the earnings releases as we go forward that there will be a certain amount of uncertainty at least for the

first few months. >> you like lowe's thank you so much. >> thank you. we have an in-house renovation expert here but - >> oh man was it cold the night before last in our house. >> no heat, i'm sure thank you for watching. >> "closing bell" starts right now. ♪ good afternoon welcome to the "closing bell." i'm wilfred frost. >> i'm morgan brennan in for sara eisen. >> coming up, niall ferguson, why he says china is the next global crisis. >> plus, big earnings coming your way after the bell from intel, starbucks andnorfolk southern just to name a few. instant analysis let's get right to breaking news on the government shutdown. ylan has more from washington, d.c. >> reporter: the senate is