>> the problem is a lack of credibility. there was a quick pivot from december to january. >> yes, yes. >> by chairman powell for no reason at all, and we have continued now with frequent switches in policy >> sri, i'm sorry to jump in it's only because we are out of time >> let's go to "power lunch" thank you for joining me on the exchange. >> thank you very much and we'll see you over here at "power lunch" in a moment. i'm tyler mathisen, here's what's new at two, stocks have been rocked, up, down, down a little bit, not where they were. trying to make a major comeback as central banks around the world cut rates that has spooked stock investors. is there more pain ahead we'll discuss that. plus, global yields, they are sinking and sinking fast, why it could be a major warning sign for investors and the major index is down

about 5% from their all time highs. where is it safe to hide in this stock market we have details as power lunch starts right now and here is where we stand right now. the dow was down nearly 600 points at the lows of the day right off the open, we've come a long way back. now down just about a hundred points with the nasdaq actually in the green, ever, ever, ever so slightly. the two big laggards are energy and financials we'll explain why, both down about 2% oil sinking to $50 a barrel. we'll have more on that later. that would explain why energy stocks are down 1 3/4%. >> the focus is yields banks around the world are cutting rates. this is sending u.s. investors into a selling frenzy.

u.s. stocks have bounced back, fears remain about what it means for the market we have full team coverage to lay it out steve liesman is here to talk about the rate cuts, and let's start with you >> hello, everybody. the important thing is we're moving lock step with ten-year yields let's just take a look as yields move down, we had problems here, and yields move up off of the lows, the markets have rallied, particularly in the late afternoon the yields have come off their lows that's the key port of what's going on today we have had a nice rally most of this has not been cyclical, most individual stocks associated with consumer staples names, krogers for example, food stocks have been rallying a bit. kroger was down as much single .

coca-cola has 3% range and same with procter & gamble, herb essentially a 3% range for the highs and lows you see the same pattern lows at the open, and now we're sitting at the highs for the day. not much with the global industrial really not helping a lot caterpillar, very good example, 3 m. almost essentially sitting off their lows for the day here. bank, same situation, no big rally in jp morgan in citigroup of bank of america, particularly still a negative territory there's a couple of stocks that are really helping today that are in the cyclical camp i think the biggest one is apple, down on the day, and look at that, now in positive territory, apple is $220 at the start of the month we're talking about a 10% move in apple in five or six trading days perhaps a bounce back is to be expected tyler, back to you. >> thank you very much, bob. president trump not backing down one iota on china today saying that someone needs to stand up to them

eamon javers live at the white house. >> reporter: that's right, i asked the president about this today. i asked him if he's watching the stock market reaction to the china trade news today he said he is watching it, and not only that, he thought had might have been a little bit worse. here's what he said. >> the narcotmarket reaction ise expected i kind of expected even more at some point we have to take on china china is losing thousands and thousands of companies, leaving china now because of the tariffs and we're in a very good position as to whether or not a deal will be made, i will tell you this, china would like to make a deal very badly. >> the president signaling there he's prepared to absorb stock market pain in order to absorb the deal, and china is about to come to the table to give him the deal that he wants earlier today on twitter, the president said really the problem isn't china, take a look at the tweets, he said the problem actually is the federal reserve. the president suggesting that ultimately, the currency is

under siege in china but in the united states, he said the problem is the federal reserve, and he wants the federal reserve to cut rates even further than they have and he feels they haven't gone far enough, and quick enough, so this is a president who's feeling his political power here in terms of his relationship with china, and in terms of his relationship with the federal reserve >> that's for sure thanks three more central banks around the world cutting interest rates overnight. steve liesman has that story. >> normally the central banks in thailand, india, are not the big three. that wasn't the case when those three central banks heard around the world as they cut interest rates either unexpectedly in the case of thailand or more than expected in the cases of india and new zealand. that's part of what sent bond yields careening downward taking stocks with them the message to markets, the possibility that we're in the middle of a race to the bottom on rates

in fact, president trump as eamon encouraged it today. he said our problem is a federal reserve is too proud to admit their mistake of acting too fast and tightening too much. they must cut rates bigger and faster it would be easier if the fed understood that we're competing against other countries, all of whom want to do well at our expense. whatever their motivation, central banks around the world take a look at this wall from russia to australia to brazil have been cutting rates since april. that's the general direction of interest rates around the world, definitely downward as they are in the expectations for our u.s. federal reserve. take a look at the probabilities at this hour 54% chance of a quarter point cut. it's down a little bit as those rates came back in september 65% chance in december, and 42 in january the fed knows it can't maintain rates so far from other countries. the problem may be if it cuts, other banks will simply cut more and nmore and more and more

>> has the fed lost control of the situation. >> the problem is that it assumes it had control i think right now, the main drivers of global rates and probably economics are tariffs that's over on the fiscal and political side i think the fed is in a position of looking, hey, that's not our circus we may have to clean up after some of the things that circuses leave behind. >> the reason i ask, is you just concluded by saying that the fed can cut rates but then the response may be that other central banks will cut rates more and we can't have a rate that is so much higher than theirs, so then we've lost the ability, haven't we, to manage >> you think that's relative race we could cut the rates here objectively, what they are in the united states, so the rates can be lower here, not clear that without specific policy coordination that we can set the

rates that the market sets between countries. >> you're going to stick around, aren't you >> that sounds good. >> is the bond market signaling to investors that we could be on the precipice of a global recession sooner than we expected let's talk about this, falling yields michael faroli, chief u.s. economist and rick santelli. are the yields and the inversion of the-year-old curve, two month to ten year or the flattening of it, with respect to the two-year to ten year, is it telling you we're on the brink of a recession. >> it sends a worrying signal. it has for a while it's been sending a signal we're late cycle at the least. i would seemphasize a lot of the move, lately, even if you have a relatively sa relatively s relatively, global developments have been weaker and the decline in global rates is dragging down

u.s. interest rates and it's also putting outward pressure on the dollar which may force the fed to respond i don't see signs that the u.s. is slipping into a recession right now. i do agree with what the market is saying, not only is growth prospects here diminishing by around the world falling faster. >> peter you cite a bond bubble that's scary to watch. we haven't seen this kind f of slide -- kind of slide in ten-year yields since the peak of the debt crisis in the united states, the idea that we were going to default on our debts back in august, i point out, of 2011 >> well, when we first went to negative interest rates in europe back in 2014, 2013, with the swiss and the danish central bank, you scratch your head, and you're like this is creating a bubble, and it's obviously gone on much longer and deeper than anybody imagined but i think it's clear that, yes, the disappearance of interest rates over seas is certainly led to

this inversion here. there's no question that the u.s. economy trajectory, economic trajectory is slowing dramatically, and the slow down in trade and manufacturing is spilling over into services, and services obviously making up the largest portion of the u.s. economy. that, then, starts to ask the question of hiring could get impacted next, consumer spending could follow and get impacted on the downside, and what this all means but this is completely lala land. the world is upside down with negative interest rates and it is scary to see a german ten year at minus 60 basis points. it's alarming. >> rick santelli, jump in. >> you know, obviously i agree with both, especially with peter, but here's the issue, do we use traditional monetary policy tools to address this do we use negative interest rate tools? we've had some smart guests on today. i have great respect for saying that, get ready, you know, zero

rates and negative rates are coming listen, i just think it's an intolerable function for the u.s. and its citizens to go there. what do we need to do, we need to think outside the box there's definitely a slow down peter described it a lot of that is a feedback loop from trade there's more going on. you add in all the negative rates, the bank of japan, bank of england would have been doing and their condition worsens so much faster than ours, that our multinationals get dragged in. i get it, but the inverted yield curve may be a sign of a recession that starts in europe, and might have an effect on us but our central bank needs to communicate a whole new message. an inverted curve with a catalyst that is beyond their control should be ignored as a signal they should fight the fight of trying to hold rates up, even if market rates are negative. they need to be more of a backstop we need somebody to shock the system back into normal

thinking, and i don't know that our central bank is up for the task, and i don't mean any ill will against them. if i had to put a banner as to who caused this, i'm sorry, but ben bernanke's name will be first on my list. >> i'm not sure i agree with that i think the proximate cause looks to be tariffs. if you look at the way the market has reacted, federal reserve cut interest rates last week and things seemed like they were okay for something less than 12 hours. then a tweet came out and there's a lot of folks who want to deflect from that proximate cause. >> a tweet came out announcing did. >> that there would be new tariffs. >> the only thing i say about that and you're absolutely right about the cause and effect over the past week, is when you already have europe telling us it's going to be the bond buyers of last resort, when you already have japan playing that role, the yields were negative on german boons before the trump

tariff tweet. >> i think that's right but if you look at what happened to bond yields since then, you look at what's happened to stock markets since then, it's all downward. >> what about the fed, how does the fed fit into that? >> i will tell you, i'm not sure the fed knows how it fits into this >> i'm not arguing with that, but i think tariffs is a really bogus answer for what's going on here >> what's a bogus answer >> that's like saying, you know -- >> tariffs tariffs added to situation that was already a mess. >> have you seen a chart, the tariffs come out, the tweet comes out, the market goes down. >> exactly but it would have been -- we're a tinderbox of negative rates with a fed backstop that disappeared. certainly the tweet was a trigger, but believe me, the outcome was coming no matter what. >> and china responded and what happened on monday. >> trade is definitely an issue. i get that the problem is how the world

deals with these adversities by a dumb policy, they're tripling and kquadrupling down on. >> you're not sure how the fed itself knows -- >> look what he said to me, what are you doing, we don't really know, we're learning while we do. >> do you think they're a little bit lost and surprised by the market response here over the past week. >> here's what i think the fed wants, it wants two things it wants to change its policy rate in response to changes in economic data. i think bullard was very clear yesterday when he said -- really taking a page from the santelli play book, we can't be involved in a tit for tat in relation to tariffs. at the same time, i think it knows that it cannot be an island unto itself and acknowledges to the president that yields around the world are much lower in the u.s., and one effectiveness, it was happened

so far, the u.s. tenure has come a lot closer to the german bund. now you're more together. >> i would like to offer a drink to our outside guests, michael piroli, and peter you go next, what is your reaction to what you just heard. >> i think i definitely agree more with steve's take, every time we have had an increase in tariffs, forecasters across the spectrum have been lowering their outlook for growth in the u.s., and you have seen prospects for the fed rate stick on down. if you're bothered by, you know, negative rates, in the u.s. we may be once again moving toward negative real interest rates that's largely a function of the trade war which is denning growth prospects here and around the world, and you see that in a lot of asian countries, not just china but countries like taiwan, korea, that are in that supply chain. their growth prospects have been coming down, and the fed has to respond. you can't increase interest rates just for the sake of it when growth prospects and

inflation are running on the light side here. i definitely agree that the fed is in a bind they don't want to cut interest rates. they would like to have higher interest rates when policy is pushing the growth outlook in a more adverse direction, the fed has to do their job. >> you don't think the u.s. fundamentals are as bad as some others that's what's interesting. if the u.s. isn't that bad, is the fed in that much of a bind. >> we think growth is going to be slowing into the second half of the year. we do obviously see inflation remaining weak, and i think the downside risks are building, and have built over the past week. you have seen not only the increase in tariffs but that in turn has caused the dollar to rise, which is a head wind for growth and inflation i'm not doom and gloom, but i do think, and part of the reason i'm not doom and gloom is i do think the fed will do their best to offset head winds here. >> peter, you get the last word. >> i'm on board that growth is slowing. but to what end do we get with

lower interest rates has anybody looked at the european bank stock index lately it's down 80% from where it was in 2007. the japanese bank stock index is down 90% because the central banks killed their yield curve and jammed it into the ground through negative interest rates. do we want lower interest rates and encourage corporations to go out and lever up more with business debt relative to gdp at a record high, should we then encourage households to lever up through lower interest rates look what happened last time. >> you're a fascinating voice here, you think we're slowing but the fed shouldn't respond. >> because the medicine they have is not going to be effective in addressing the illness. >> i think there's unanimity on this panel i think even piroli would agree that nobody is quite sure that interest rates are the right response here, and i also think everybody agrees the fed will probably respond by lowering rates anyway because there's not much else it can do but it has a

mandate to do so, i don't know that there's 100%, i'm pretty sure there's 100% agreement that everybody thinks the rate cuts will not be 50% effective. >> not only are they not effective, it's turning into quick sand if you're the ecb and boj, virtually impossible to get out of this policy the fed has a choice, do they want to go down that path which has clearly failed and those banks are now trapped or do they say there's only so much we can cut rates. cutting rates further than that is not going to help and we don't want to get trapped like the others. >> i'll tell you there's a new factor we need, and i'm coining it right now it's called p star p star is for politics okay we have r start for the neutral rate, and one reason wi had the fed is going -- reason why the fed is going to have to do this, i do not think it can stand by and do nothing if the economy is falling. >> that is the worst reason on the planet you do something because you don't know what else to do

if that's where we're at, i'm liquidating all of my stocks. >> i think we may be there, rick, because all they know, i know we got to go. like mike respond because he's the smartest of all of this stuff. >> would you rather us raise interest rates right now so certainly there are several channels lower interest rates can help the economy it's not just currency this isn't just a matter of competitive devaluation. there are other channels through which lower interest rates can help growth, asset prices being one of them. market is pricing a lot of fed cuts if the fed sits on its hands in september, we'll see how assets do. >> one final word, tina, there is no alternative, as bad as this is, i guarantee at some point, they all come back into the stock market. >> all right we've spent 20 minutes on this one. that's good. steve. appreciate it. >> lost me ten minutes ago

peter, michael, rick santelli, thank you. given all this, you might be surprised that stocks are actually staging a comeback this hour after that major selloff earlier today. s&p down 13 points, that's 1/2 a percent. what are investors supposed to do with all of these swings. we're going to get some advice we're going to get some advice on that next on "power lunch."s. but you're not mad, because you have e*trade which isn't complicated. so you can take on the markets with confidence. don't get mad. get e*trade and start trading today. don't get mad. - stand up if you are first stand up if you're a mother. if you are actively deployed, a veteran, or you're in a military family, please stand. i will tell you this, southern new hampshire university can change the whole trajectory of your life.

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welcome back to "power lunch", the dough about 500 points off its lows of the day or thereabouts, but worries

about a global slow down do persist, and seema mody has been checking the markets around the world for us >> this certainly has been a global story take a look at how stocks closed in asia, negative across the board, the shanghai composite, the japanese market, the european stock market closed higher by 2/10 of a percent. let's broaden it out and look at how stocks have performed so far the in month of august as you can see here, it's not a pretty picture, even though central banks around the world are cutting rates, that's not really helping global stocks rally. the dow is down 4% as you can see, china, europe and japan are faring worse some strategists say a lot of it has to do with what we are seeing in the bond market, nearly $15 trillion, and the economic data as i said in europe continues fare worse. clearly further rate cuts aren't enough to boost stock prices around the world on friday, we will get an update

on gdp numbers out of japan and germany that will be watched closely. before then, we hear from one other central bank kelly, do you know which one that is. the philippines, we have the philippines tonight, and they are expected to cut rates. >> but by how much >> with worries around the world still in focus, what is an investor to do now jason pride. sherry poll with ubs financial services and dan nathan a fast money trader and cnbc contributor. sherry, let me start with you. when you have clients whose livelihood depends on bond yields, for example, and those yields are going away, what do you tell them? >> the post important thing for investors is to not make portfolio decisions in moments of political or policy uncertainty, and instead remain focused and close to data, so wrapped to interest rates going lower, clearly a great time to be looking at refinancing and taking care of the other side of your balance sheet

clearly not a good thing for savers who are holding cash. probably at rates and at levels that would not benefit their portfolio. >> are you telling people who have that bond exposure be careful, you know, these prices are looking too high now, these yields are looking too low or do you feel comfortable with what you're seeing. >> i feel comfortable with what we're seeing, only because when you're looking at portfolio rebalancing, you really want to take into account that if you have unusual moves in any one of your asset classes, you should be taking gains and adding to areas of your portfolio that are under performing the one thing i would quickly note on that is that you really have to take a look at what kind of dividend rates we're getting in the stock market, again, relative to a ten-year bond and you're willing to hold a bond for ten years at 1.6, 1.7, why wouldn't you own the market when we have annualized returns at eight and ten. >> and dividend yields at 8 and 10. >> does the current environment scream to you, hey, something is

out of whack and i've got to lean against this or like so many strategists we have been talking to, do you say i'm going to ride this, meaning yields are going lower and i'm piling in as far as it goes. >> we went through the process of putting together a recession last year, and the yield curve got its part in that, about 1/8 of that mix. we have a pretty good way of kind of thinking through the recession implications here, and if you're looking at the yield curve alone, yes, it actuall says effectively, a 60% chance of recession the rest of the indicators, all seven other of the eight in our mix are effectively saying minimal risk a great example is high yield bonds, spreads haven't backed up that much. high yields is a territory where investors are picking up steam wheelers they're aware of the steam roller that's approaching. this isn't a major concern for us our perspective of the clients is we are in the 10th, 11th year

of the economic expansion and bull market. it is getting long in the tooth, at the same time, we're not seeing the build up in excesses and what we're recommending investors do is stick it out with your kind of neutral full equity allocation, build in a little defensive within that equity allocation, in order to absorb the bumps because we are late stage and we do have things like trade policy that's going on causing some of these bumps it feels good to have a little bit of insulation from them. don't take that too far. this expansion looks alive and well, even though it feels bumpy sometimes. >> let's get your thoughts in here typically when interest rates decline or the federal reserve goes into a quantitative easing program as they did for years and years there, earlier this decade, risk assets do well. drives money out of safe assets ultimately in to seek higher returns, but you say that's unlikely to happen this time, why. >> well, think about the last two times, tyler that we have had rate cutting cycles over the

last 20 years. back in 2000, the ten-year treasury yield was above 6%, it went all the way down to 1%. that was not good for equities down to 1%, because the s&p 500 got cut in half between the highs in 2000s and lows in 2003, and the highs in the stock market in 2007, that the ten-year treasury was 5%, funds went to 0. okay what happened to the s&p 500, it got cut in half. so all of these prior guests i have been listening to all day long, talking about how there is no alternative, rates are going lower, looking at all of this sovereign debt in a race to the bottom this is not good for race assets, specifically equities right now, so the way i think about it is we are due, we are embarking on a rate cutting cycle when fed funds was at 2 1/4. no one knows how this is going to play out. the s&p is 5% off its highs, every single time since the high

in 2003, what have we done, we flush lower, we have a 12% decline, a 20% decline in q4, and 7% in may, and 5%. do not buy highs in this market. there is no torque to get a meaningful breakout right here, and i think equity investors have done well to buy the selloffs and buy into fear not buying euphoria when we make the new incremental high. >> there's a lot of fear out there, and the pull backs have been as sharp as the selloffs in this market. where would you want exposure right now? >> so broadly speaking, we are recommending a neutral or full wait into equities within that, in order to build some defensive, take off some of the volatilities, we are recommending a twist towards defensive equities that is higher quality equities, more stable businesses, and an inkr incremental move the market has been narrow and focused on the highest flyers,

those have gotten expensive relative to the rest of the bucket we would prefer to own the rest of the bucket now. >> sherry, are you going with the rest of the bucket too >> well, i think it's very important to be selective obviously in this market and the areas that we're focused on are the ones that have been underperforming so we need to look at energy, which is paying north of a 4% dividend, brave and bold, but really the areas that ubs favors are communication services in addition to health care and consumer discretionary >> thank you, guys, appreciate it, everybody. dan nathan sherry paul, and jason pride. some breaking new details regarding an fda investigation into vaping. let's go to aditi roy for those details. >> the fda has announced it is investigating 127 cases of people having seizures after vaping the fda initially announced this investigation back in the spring, and since that time, the

agency says it has received 92 additional reports of people have seizures after vaping and most of these, or especially, they say, it involves kids and adults the agency adds it's unclear whether e-cigarettes caused the seizures when this investigation first was launched the fda was under scott gottlieb i got this statement, it was expected that we would elicit more reporting after the initial public advisory. we notified that we identified cases of seizures, particularly in the setting of e-cigarette use among kids 92 additional reports over that short period of time is concerning that from scott gottlieb who was the head of the agency when they launched that investigation in the first place. shares of you wialtria which ow stake in juul a flat, a touch in the red. >> thank you very much, we'll keep our eyes on that one.

one technician said we could be in selloff that makes what happened in december look tame oil is down 14% in august, and it's early, and we're not even halfway through the month. just how low can oil go. that's coming up on "power lunch.

welcome back to power lunch. i'm mike santoli at the new york stock exchange the dow coming back from the day's lows but still losing nearly a thousand points this month. the markets heavy caterpillar, 3 m, goldman sachs, apple, is there more pain to come for the dow downers. boris of ek asset management, today, so jc, obviously there's some bargain hunting going on out there. are there any of these names that still look a bit vulnerable, maybe some dip buyers should be careful jc sorry about that boris, how about you can weigh in on that, any feel like they might have further downside to you. >> absolutely. while caterpillar and 3m are poster children for the global

slow down and all the problems with china trade, i think intel is the most vulnerable simply because it's own organic business is being threatened by all sides and really hurting in the cloud, it's unable to do anything in mobile, and the margins are compressing. i think if it's a case of kicking the guy while he's down, intel is sure in any kind of slow down going forward. >> boris, we have to leave it there, appreciate it thanks and for more trading nation, head to our web site or follow us on twitter @trading nation kelly back to you. >> michael, thank you, ahead on "power lunch" we continue to monitor stocks, the dow still negative but off the lows, only negative by 92 our next guest will break down levels you should watch. and how should investors monitor global, and we'll get some investment advice. and a strong warning to the world's wealthy, why a growing number of americans want to see higher taxes on the rich all this when power lunch returns.

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welcome back, everyone, i'm sue herera, here's your cnbc news update at this hour president trump telling reporters at the white house this morning that south korea has agreed to pay the u.s. more money for protection against north korea and talks have begun to further increase payments >> we have been helping them for about 82 years, and we get nothing. we get virtually nothing, and south korea and i have made a deal where they're paying a lot more money, and they're going to pay a lot more money. >> fedex will no longer deliver amazon's ground packages

the company says it doesn't plan to renew its contract with amazon at the end of the month fedex has ended its express contract with amazon which covered air shipping amazon is ramping up its own delivery service programs. and a powerful explosion occurred outside the danish tax agency in copenhagen last night, shattering windows and damaging the building and slightly injuring one person. police believe the explosion was not an accident, but rather deliberate you are up to date that's the news update this hour ty, i'll send it back to you. >> thank you very much slowly but surely, we are climbing back, erasing those early morning losses which were very sort of frightening, destabilizing, the dow now down 108 points, as you see there, a little less than a half percent. the nasdaq has dipped into positive territory by 8 points, the s&p 500 essentially flat: down 1/5. let's go to dom chew at the

commodity desk. >> oil were in the red what's happening as tyler pointed out in the stock market. oil would have to get back a lot more to get to the green part of the screen today 58.28 off nearly 4 1/2%, crude prices right now, just about 56.38, off by about 4 1/2% as well that risk aversion trade took its toll early on with energy prices as fears overhauling -- things did get worse as official u.s. energy department data showed a surprise build of 2.4 million barrels of oil last week analysts thought it would be a reduction of 2.8 million barrels. as oil falls further more attention will be paid to the weekly p weekly baker hughes rig count. >> oil is down more than 12% since trump announced another round of tariffs on china.

12%, less than a week. jeff gillberg joins us now, a cnbc contributor hillberg, how much worse can it get? >> it can always get worse, kelly. it's interesting in the wake of the ratchet up trade tension, we have seen crude oil move look at a nine month chart, the correlation between crude oil market, wti and the stock market, they are kcorrelated remember, china is the biggest consumer of the cried oil. we may have -- crude oil we may have the ability to touch the december lows of under $45. >> this is the most bullish time of year for crude. if i'm driving, that's a big break for the u.s. consumer. the oil patch, is it going to hurt u.s. growth because that's been a productive part of our economy. >> there's so many moving parts and i think the geopolitical tension out of iran. we have to consider that in the price of crude oil, etf, xlt, a laggard all yearlong in the s&p

500, and i think if you're looking to move your way into the crude oil patch, exxon, if you're looking to have a little more in your portfolio, that type of stock is on sale, kelly, but i do think we have stabilizati stabilization at $50 i don't think we touch 45 anytime soon. >> we'll see jeff, thank you so much. jeff kilburg. >> you got it. stocks as we have been reporting have made a major come back today but the s&p 500 is still about 5% blow its all time high what are the key next levels to watch. let's bring in bill strazulo, chief market strategist. good to see you. what are the charts telling you about this pull back, and how worrisome it is? >> well, tyler, i think the last couple of days, basically what the bulls did is they helped serve, the key support level and the s&p off the december lows is

2,800, and the nasdaq 100. it's 7,300, if you want to throw the dow, 25-6, 25-7, the market held where it needed to hold, but this battle still isn't over you've got the rally off the late december lows, the christmas ral lis, saying we want to make new -- rallies, saying we want to make new highs, and the nasdaq 100, 29-2 to 29-4 in the dow but the part of the puzzle that people don't understand is the longer term rally off the march 2009 lows, that's pretty much tapped out, at least in the 8th or 9th inning the december rallies are running into the march objectives and this is the battle that's going to play out over the next several months and tell us what the market is going to do for the rest of 2019 and even into 2020. >> do we have a chart that shows that coming off the march 2000 lows i mean, what are the patterns

that tell you that this is getting long in the teeth, and you clearly explained that off the december lows, that uptrend is in tact. >> yeah, it's a good question, tyler, i have talked a number of times on this show that these rallies off the march 2009 lows are pretty much done in fact, many times in 2018, talked about the nasdaq 100 topping out somewhere around, you know, 7,500 to 7,800 the dow, somewhere around 28,000, so the bigger picture, longer term trend has either reached its objective or come very close, and that to me is something that a lot of people don't really appreciate. they look at the rally off the december lows. that looks overall positive, but the bigger picture, ten-year bull market is really, like i said, you know, late in the game here, 8th, 9th inning, and so we've got to see how that plays out. if 2,800 doesn't hold in the

s&p, 7,300, and the nasdaq 100, 25, 6, 7 and the dow, you're going to get another major liquidation, you're going to see the dow down another hundred points, the s&p crack another hundred, 150, so watch 2,800 and the s&p, 7,300, the nasdaq, 125, 6 and 7 and the dow. >> you cannot put a sharper point than that. bill, thank you. >> my pleasure. despite the comeback today and the s&p has nipped too positive territories, the dow is down since wednesday's fed decision how are the hedge fund managers dealing with the selloff to that we turn to leslie picker what do you know >> they are not playing it they are sitting this one out. the industry is up this year, equity returning more than 9% after a few rough years. hedge fund managers didn't want

anything to do right now that might disrupt those gains. they have been pulling back their exposure to the market, and not participating in the recent selloff those i speak to point to what they see as quote untradeable ma cr cro risks, hong kong protests, market valuations that they see as very lofty levels ten years into a cycle the lack of hedge fund participation and technical aspects could set up the market for another bout of volatility in the next few weeks. the firm adds this second wave could be worse than the one we have seen recently not ruling out the possibility of a lean in like shock. the question for the average investor out there is if the so-called smart money isn't participating, should you be >> let that hang over everybody. >> yeah. leslie, thank you. leslie picker. >> how about delivering elsalph,

back for the 9th year. we'll explore the critical issues, we have ceo david taylor, nelson pelts, rock creek ceo and more plus we'll hear from s.e.c. chairman jay clayton, and joe kernen will sit down for a one on one with veep, mike pence, register for tickets at delivering alpha.com. coming up, a warning for the wealthy, and wlle' dive into the worldwide slow down concerns that have been weighing in on stocks stocks stay with us they don't have an. 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. ♪

welcome back we're just getting word that james mattis is returning to the board of directors at general dynamics general mattis will be rejoining the board. a warning to the wealthy, ceos, board members maybe? americans are frustrated, and they want to cap your pay. >> governments and companies are ignoring the frustration of the tea public over soaring pay. we're about to see, quote, greater unrecent, greater

instability, greater anger and frustration in the, as too many people are being left befriend from soaring corporate profits and income two thirds support a cap of ceo pay of 20 times the lowest paid worker, and the poll for you nearly two 1/3 supported a tax rate of 70%, including nearly half of those being trump supporters >> every ceo from every public corporation should be nervous. two thirds of the country now say they should not be able to make unlimited salaries or unlimited bonuses. >> these numbers are largely in keeping with other polls more than half of americans support an annual tax on wealth over $50 million. polls have showed a majority of americans for a long time opposed ceo pay and support higher taxes on wealthy. nothing really new here, but what's important is he's a republican pollster saying that

republican politicians need to wake up to the concerns about inequality, which he seeing as a global phenomenon. are there countries around the world that cap the ratio of ceo pay to the average worker's pay? >> none that i know of there are many more that disclose them, but none that i know -- >> that say you can't earn. >> there's more the cultural norms. in britain it's frowned upon when ceos make a lot of money. they tend not to, but not legally cap. >> it would be tough in some of these trying like restaurants. of course the multiples -- there's always outliers. restaurants and banking would be the two sectors. >> look, i'm not sure -- i haven't thought it through, but i will say this. when you raise marginal rates or put taxes on wealth, things like that's correct one thing that you can damn sure count on is there will be new fresh ways to gain those taxes and conceal the

wealth or slide the income into a sheltered forum. >> that's right, where the forecasts rarely live up to the billions they project. absolutely. thank you very much. dow just slightly lower. we're well on the floor the lows of the session those global yields are still super low and falling. how should investors navigate that volatility? let's bring in christopher smart. on christopher, welcome. what do you say to clients right now? >> it's a confusing time when you start the the day and this seems to be triggered by an announcement in thailand or new zealand, there's definitely confusion. the messaging from the fed has not been terribly clear. investors are trying to come to terms with the new situation with china, which is clearly headed for a worse place than a

better place, and we're grappling with the earnings season, and it's been a mixed bag. figuring out the direction is a difficult moment right now. >> the main question hanging over all of this seems to be the u.s. gets lower yields do we benefit from that? tom lee was making points about how that should help equities, and increase m & a activity, and have positive effects if you happen to be a mortgage borrower right now. the glad half empty is the u.s. is going into recession, everything is going down from here. >> we all know a recession is coming at some point i think what the data says is, when it comes, it is more likely than not to be relatively mild, nothing like the big selloffs we have a fairly balanced economy, the consumer balance sheets are strong, corporate balance sheets are strong, consumer sentiment is quite good, unemployment is low, all those things that i can

tell you you already know. the big question for longer-term investors, whether we're able to extend this cycle depends on whether companies are reinvests earnings in fixed assets that has not been happening, i think in large part because of the trade uncertainty. maybe that settles down a bit and we see a renewal of that i'll just jump , the other big moving part in all of this is the chinese government u.s. companies and chinese government, does the chinese government do more they have a lot of tool also at that disposal to makes sure -- and boost global demand in the end. >> they have a system where the leader is a unified leader that leader controls the central bank that leader controls fiscal policy that leader does not have to answer or move legislation through two houses of congress, one of which opposes -- >> he can set the rates with a phone call >> sure.

sure i'm not sure it makes a lot of difference, christopher, but if -- if the united states goes into a recession, will it be one of those very rare cases where we effectively imports the recession from overseas because global demand slows, or will the recession be native to the united states? i'm not sure it makes that much difference, but i'm curious to your thoughts. i think what we have seen -- what you just said is absolutely right, it doesn't really matters who hits you in the face, you're getting hit in the face. i think the broader question is it seems to have been a slowdown, it seems to be cubing from weakness in europe, a slowdown in china. i think china is very much in control of deceleration and the economy there, but it clearly has been a serious headwind to the united states, in addition to further uncertainly about our earnings, our reinvestment in

our companies and whether or not we can extend the cycle even longer than the historical report thate that it already has set. >> if you had to put a wager, what do you think the odds are there's a trade deal between the united states and china within, say, the next jeer >> i think it's quite low. i think i would dodge your question by saying it almost doesn't matter those of us who have been looking at this relationship for some time understand there's a lot of issues on the table, more than just chinese purchases of agricultural goods china is a very different kind of systems it follows different sets of economic rules any deal that's done will be limited and temporary, and we'll be going back and forth, no matter who is president, over the next six, ten years. it would involve tariffs, retaliation, and the hope is with that back and forth, there will be a new mod us operandi,

where investors can find some sort of clarity to forecast where they should be building their supply chains, and where they can expect to enter markets. >> christopher smart, thank you very much. thanks for watching "power lunch." >> we'll see you tomorrow. "closing bell" starts right now. welcome to "closing bell." i'm wilfred frost here at the disney post. it opened lower, and it stayed lower, unlike the rest of the market, which has staged a dramatic 500-point intraday recovery the question is, as we enter the final hour of trade, will it hold >> and i'm sara eisen. this remarkable recovery in stocks, a global bond rout rout, yields collapse, the s&p just going positive pressure on the federal reserve astr