how i wish andy levy was here, we have more "lou dobbs tonight," special edition on trillion dollar sell-off on wall street coming up, you don't want to miss it. some fear on wall street and main street next. stay with us. lou: i am lou dobbs welcome to our special coverage of market meltdown, major sell-off on wall street today. spreading fear among investors who were left gasping, global sell-off began in china. and minutes after opening bell, in new york. dow went into a historic freefall. dropping more than a thousand points moments went trading, market leveled off. support broke as it would twice more in session, by conclusion

of trading do you, posted second straight 500 plus point declines over two days, so how far will the market fall from here? when should we expects? we're talking with some country best economists and analysts, moody's chief economist john lonski. and sam stoval joining us, and artur -- art. fox business' nicole, good to have you with us. >> good to see you. nice to be here in your studio, something happened in your market today. lou: you covered it today, you looked better i think by far than all of the people you were working with. who are seemed to be bedraggled you are full of energy and bright. >> thank you, but the truth is

that it is a play-by-play sort of market, that is what traders are telling me, i had a chat in the green room, someone said, if anyone says anything about a bear market. answer, i had not thought about that? no one is saying anything about a bear market, they said we saw 300-point sell-off thursday, 500 on friday. and thousand points today. first of all everyone getting freaked out to see 1,000 points. but, today, as people were leaving i asked so what next they said, look we have to take this one day at a time. being look at what china is doing, people are putting money to work. we saw many of names come up 10% off of the lows of the day. so there was some improvement but we can't deny that regular investors, and been who is not an expert even experts, don't really know what is happening at the moment.

lou: that raises an interesting question, i don't know if talked about this with trade ires and firms, but we have, this is far from a retail market. the average investor just is snoot i in -- just is not in the are he or she are playing with small numbers, what we watched today it seemed to me, i am taking it up with everyone that i talked. there seems to be a conservativable lack of -- considerable lack of liquidity in the market, we saw small volume movement and a loot of brig prices does that concern trader? >> 2 has been a thyme theme, today was an exception with very heavy volume, mostly down about 21 to 1 that gave everyone a feeling of capitulation, but it was not really over but it was rover in a are not sure. retail investor is someone who is a regular person, they will

wait it out, the truth is, hey will watch their 401(k) go up and down. and that is how they stick it out. lou: that is interesting. you think there is a retail element driving this market? >> not necessarily, i think that these moves are really -- today was a lot of money on the table, there were margin calls happening that a lot of traders were noting, if you don't have money to pay margin calls whether short or long or whatever. they have to sell their winners too to just make it -- regulatory issues, and all a lot this program trading, that sell upon selling once you hit a certain thresthreshold we know , but the momentum is every, the funds, program trading you know whoever regular guy. lou: is there's sense that this is an entry point that could

lead to a bear market something more than a correction, now all of the indexes are in correct territory. s&pes nasdaq and the dow. we have what? 40% of the dow stocks are in bear territory they have been hahammered. >> absolutely, so question is, is this a entry point, you will have gate guests -- great guests, but the file feeling is, if your money on sidelines today is not the day to put it in. it is like catching a falling knife. lou: you like that falling knife and dead-cat-bounce. >> you wait, you leave it where it is. you don't sell. any expert will tell you that.

you wait for a pullback or a little bit of a bowen off the lows -- bounce off of the lows. lou: terrorist --erifi ter -- t. council to all investors out there. >> keep an eye on china, oil and fed. lou: 6 1/2 -- >> they are so enter twined. lou: to think about crude oil right new near $38 a barrel. it has been quite a run this is, this has the feeling to me, of something very different, and as nicole suggested. if you think about looking for a bargain, i will tell you, i would not get near this market. >> but this is a crazy market with oil 6 1/2 year lows, and volatility index, it was all going all over the place, just take a breath, and wait it out.

lou: nicole a great job throughout the day, and here tonight thank you. >> thank you. lou: analyst all day telling fox business what led to this wild session in markets, what is next for the economy. i'm told there is no downed bite -- there is no sound beats. we're going to be joined by moody's capital market chief economist, john lonski, and s&p capital iq chief equity strategy sam stoval they are settling in to their chairs, and are now ready to for me to say welcome, good to have you here, you heard nicole caution investors, you heard me say, i would not get mere this market for anything. >> mm-hmm. lou: up less someone wanted to cover all my stock purchases. is this a scary time to think about doing that. >> sure, then i think also

question is what if i had money in the market, do i sell out? real problem is, that -- >> do you? >> no, i don't think so, because if you soldout today, we're down 11%, let me ask you, when would you get back? lou: question is, do you in point of fact what to say down get out, do you mean you would put money in in. >> moi council to investors would be if you have money in the market now, stick with it and also take longer view. basically i found is that people call investing gambling, i sea, if it is gambling tell me which casino pays gambler 80% of time which is what market has done since 19 french, and rolling -- since nene french--1947. >> still a little bit unclear would you tell people to go in looking for bargains? >> i said no.

you stick with it but then you wait until the dust settles then look. lou: to me that is the big decision, whether you put money in or not people looking to stocks -- lost a lot of money. i heard -- say that you know, there is a direct line between china and what is happening to our markets do you concur in. >> well obviously we're responding to what is going on in china, the big thing is china may end up exports more than goods i mean price deflation that is the big concern, price of oil has come down, industrial metals are down, could it be wages are add versusly a adversely affected by it. lou: we'll have more with sam and john. i'll be answering sam's questions and john will answer

john's question later in the broadcast, thank you. >> up next, we'll have more on what happened on wall street today. what led to the market meltdown, donald trump has been warning for years we need to uncouple from china. will this boost his candidacy? we'll come right back with some answers. stay with us.

lou: republican candidate using today's market sell-off to blast the president for his economy policies, and our economic ties to china. >> because this president has run-up more debt than any president in american history, that debt has been given to us in large measure by the chinese, now as china market tend to have a correction, it is going to have a greater effect. >> i've been talking about china for years, years, it will bring us down too because we're so coupled with china. >> we've been expecting a correction from china for a time now. lou: futures moving higher, up more than 1% as you see there. dow futures up 221, nasdaq up

48. s&p up 27.25, what did you call that a pop after drop? >> we've seen that we end up with 2 to three -- 3 percentage point, we end up with a counter strength rally. lou: john, as you look at what is going on here, relationship between china and the united states, a lot has been made about it, it has a role here, but we also have an anemic recovery. by historical ca historic scan e have -- standards over half american survey do not expect their children to have a better life than they have had, middle class in this country, is battered. and for first time american

dream, americans are skeptical about it. >> that is because, there is more competition, than there ever was before for u.s. worker, in part because of you know the economic growth of china. the development of other emerging market countries, you think about the unemployment rate, the one that matters is the global unemployment rate, it is high right now, that puts downward pressure on wages, on job opportunities for americans so this recovery -- >> you say that, i can just imagine a lot of folks at home saying, what the hell does he mean that global unemployment rate? we're americans. that is what matters, that is what we is influ en anence and l through our government. >> we're connected in international trade not only goods but services. computer programmers. lou: no one is denying that. >> we've been a international trade since, the founding of the country. what is so different, why is

that a great thing? is it because. in point of fact that some businesses, and some leaders of those businesses have figured out, that if you put foreign cheap labor in competition with american, middle class labor, you can win because, your price of your products or service is lower is that --? >> that is right, unfortunately that is what is going on, costing americans a lot of livelihood. lou: that not competition that is destroying the middle class of in nation, and being indifferent to consequences of business practices. >> what we've seen over centuries, you export to lower cost areas, inglance di englandt with new england and textiles, and with southeast coast, then if you have la low barrier to entry, they will export to wherever the lowest cost is because they have to compete

with others condition the condin -- within the country. lou: i want to ask you, a rot of discussion, say if this buying surge there is nothing to stop a massive move to the down side, due to the lack of liquidity, i would caution to remain on the sidelines until a define ale sourcablesource of funding. >> we're in last week of august, before labor day holiday. i hit send this morning i got more bounce backs of people not able to read it, than those who could read it. let's wait.

lou: august is one of the very worst months you taught me over the years. >> yes. >> august 1998 we had global difficulties, u.s. market sold off, fed cut rates, market straightened itself out. today we have a zero percent federal fund rate not much that fed could do. so who knows what down side it we also have problem in corporate bond market, high yield is sinking, spreads are widening that tells me that suppliers are credit might become more tight fists and hurt the overall economy. lou: some say that has gun. john thank you, sam thank you. >> thank you. lou: up next. officialer ronald reagan economist author laffer with his stand on what is happening and what we can expect, stay with us.

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lou: well white house press secretary josh ernest addressed the market meltdown today. >> i think that there is no doubt that the u.s. economy is far stronger now than it was in 2008. people can feel confident. lou: i'm sure we all feel more confident. d arthur laffer. these statements from white house -- >> they are crazy.

lou: we heard them, they amount to nothing no matter whose presidency or what party they represent. how do you feel? do you think that there is something unique about this sell-off today? and period that we're going through, how concerned should investors be, what your sense of the attitude of american people right now? >> well when a administration spokesman said there is no doubt -- you know it is bs . and we have worst recovery in u.s. history, in. employment, in output, it has not gotten better. usually when you have sharp downturns have you sharp upturns, not happening. it has been an abysmal obama recovery. it time for political change, i think our stock market is still very low, i think we have a very good future because of the

change in politics this is occurring, lou. we're just missing one spot, we'll get that in 2016, and then you will see the changes in policies. lou: i'm going to ask you the same question that everyone would ask of any enthusiastic republican member of the intelligence. so i'm going to ask you, what have the republicans done since they took control of senate and house. >> you know hopefully they stopped really bad legislation, but they have not undone much. lou: i'm not asking what they have undone, i am asking what have they done. >> the question is, what do you want them to do. lou: the question is, what have they done. >> i can hear the echo in my ear. >> i am going to echo, they should not do anything, they to undo things. have a year of repeals reg

legislation, not new legislation, you know that is right. lou: i know what is right. >> do another stimulus package? lou, you don't support that, you don't support more protectism, it is a free market. lou: you tell me when i believe, we have a problem. let's breakthrough that. try to understand -- >> okay. lou: let try to understand how the american people are feeling. i would like to understand why middle class in survey, after survey saying they don't have confident in this economy. >> they shouldn't. lou: they don't have confidence in their future. >> they shouldn't. it has been a awful economy. the market has been terrible for last 12 years, friend years, it

has been -- friend years 14 yeat has been flat since 2000. lou: so have wages. >> awful, now we're just coming to a position to unto these things that were done to us. lou: who is going to do that? >> i think that anyone of republican candidates, i think you're hero donald trump would do a great job. lou: i have got a loot of heroes, ted cruz. >> so do i am i just mentioned one. i think that all republican candidates are pretty good, combined with a republican house, senate, and govern ship, i think we could have a reagan-clinton period of boom that would knock your socks off. lou: if you don't turned this market around, i am going to be surprised. >> i -- >> thank you. >> i am investing fully. lou: -- >> i don'ting is that for other people are for me,. lou: we're all of the rest of us

in american are thrilled for you. art great to have you here. >> thank you, lou. lou: up next. chinese policy makers remain divided on a rescue. it looks like paralysis in beijing. according to our next gift, joining us forbeing forbes cont.

>> markets up after the massive selloff on fears about china and a slowing global economy as well as the chinese economy. the dow jones industrial open today's session with a 1089 points point loss, the biggest point decline in exchange history. the dow recovered to finish down five and 88 points and s&p lost 78 points the nasdaq down 180 points.

all you mount it for the heaviest in four years since tony lynn, 6.5 billion shares traded, 5000 measuring today's losses at almost a trillion dollars. the dow losing nearly 1500 points over the last three trading sessions, losing $2.2 trillion over those three days. the dow the s&p and the nasdaq all officially and correction down more than 10% from recent highs. apply to safety is also revealed on a 10 year treasury at 2% for the first time since april. crude oil has fallen below $39 a barrel for the first time since 2009 losing more than 5% today. our next guest is beijing's stock market is tanking and actually shanghai is tanking because it's lost control of the chinese economy turning its back on reform. back with us now is the jupiter gordon cheng. good to have you with us. let's start with shanghai.

8.5%, a decline we have seen all sorts of stories about investors who are literally on a rampage. whether it's shanghai or whether it's hong kong. what's going on in terms of the tension between investors and the state in china? >> we saw a little of this in shanghai where we had a mob actually detained ahead of the metals exchange, turned him over to police because of allegra -- irregularities at the exchange and clearly we have seen over the course of decades chinese investors take to the streets whenever they think they have been robbed and right now that's exactly what they think. >> by the way that official was released by police without explanation or a communiqué if a few well from the communist authorities. howell on communists alike of them but anyway what's going on with that government? a lot of great expectations

about chi and the west expecting great things. what they have seen instead is a leader who is at the same time fighting an economy and a structure, a financial system that is falling apart it seems right now. while the west is waiting to figure out how to relate to this new government. >> before xi jinping became the congress party's general secretary in 2012 everyone said he was a reformer and his first year in office people said oh yes is a reformer. there was what was called the third plenum which had an economic reform plan. everybody help it but xi jinping is taken to perform backwards. what he is done for instances attacked multinationals predatory and discriminatory prosecutions but also he is now taking large state enterprises, really gargantuan businesses. he's putting them back and a

formal state monopolies so essentially he has this maoist idea that command economy and is trying to enforce that throw a lot of sectors. on one hand he is returning returning -- returning in restoring a command economy if you will but also politically he is consolidating his power under the rubric of reform of anticorruption promises and pledges which seem to always find corruption in his political enemies and rivals. >> there has been no prosecutions of family members. there have been no known prosecutions of his political supporters. he is actually prosecute anticorruption campaigners and of course his political opponents so it's in the guise of an anticorruption campaign does but this is a political purge of the one thing he has been doing is his view of china's basically the communist party controlling most everything. it's what's called the chinese dream and because of that the economy is starting to tank

because that's exactly what china should not be doing. >> what are the prospects in your judgment for us poor americans for the rest of the world. to know what's really happening in china how much of an indication we have as to what's really going on in terms of economic growth, in terms of the policies that are going to be unfolding over the next several years. with the implications on our trade relationship and our relationships. i think we must come brand was going on in china and the political spare in this whole idea of where china in terms of reform quote unquote and also as you say growth growth because there's a wide disagreement. i say one or two. a lot of people say five, six or seven so it is a black box. i was talking to the legendary investor a terrific guide and he

said he thought it was about 5% and that worried him even that slow down from 75% in terms of the economic implications. gordon gordon cheng great to have you with us. up next central bankers and the federal reserve between difficult choices according to our next guest. coming up wall street veteran ted weisberg. stay with us.

>> analyst on fox business ring and where they market the people goes from here here. central banks have been pumping up asset prices for seven years. i don't think anyone should be surprised if we see the values come off the way they have paid. >> probably gets worse before it gets better from here. i don't think it turns into a bear market unless we are going into recession here which i think can be avoided this time but we are probably not quite at

the bottom. >> other than u.s. it's hard to point to some place or some industry and say that the catalyst for growth. it just doesn't seem to be there so i would be very cautious and to me this looks like more than just one of these corrections that's going to go away. i'm a little bit more concerned about. >> you know, i think the former commerce secretary carlos gutierrez is exactly correct and as you look at what's happening now we are looking at stock futures at this moment live. this is course after the sharp selloff on wall street. today we are looking at over 1% gains and these numbers have been up a half percent than they are right now so the volatility is going to continue it appears. joining us now wall street president of seifert securities ted weisberg and the founder and president of and. wealth management kimberly

floss. good to heavy with us both of you. let me start if i may with you. where is the individual investor and is it your judgment that this may be the death now about to be -- not to be overly dramatic for the individual investor who has been run out of wall street? >> i think are the individual investor it's difficult for them. this is difficult for anybody. i don't think anybody received a selloff as dramatic as it was this morning and i think that's exacerbated by the selling programs there were triggered, lou luke but from the individual you know this country is the best wonderful machine with the growth creation we have in this world. for their 401(k) i emphasize on them to basically control what they can control and not worry about the rest of the markets

and that his practice diversify allocate rebalanced and continue to buy for the long-term. it's basic. sorry. >> i'm sorry, go ahead. >> a dollar invested 1970s lou is now worth $45 despite all the crashes and displayed -- despite the oil embargoes and the.com. >> i love the history lesson kimberly. what would you say about the individual investor? you live it everyday. >> we have a brokerage firm that deals with individual investors and we have seen a dearth of activity when the dow was trading at 18,000 and the last third four days. they never have come back since the crash of 08 and 09. and that really scarred individual investor and all this

volatility that we have seen since then we have the crash in may and we have this and we have had others. we all agree markets have had a big move up from trading lows that were due for a correction but in hindsight that's the philosophical approach. the fact is the volatility is breathtaking and i think it scares people to death. >> what do you say? you are listening to ted is saying it like it is. wall street is basically told the individual investor to go to hello because they are not protecting the fcc. the regulators are really, really abandoning what was the great chief attraction of american markets. first liquidity security. >> yeah and i do have the individual investor, i work with him every single day and i've worked with them for over 30 years so it's not like this is my first rodeo, okay? the bottom line is this is the greatest wealth creation tool in the history of the world and

individuals get that hot i think it's the advisers responsibility to educate and to coach them along. that's what i have done with my clients. ted what do you expect to happen here? you deal with those issues, security and liquidity. are you saying liquidity in this market? >> it's interesting there's plenty of liquidity but just look at today's action and there are two issues here. there is a liquidity issue and i think there's plenty of liquidity. the problem is the volatility which is the unintended consequences of all the rule changes that the government has basically wrapped around the securities industry. we could go on and on and on. there's a stock today exile opened at 37 and traded at 5 dollars, closed at 37. that may be only 100 shares traded there but if you are sitting home and you look at

that it's fascinating. what am i doing? what's going on here and it goes on all day with a lot of different stocks. >> in that stock doesn't sound that liquid to me. >> at the end of the day i'm sure it's liquid. >> thank you ted weisberg and kimberly fox thank you both for being with us. up next, hold onto your seats stock market investors, the wild right is likely just begun. chairman editor-in-chief steve corp. will have his take right after this break. stay with us. we are coming right back.

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>> today's selloff began in shanghai where markets tumbled. last week investors were sure

they had no reason at all to worry about china's economy. it was just two months ago and attacked the treasury secretary lew actually said china's markets are not leaked to the rest of the world. listen to this. >> i will say that china's markets are still pretty much separated from world markets. they are obviously moving towards being more integrated for right now they are not so you are not going to i think see the direct linkage there. >> joining us now forbes media chairman editor-in-chief steve forbes, great to have you here. >> good to be here. >> before we get into the particulars of today's momentous news we want to. >> i think he was at la-la land in terms of saying the chinese juan the currency is not what they call special drawing rights and in all of this gobbledygook so his attempt at reassurance which is why this administration is in trouble.

they have been look reassuring us for six and a half years. in baseball you would have been hired five years ago. >> this is a different kind of ball. what were your thoughts as we watch the dow dropped steve from 1089 points like that? >> well it showed that there are a lot of sell orders out there in what was remarkable was house with almost within an hour or an hour and a half people sensing this is gone too far and especially after having an almost 1000 points in the previous week. some bargain hunters said let's get in. >> those bargain hunters when the dow was less than 200 points down fewer than 200 points down, they had to be a little chagrined when they saw the close at i've hundred and 88 down. >> all that goes to show is for most of us who are investors don't try to be a timer.

it's good for the brokerage industry but not for the net outset -- net asset value. >> what would you tell investors watching you at home right now? should they go out bargain hunting tomorrow? >> if you are into that but for investors -- those. >> i like that. >> if you are into that but for most investors the best thing to do is to go to an index fund, low fees and ride the storm out. america always comes back and remember a lot of people who got out in 08 and up 91 of the worst bear markets ever fail to see the turn in march of 2009 and missed the upswing. >> march 2009 as he is referring to, the lows at 600. we are now doing a little better than that. steve forbes is going to have much more for us as we pursue what did happen and what is likely to happen tomorrow. u.s. features to tell you about the present are moving higher. coming up what investors can

expect tomorrow. stay with us.

to the degree that we can divine anything from these live numbers that you see at the futures market showing a rebound , a modest recovery from 588-point drop in the dow as you see 192 points. it had been one third of a% higher earlier. the nasdaq futures also up or a 1.5 points down 32 and the s&p 500, 25.5 points. joining us now, rejoining us now i should say steve forbes and gordon cheng. let's start with this balance that you see there steve. can we really defined much from that or is this going to

indicate or is this much too early in the futures trading for it to mean much? >> we have these kinds of markets and what you focus on is not what happens during the day or happens between 3:00 p.m. and 4:00 p.m.. that's one emotions reached their peak so in 2008 you have volatility during the day and the last half-hour the thing would go berserk. the key thing is yes it may start about what happens in the end when people are saying do i want to be holding stocks overnight that's the key. >> a lot of people didn't want to do that, 6.5 billion shares traded in the market down 588 points. what do you expect to happen? the shanghai market to open and there a lot of speculations in the market, a lot of speculators in the market and rumormongers that those -- spreading rumors that the chinese are going to cut interest rates and they are

going to further cut reserve requirements. what do you expect i was going to say tomorrow but it will be early tonight. >> when the markets open in china people are going to get out. the only buyers today really are the central government and we are going to see a pattern of basic weight a sharp fall at the opening i believe in the question is whether beijing comes in and enter beans. >> that will give us an indication as to what happens in asia and then what will happen in europe and ultimately hear back on wall street. >> absolutely. yesterday what occurred is essentially the central government intervened in the morning. it took an 8% downswing to about 3% of them it was just overwhelmed with sellers and it didn't intervene in the afternoon session as a normally does. i think the problem here is the central government has lost credibility with stock investors so essentially they are not able to really change the direction of the markets and there's a fear of relatives among

policymakers in beijing. you put it together in stock investors say i don't believe the central government anymore. >> as many people in this country don't, ours but steve it turns out the relationship with china is built on a bit of a vapor a meth and that is they are free traders and their market committed. they are running from their markets as fast as they can and reshaping the relationship of this country. >> well running away from markets is a formula for disaster for the government. they want control but they don't realize, fully realize their legitimacy. legitimacy comes from having a prosperous economy and a prosperous economy comes from continued opening up liberalization in this kind of thing of cracking down on liberalization is going to spell a stagnated economy and they are going to have real political troubles.

>> lyrical trouble spell economic troubles for us because we have such tremendous american investment in china. they are a market for many of our biggest corporations and multinationals as well as the production center. how big are the risks waxed. >> the risks are enormous but beijing, you are going to eventually get reform because they know is that our death. >> steve forbes and gordon cheng thank you for being with us. and a reminder to vote in our poll tonight. will you be investing more, less are the same amount of money in the market for the remainder of this year? cast your vote at lou dobbs.com. time now for figure comments. kelly commented on facebook about the market sell off saying this is nothing. it's only just begun. wait until the end of september, beginning of october. the reset is here. strap income is going to be hellish ride and s treated -- tweet it out currencies to improve its gdp will have to run out of steam at some stage and

we are running out of steam just a bit here tonight. that's it for us, thanks for being with us. we half much more market analysis tomorrow night at 7:00 and 11:00 eastern on all the days of economics, markets the days of economics, markets and politics.advertisement for time life's video collection. (rock music) ♪ it was the summer of 1969. america had just put its first man on the moon. hair was big, skirts were short, and sideburns were long. cbs had just pulled the plug on the smothers brothers show by replacing it with, well, let's just say it was a real butt kicker. (donkey braying "hee haw") you asked for it, now here it is, the best of hee haw from time life, now on dvd! -♪ hee hee hee -♪ haw haw