lou: i'm lou dobbs welcome to our coverage of today's market sell-off, stocks closing down sharply after bleak manufacturing reports from united states and china, reigniting the investor fear about the health of a slowing global economy. and speculation that fed might ignore market weakness and raise interest rates on view that united states economy is actually string ending. -- strengthening, all 3 indexes today falling nearly 3%. dow in correct territory, s&p

500 lower than may record high, and also wilshire 5,000, today's losses almost 700 billion dollars in market cap. crude oil prices plunged 8%. in china shanghai composite index fell 1.2%. today's plunge following market's dismal performance in month of august. in which dow and s&p each lost more than 6%. for s&p 500, that is the worst monthly performance since may of 2012. and for dow joneses industrials biggest drop since may 2010, with us liz ann saunders. charles schwab. this is comes at just time that many investors may have been relaxing saying that volatility was last week, not this week what happened. >> so, this is actually not terribly abnormal looking at

history of corrections. they don't tend to be perfect v bottom, you get high drama low then an immediate bounce then you spend time retesting lows with marginally less drama, if you look at every august in history of s&p 500 that was down more than 5%, was case in this august. all but one saw september continued to weak. now good news that most of them within on and things picked up as the year went on, we're in a seasonaly weak period of time that process of retesting, that takes time, i think that is what we're in. lou: september has a unique character in history. what are we in your judgment doing here?

are we correcting within a bull market? looking at on set of a bear market? or at something different, something that we have not experienced as either on an economy, a market or in this country, a people. are we looking at reactor just am to new global realities. >> i think to some degree we're seeing maybe a reissuing just am to global -- reactor jus rea in. >> what would concern me more, is if vast majority of leading economy indicators were to deteriorating such it isn't a recession signal that is when you worry this is a harbinger of worse to come, at-this-point that does not appear to be the case. lou: as we look at the impact of devaluation, by china, of its currency. represent moving lower.

now there is an intervention on part of chinese government, u.s. dollar continues to strengthen. putting pressure on our exports, is there a possibility of a global currency war, is there a possibility there is more damage to result from chinese devaluation of their currency. it is a major factor in our well being? >> keep in mind, you know our view is no, we don't think that this will erupt to a massive currency war, keep in mind that the devaluation in china was a surprise, that is 3% in a short period of time, that comes after a 29 percent appreciation in rnb . so i think that has more and we have put many notes out on this,

we do think it was more about china moving to liberalize its moptary policy to try -- monetary policy to get in international monetary fund special drawing rights more so than start of a currency war. i think there was an economy angle to it but i think we have to put 3% in context of what is happening in last 3 years. lou: we also may consider, the fact that we've got international tensions, the likes of what we've not had for in time. with a joining of chinese and russian intelligence. we have military exercises. we have russian aggression, we have at same time, a moribund, european economy, our neighbor to northern terring a recession -- entering a rig, and we have emerging markets that are decimated.

to what -- >> main of those that you mentions -- have been going on for some time, none are brand-new forces. the question therefore is what conspired to have them cause this massive dislocation in the market, i think they were more the straws than the causes, looking at market leading into this correction, you were already seeing a lot of technical deterioration, the generals were still at front line, indices were doing well but individual holdings had started to deteriorate, a tremendous aim of uncertainty about federal reserve policy as we got closer to september that set on itself as opposed to we've been a impeperfection of calm prior to this. lou: tomorrow? >> i don't know that you do anything on any one given dayer.

we've been saying this is say probably fairly normal thing to occur, 10% correcttion is not abnormal, the volatility gives you opportunity to rebalances, investor should maintain discipline, if they have a structured portfolio that is right for their risk tolerance, and time horizon, volatility gives you an opportunity that may be add back to say, quits that might have diminished -- equity that might have diminished in their portfolio. your portfolio tells what you to do i think that is -- it forces you to do what you know we're supposed to. lou: did you take pressure off yourself there? >> i -- one of reasons why we don't forecast is because we can't. lou: it is great, great to you with us, we appreciate it. >> thank you my pleasure.

lou: up next, stocks suffers a third worse loss of year as part of a global route, investors wound -- wondering when will volatile end. >> market set to rebound tomorrow if the futures are to -- if they are reliable indicate or. we're comes right back stay with us, much more ahead. [ male announcer ] we know they're out there.

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lou: stocks they are something to worry about right now could beginning september in a sea of red on wall street, numbers me now, lori rothman. dana peterson, and scott shelody . shelody. i love that cow prin jacket. good to have you with us. >> thank you. lou: how crazy was it there today? >> pretty crazy, i was here at 4:30 this morning, i am going home late, it is the way it is for next 5 months, we have 10ered a time of -- enter a time of high volatility, i would say rightfully show, ift -- it is time for the rational man to celebrate. we're coming to you know, fruition, reality taking hold,

we're basically, in a global rate compression, maybe slightly recessionary environment. and to think of fed thinks they might have to raise rates just because they have to make themselves relevant is also something very dangerous. so, we're all in the state -- we're all in a state of fluctuating for friday with jobs report, and ecb thursday a ton to talk about. lou: and talk about it we will, lori, how was it on floor the new york stock exchange? >> i walked in at 7 a.m. this morning and traders were grumbling, bleeping china, they were frustrated, i would say jaded. but an energized jaded this has been going on for a week now, this extreme volatility. lou: and driven by who is selling? almost nothing was advancing. 90% down.

>> where is the money going, they are selling, we saw a slight move in to classic safe havens like gold, treasuries a little bit. but, nothing. lou: nothing dramatic. >> so are people just cashing out, and shoving it under the mattress. lou: can they do that? >> they can, but it is better to place it in a bank. lou: she would say that. this economy right now, we saw the second quarter gdp revised to 3.7%, well is dynamic by comparison to earlier reports, so, what is going on with the markets? china? is certainly some catalyst, but is that enough to do this? >> well, certainly is. we believe that much of the volatility is related to

transition in that country from being country to focus on investment toward consumer spending. but in u.s., data has been quite positive, as you said, second quarter gdexpect was revise upward, car sales strong, housing activity been quite strong. consumer spends is picking up. in terms of labor market, we've seen job added by about 24,000 -- >> you know -- we talk about labor market we have to do better. that is not enough to drive our population. >> i think confidence, is waning, it was interesting today you saw russell 2000, that is small caps, some is important to keep in mind, there is no exposure to china, if our head of the weak china trigger data sell-off why were stocked that have no exposure to china

selling off so sharply today? lou: scott, you talk about, you have to get used to this? you say volatility will be with us at these levels for that long? >> yeah i do, headlines was just mentioned i understand all those figures, but that gdp revised, that reason why it is because we a massive inventory build, record setting we have work through that now, atlanta fed downgraded a third quarter forecast for gdp . we're not doing anything yet. lou: i am sorry, let me ask you, i want to ask each of you, why is it that the fed you would entertain the idea of raising up rates at this -- june tur given the data. >> thank you, i've been doing this job for 28 years. and every single time we raised interest rates was to cool off

an overheating economy. there is no way you can tell me that this economy is overheating. the real reason that i think that markets are roiled, if feds raise rates it is not for all of the right reasons, it would be just because they want to stay relevant. we've been at 0 interest rate for 7 years, if anyone can canon ser this, i -- can answer this i would say raise rates tomorrow. >> dana. why don't we have 2% inflation, wh.>> the economy has been growg

above potential for a year. lou: no, i don didn't ask about potential, i asked about inflation. >> i think important thing that fisher point out that you can't wait until you get to 2% to start raising. lou: this is find stuff. he is a wonderful fellow but he is full of it, either you have got a target, or you do not. if you are the fed, i think that scott hit it on the head, lori, i think they are looking for relevance. 4 1/2 trillion around, not only this economy but global economy. >> they -- the ship has sailed, interest rates should have come up a while ago, i think. to scott's point, a quarter percentage point for first time in 7 years, the fundamental fact is that really going to make a

difference, it abseushed i absuy view. >> i think she is right, i think that if fed raises them for wrong reason to prove a point or stick to what they said they ul do that is what markets would be -- about. anybody that wants to tell me we're in a normalization environment, we've never seen central banks involved like we have today, normalization is out of the picture. i am thinking what is next. it is interesting to see how the get gets themselve out of this quandary. they pegged themselves to the ee inflation rate ha is not going up, they are stuck. lou: stuck, and rates lookly,

stanley fisher notwithstanding, i will ouch are my bet. these rates, don't go up. because these people, that make up the fed, and particularly fed open market committee are not on their worse day, that dumb. >> what about a shot of liquidity, maybe not in form of -- but, fed has to raise interest rates but offset it? i don't know. lou: do you think they will raise rates? at some point -- >> at some point. lou: in september? >> no, i think december. lou: dana. >> there is a greater wait on meeting such as october, but i think if fed raises rates it is a signal. lou: no one should believe their lying eyes in this economy? scott.

>> i think as long as they say data dependents. it continues to disappoint, hello japan we'll have a rate compression environment, lower interest rates for longer than we thought, let's say they raise them in december. quarter in 2016, a quarter in 2020, okay we're at low for a long time. lou: i'm sorry you said that about japan. that should make everyone squirm. right. >> here a little bit later. and we thank you. lori. >> thank you. lou: great work today. >> appreciate that. >> up next, a wake manufacturing report from china. we're drilling down on what is happen over there right now, and how it affects us as they say state side, that's us.

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lou: the nikkei opened in tokyo down 1 1/2% already. fears of china's slowing economy spreading in markets in the world. author of coming collapse, china, a forbes contribut or, g. good to have you with us, first to the idea that china could be

the driving force behind what is happening in our markets and this huge sell-off, do you give it credence. >> yes could i believe most people invest famment -- investment community think that china is growing. a lot of indicators that show, low single dinet growth or no growth. lou: i try to understand why so many people, otherwise intelligence. have decided that communist run nation of china is open and transparent. come on. these numbers are unreliable. >> they are. in beijing they talking 2.2% growth. real problem is direct of the

economy, it is down. if it not 2.2 right now it will be no a month or two. real issue is what beijing is doing. we sawtellevised con-- the tells confessions. cultural revolution type stuff we've seen these people jailed, hedge fund manager, leading hedge fund manager in china is in custody being questioned, beijing is going back to dictatorial -- >> a journalist admitting he is responsible for moving the market. >> it is ludicrous. it shows you how -- >> not a word out of washington d.c., obama administration, we don't hear business organization, a chamber of commerce business round table. where are the voices of reason

and leadership here talking to the markets? i mean we're hearing almost nothing from the u.s. multinationals, vast powerful commercial banks, that are doing amount of business there and around the world. why do we hear nothing from them? >> for decade they were proponent the of this, if we just did business with china, and ingreat our economies, thing would be economy china has gone backwards under to the xi jinping. >> do what degree do you think that chinese government is supporting its markets. we know they had state run companies, buying stock. we also know that they are trying to do anything they can to stop the decline this this market. which is about as -- to real long-term interest rate, one could imagine. and market there will be closed to celebrate their military add

vances -- with that parade. >> certainly in stock market, thursday, friday, and this week we have seen late session buying, which is the so call national team, all of state enterprises. >> last week this week. >> half the and this, -- last and this. >> they are supporting their stock in currency they spend $20 billion a day, trying to protect their currency this serious for them. lou: bestes estimate about 100 billion a week. imagine vast reserve they get to. they could last about 18 weeks, in intervening in the markets, it is bizarre, and it also very dangerous for this economy. for the global economy and markets, goferredo gordon thank. >> thank you.

lou: up next, presidential candidates know who to blame for turmoil in the market. donald trump said it is china. fed, and obama, those three, but what can he or any of the other candidates do about it? who has his or her finger on the pulse of will american people. we'll take that up next.

lou: every one of us is concerned about our investment whether it is a 401(k) or company we work for will be influenced impacted by the

market turmoil that globe is experiencing, a brutal sell-off on wall street today, major index down 3% today, one of the biggest declines of year, worst start to september in 19 years. -- 13 years, there is 9 other na mamanhunt underway in illinois r killers of a police officer. latest release of hillary clinton e-mail show clinton and her aides were fully aware of the need to protect sensitive, and classified information, republican presidential candidates are seizing on this market turmoil. putting much of the blame on obama administration's policies. >> i said you better start uncoupling from china, china has problems, they have big problems they are bringing us town. >> chinese market have a correction, it is going to have a greater opec this president

does not -- greater ethic this president does not know how to say no. >> they think you grow the economy by growing washington, i think we grow the economy on cities and towns and villages. get the government out of the way. lou: to the market impact. with me now fox news contributor michael goodwin. ed rollins. >> let's start with we're starting to hear grumbling from campaign trail, blame placed on obama administration. but this is a profound event that is taking place as if people don't understand there a

time here, do business as usual. >> as i mentioned before. they were talking about cratering of stock market and the economy in 2008 election. between debate between mccain and obama. >> want to suss -- sus suspend campaign? his reaction, obama did not screw it up the way mccain did. lou: president bush and as you reminded us. and obama, one of few times i have seen him keep his mouth shut. >> i don't know that we're there yet in terms of cratering but i think it will scramble the election in sense that

candidates will be presented with what will feel like an emergency to a loo a lot of peo. lou: people forget we still have 30 million people here that are unemployed, under employment. it is devastating. >> white house say we have lowest unemployment number in years, all is great, people don't feel great. labor day be september 1, kids back-to-school, a new period quarter. i think there is so much uncertainty part of what is -- people have done the right thing, invested in stock, and retirements. have seen an evaporating where things are happening, cops are getting shot they don't know why.

lou: the wheels are coming off on so many fronts. and we have. i am astounded by some things i read and hear on television, but, talk about donald trump as a absolutely you know, a show showman, he is the one as we showed you. he has been taking about china and decoupling, i can tell you i heard so many snarky comments from the economists. that he would mention such a thing. >> but he has more legitimacto talk about issue, this is a cycle, we have talked, i thought we have strongest field i have seen. lou: i agree. >> with governors and elected officials, there is a large segment of this country that does not want anything to do with that, the guy that talks to them has been trump, people want to -- have underestimated him

including me, this gives him a form where he has legitimacy having dealt all over the world in economic issues. lou: he understands economics. >> that important. so my sense this is going to help him a little bit, hillary, does not have much room to talk about different policies. lou: you know wild be hillary clinton, and e-mails. this is part of those wheels coming off. political leaders. with right reminded her a socialist. they have influence to economy we'll have if -- it should be at lyft thought provoking. >> i think neither one of them have a lot of credibility on this issue. i mean i think that socialism is last thing we need, look at

china away it falling apart. lou: that is working out great. >> so, i don't think that either one of them can speak to this issue in a way to give people confidence, trump with his business background, and with having talked about china for a long time. is in a better position, an area where i think his skills lineup with the campaign moment. lou: in not his nature. and his you know, one assumes -- >> he will not need to be tutored, ross perot jumped in at a time not quite an date that -- that -- candidate that trump is he dominated for a period of time, i think a lot of people will continue to be attracted to trump. lou: and it is going to be interesting. we're seeing some spines, stiff stiffen a bit, and a change in rhetoric. hopefully for good of the

can'try, ed rolls and michael goodwin. >> thank you. >> we should celebrate like this every 7 years. when the market goes to hell. what does united states need to do in response to the changing reality in world? we take up that, not just stocks plunging. crude oil prices falling as well. down almost 8%, and at a time drivers will pay lowest price for gasoline in more than a decade. on labor day weekend. will they go lower? we take that up much more straight ahead. stay with us.

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lou: crude oil prices plunge down 8% to over $45 a barrel we have not seen this volatility in crude oil market in years, u.s. benchmarbenchmark crude mostinge for fourth straight day longest streak of volatile since january of 1991' joining us annie -- andy lethal. great to have you with us, we're looking at fundamentals of where we have, volatile is ubiquitous in crude oil market what is going on? >> well, we have a burch going on -- a bunch of things going, last week has been volatility, we had short covering as market got below $38, and a lot of

people like myself think this is cheap, given that rig counts are declining and pro duc pro duck s declining -- production is declining yesterday opec said we want to talk to the nonopec producer to seek a fair price for oil in a left pla playing fd 92 that is hysterical. this is -- opec they want a level playing field in they are all about not having a level playing fields. >> well, that is right, we have seen opec say a fair price should be $120, $100, 80. or whatever. but if -- if you would look back to last week, and see commenting coming out of iran, where on one hand, oil minnister said we want to produce as much oil as we

can, we need an opec merge meeting to stabilize prices, we have a disfunction algroup of country who want higher prices but are unwilling to to anything about it they are all looking at saudi arabia to make a different. lou: drivers this weekend, $2 .40 average gallon of gasoline across nation, right now, lowest in years. that is not going last in your judgment? give us your view. where we can expect the prices to go. >> it is not going to last, prices are going down, another 30 cents a gallon between now and the end of the year, toes for 2 pay 15 if you look at state like south carolina, we have stationing selling below a love ar -- bely $1.70.

>> well, you know what. that -- adds up to quite a tax cut if you will for nearly all americans. we'll take that. thank you andy. >> thank you. lou: up next, major average down 3% across the board today. what will tomorrow and wall street bridge? how will our elected officials and policymakers respond to all uncertainty, and changes that powerful changes that are underway around the globe? that is a plot more still ahead, stay with us. future right now, moving higher. we'll have that and much more, next. we live in a pick and choose world.

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lou: we're getting a jump on market tomorrow. dana peterson, and scott, and professor of finance at depaul university. giving en struct to me. death penaltia dana turn to you first, where arery headed if fed raising interest rates? market right now, whether it is crude oil market, or commodities, we're talking about insane price distribution --

depress -- depricing a here. >> i think important thing to think about is not time but the pace of normalization, fed officials have signaled they prefer to go slowly in a measures pace of a nondisruptive manner. lou: are you concerned about deflation? >> well, so far we think that most of the pressure is on en flag from commodity price -- inflation, from commodity prices, and low oil prices. it transitory. lou: do you think we should -- well we could go on with that. scott, break the tie. are you concerned about deflation?

>> i would say this, yes. but for fact that only reason i would not be is that we have a population growth that would be off the charts, we're seeing global rate compression, canada said they are going into a recession, you could have a global recession -- there are reports that china is between 35 to 45% of global gdp, for last 20 years they have grown 56 times, if you can look me in face tell me there is a soft landing i'll la laugh odd loud there is going to be a thump, let's see, there is a greater chance of deflation than inflation, that is why i think that rate hike stuff is insane. lou: and investor trying to figure out tomorrow, what is going to happen, what direct are markets going, uncertainty, and

dention between -- tension between view that you know, i mean, stanley fisher one of most respected members of fed, talking about raising rape its s poppycock, and we are risking much here with these markets. as we have seems to be so many cavalier attitudes about impact of an opening shot at least we'll see what it leads to. >> well, i would think that -- i would say that fed officials are cassius. -- cautious. fisher did say that the fed will take into -- well will pay more attention to development. lou: ple bless their little hea.

>> scott thank you. you have been up since very early this morning. >> thank you. lou: dana peterson thank you. >> thank you. lou: we appreciate it. lou: up next today's sell-off, adding to what has been a difficult few weeks, trader say a lot hinges on jobs report, i'll have a few thoughts on i'll have a few thoughts on market felt down -- meltdown and [ male announcer ] we know they're out there. you can't always see them. but it's our job to find them. the answers. the solutions. the innovations. all waiting to help us build something better. something more amazing. a safer, cleaner, brighter future. at boeing, that's what building something better is all about. ♪

lou: in the markets this was a brute a daal day for stocks and many other assets, we hope your pain has not been too severe, it may continue into tomorrow or may not. we taken a look at stock futures, and they suggestion a positive open.

but, hope that holds through the night, the s&p is now 10% lower than its may record high, officially a correction, markets awakening to fact that slowdown in china's economy is worse than reported, worse than many thought, japanese markets are open this evening, trading lower but off of the lows of morning session. and volatility not confined to stocks. crude oil prices plunged almost 8% today. but at least that good news for folks as gasoline prices the likely fall even lower into fall. >> and stocks tomorrow, liz ann saunders at charles schwab said here. what we're seeing in her judgment is a correction and an ongoing bull market but at-this-point, this sell-off is not a harbinger of worst things to come she says, not for now, we hope she is right, perhaps our concerns are misplaced, time

for your comments. >> dana peterson of smart, and right to say that u.s. economy is solid and will grow, and create jobs. >> joining us tomorrow, >> joining us tomorrow, tomorrowe a a a a a a a a a aert for time life's video collection. (soft piano music) well, hello. i'm carol burnett and i'm here at cbs in los angeles at studio 33. come on in. (tv show announcer) from television city in hollywood... (jaunty theme music) ♪ ...it's the carol burnett show! (carol burnett) this is the stage where it all began. we shot all 11 seasons of my variety show here. you know, we made so many great memories. but no one has seen the first five seasons of the carol burnett show since they were first aired. no reruns, no web streaming,