[closing bell rings] would i imagine there are sighs of relief here. as the dow falls below 25,000. we look to close at 24,373. we endured the biggest intraday point drop for the index ever. that will do it for the claman countdown. this is "after the bell." melissa: stocks hammered for a second straight day. the dow ending down 1174 points. that is more than 4%. take a look at the chart. we are down near 1600 points just an hour ago at 3:11. that is where it was. as liz said, this is the biggest intraday point drop in history. the selloff hitting all the major averages today, the s&p and nasdaq, closing down 4%. the dow and nasdaq are negative for the year. whew, i'm melissa francis. i feel calm though. do you feel calm? david: i feel calm. i'm david asman. to put things in perspective. i was at "the wall street journal" 1987 when the october 19th crash took place. that was 22% drop. melissa: wow.

david: 4 1/2% is extraordinarily high or low if you put it that way but put it in perspective. 22%, versus 4 1/2%. it could be a lot worse. we're not in recession. that is another important element in this. we got you covered on "after the bell," at this hour, on big market moves, what is driving these markets. what you should do with your money right now. phil flynn is watching the action from the cme. first let's go straight to nicole petallides on the floor of the new york stock exchange. nicole, what are you hearing from traders about tomorrow? >> well, tomorrow, right, first of all they're trying to digest today. i will tell you i spoke with the president of the new york stock exchange tom farley, what happened today? because we dropped nearly 1600 points at one point. we saw exasperated selling in just a few minutes, within ten minutes of selling. his first point, the first point he wanted to make, we saw smooth trading here at the new york stock exchange on heavier than

normal volume. in fact i just spoke to a spokesperson. we cross ad billion shares, 1.1 right now. that is roughly double a normal day. there was some very heavy volume. tom farley, really, really accentuating the fact this was smooth and orderly. are you worried about over 1000 point drop? he said, no comment. traders what they're thinking tomorrow, david and melissa, they're really feeling okay with this they wanted to see some capitulation. they wanted that selloff, that big selloff they have been waiting for this. was pretty amazing because at 3:00, we were down 762 points. by 3:11, 1600 points basically. that was a really big move in ten minutes. last thing i will tell you, one trader brought to my attention that over at isi, they were saying it was, did have some lates to a "flash crash" which is the phenomenon, electronic

markets moving in and seeing withdrawal of stocks. whatever it was, there was program selling. you have treasury yields that have been high and markets under pressure. one trader said, look, nicole, not the three days of selling. it is 400 days of gains that were really a phenomenon. we have been running up since the election. last but not least, people i knew, buying right at the bottom, shaking but buying, catching that falling knife. guess what, already made a little bit of money. this is not for the, got to have a strong stomach. melissa: talking to people their shopping list as well. i hear what you're saying there, nicole. not for the faint of heart. thank you so much. phil, oil continuing to tumble after hours closing down nearly 2% n my mind this is a good thing because ceos and other traders have been talking to me about oil and commodity prices being inflationary, a little pullback here is not bad. >> absolutely correct. even when we heard from some of the airlines today, that said, way energy prices are, we didn't

hedge. so we'll have to maybe raise air fares. i think a lot of businesses i'm hearing from, a lot of pain, these are highest prices we've seen in years. very, very strong demand that drives up costs, raises inflation. a little bit of a break is food thing for the economy. what does it do for the rest of the economy? gold isn't sure what to do here. would you think it would bounce back up the fear play. we're seeing the fear on the vix. that is the weird thing. the people trading the s&p 500, the big boy, they don't seem to be too nervous. i talked to one trading, what are you thinking? where are the market makers? where have all the market-makers gone? this is being driven by computers now. he doesn't remember the days when a stock was going bad and market-maker would stand there to buy it back. they're nowhere to be found in the computer world. melissa: that's a great point, phil. thank you. david: let's bring in today's market panel. dan henninger from the

"wall street journal," adam lashinsky from fortune, fox news contributors and lenore hawkins. dan, you and i were together at "wall street journal" in october when the 22% crash happened. couple weeks later we were back to normal. what happens when recession is crash. if it crashes in a healthy economy, it is likely to bounce back pretty quickly, no? >> i think that's right, david. i mean unless all of us are missing something there is really nothing out there in the world right now to suggest that what's been happening in the economy is threatened in any way. the real economy is very strong. for instance, the ism, non-manufacturing index, that came out today, hit 59.9. that is really high. the estimate would be 57.6. so just another indication the real economy is going well. i think what happened today is

basically, that the stock markets are beginning to sink, getting in sync with the real economy. that necessitated some kind of a pullback to a point where two can start operating on basis of something more real than what the stock market has been doing recently. david: lenore, are we missing something? is there something big a subprime mortgage crisis, something we aren't seeing right now? >> one of the things i think we have not been seeing people have been talking about how this is one of the most expensive markets. that stocks prices are really priced for perfection and then some but what we're not seeing a lot of talk how the u.s. is performing relative to the rest of the world. yes our economy is doing well. out of top 29 countries we're only 10th for economic growth. if you add impact of a falling dollar. the dollar is down 12% since first of the presidential election, you put those two together, our markets are less attractive for international

investors. money is going out of the dollar and going out of stocks. david: adam, is the market afraid of the fed. for years the market was afraid of what the fed was going to be doing when the underlying economy is as strong as it is right now. is there fear about these, the fed raising interest rates because we know there are a lot of bonds on the market. only way they sell the bond are raising rates, right? >> obviously there is fear. there is fear last week and week before that, and last month for that matter. there is fear for quite some time. that would not explain today. neither would i think dan's comment that the market is coming into alignment with the economy the economy doesn't move in big herky-jerky moves. david: it did today. >> economy doesn't move that way. melissa: let me challenge that to go back to dan. one of the things that set off this pattern the forecast from the atlanta fed when they

thought first quarter growth could be 5.4%. for gdp. that is herky-jerky on the economy and makes people nervous about inflation and all kinds of things. >> the fed kept interest rates so low, so long. talking about the possibility of fur interest rate increases in coming year that will have some effect on markets, no question built. i think those are the realities that will cause a selloff like this, and get the market back to the point where they can react normally to what is going on in the real economy. i would suspect once we hit this leveled off point, that the market will again begin to start growing as some of people on fox has been suggesting, but not the pace which it has been growing here recently. melissa: lenore, let me ask you more about the fed. we're not just talking about interest rates here. we're talking about the balance sheets and tapering effect. the idea they picked up a whole lot of product along the way in

the past eight years, stablizing the economy. at some point they have to clean off the balance sheet. i don't think it is coincidence that jerome powell was sworn in today, the new fed chief. couldn't a lot of this nervousness be about that? >> absolutely. let's not forget that we're in a level of spending you normally see when the economy is not doing well. we had the biggest deficit in 2017 we had since 2010. we're hearing the economy is doing great, unemployment record lows, we have booming debt and we have the fed tapering, federal government issuing more and more debt that will have impact on rates. melissa: adam, i itching you to get in there. >> anna had a cough completely unrelated. david: well, timed cough. >> melissa, i chuckled what you said literally, literally a

coincidence jerome powell's first day at fed. all the accurate an fine comments from lenore was making were completely apparent last week. we all want to explain this but sometimes things are inexplicable. melissa: i'm not sure this is as inexplicable this is not so much of a head-scratcher, dan. we have a market that has gone up and up and up. i talked to a number of people that love it. they don't necessarily believe in it. it is too frothy. we need a bit of a correction. is that what we're seeing, dan? >> i think that comes down this is correction. as someone famously said, markets fluctuated. they haven't fluctuated much recently. melissa: no, they haven't. they have gone straight up. >> they had to come down. david suggested 1,000, 1600 points is not the as 800 points in 1987. melissa: terrific. david: more reaction to the selloff. peter morici, university of maryland economics professor.

peter, lenore was mentioning the fact there was talk-down of the dollar from davos last week not helpful to the overall market. i understand why you're treasury secretary was talking down the dollar. that makes assets in the united states cheaper. he was trying to get foreign businesses to move here, to build new to build factories. it is not helpful for the market. coincidentally or not, 1987 before the october crash, the treasury secretary, james baker was talking down the dollar. that led, or some people say that triggered the crash then. melissa: true. david: is that a problem this time? should the treasury stop trying to talk down the dollar? >> well i think the treasury right now should be quiet about the dollar. it is unfortunate that the market react in ways that don't make economic sense. for example, if the dollar were a bit weaker and exports were cheaper and imports were a little bit more expensive that would be good for u.s. growth.

we need more growth. don't believe that atlanta fed number. economists that watch that thing but basically they come up with a new estimate every week and it goes up and down. that is an estimate what they think first quarter growth will be and we're only one month into the quarter. we have not been growing at 5.4%. david: no. >> they basically read the high institute of supply, ism number -- david: without getting into those number, peter, we haven't seen full effect of the tax cuts. we haven't seen all the money come back. we're expecting probably as much as a trillion, if not more so in terms of repatriated capital. once that starts churning in the economy, won't that lead to greater growth and more stock buybacks and higher stock values >> certainly will. i wouldn't count a lot of that money coming back. they will pay taxes but leave it where it does the most good. after pell has a flush balance

sheet. they don't need more money here. david: hold on a second. peter, we know they already paid off a lot of those, the taxes on that foreign capital in the last quarter. we've sina in a couple of the report. >> that's right. david: that were issued last week. go ahead. >> they have to pay the tax, whether they keep it there or bring it home, they have to pay the tax. david: why wouldn't they bring it home? >> well the point is, where do they need it? if their balance sheets are already flush there is no reason to. remember that money is not just sitting around in a savings account at deutsche bank. a lot of that money is invested. they would have to sell off investments. it won't come back in a rush. david: forgive me for interrupting. you invest money if you think it is going to grow. if you think the whole u.s. economy will grow because of tax cuts, consumers have more money in their pockets, they're already confident about the economy. they will buy more things. that is why companies might invest more here.

in factories and growth, et cetera. >> absolutely. i agree. we're on the same page. we're differing on is the pace of the flow back. they have to pay their taxes all at once but they can bring back the money as they please. as you know, it takes time to plan a building and put it up. david: right. >> that is just one factor. there are other things going on here that are very significant. one is the deflation of the chinese stock market. the chinese government has been trying to bring doesn't bubbles over there for quite some time and now they're having some success. guess what? markets are linked. another thing is, there has been this kind of misinterpretation of fed intentions. they're going to gradually raise interest rates to level well below historic levels for economic expansion. they're talking about a top federal funds rate of 3%. and it doesn't mean that there is inflation outside. you know, last month, we had 2.9% wage growth. even with barack obama era

productivity growth of one% a year that translates into 1.9% inflation. david: before we get too into the number, peter, i ask you simply what do you think will happen? have we gotten out you have our system or is there more carnage to come in the market? >> there is more carnage to come but the market will recover. we're going through a correction long overdue. if you recall 10 days ago if you read "the wall street journal" everybody was saying the market could only go up. that is the surest sign that things are going to go wrong. david: that's right. everybody was absolutely positive about the market. that is kind of dangerous. peter, final word, quickly. >> other thing was the big technologies recorded record revenues and profits but there was a lot underneath the balance sheets indicated some worth repeating. i think they will fix their problems and meet their challenges but there are a lot of headlines around the world that indicated big tech disappointed.

we're riding very intensively up the market. they are the lead horses. we can't expect that from them, quite so quickly. quite so soon. david: gotcha. >> this market will turn around. david: peter morici. melissa. melissa: market mayhem. the market taking a major dive, with the white house reaction to all of this, blake burman. what did they have to say about this? reporter: as this was unfolding i walked into the white house press operation behind me. i didn't even have to ask a question. spokesperson looked at me, we're not commenting on this right now. that is their official position at this very moment. the president though as you know, he is on his way back from ohio from a tax cut event. as he was flying there aboard air force one, the number two in the press shop, raj shah was asking about everything, the market was down 500 at that point. that was his at the same time at that point i stress. markets fluctuate? the short term. we all know that, and they do that for a number of reasons but

the fundamentals of the economy are very strong and headed in the right direction for the middle class in the particular. the president hit the ground in ohio. started speaking, related or not, the markets then dropped even further. he did not mention the stock market drop at all, the president did not. he did though tout the economy as a whole. >> your taxes are going way down. and right now, for the first time in a long time, you've seen it, factories are coming back, everything is coming back. they all want to be where the action is. america is once again open for business. reporter: i think all could agree, melissa the timing for this white house as it relates to the stock market drop was horrible. because you had the president out on the road continue doing with him and other top officials trying to put him out there to sell this tax-cut package and, i can't remember the last time that the president was out there giving a big speech and people cut away from it. because you had this market

dropping and dropping and dropping. and president was touting his tax cuts, the cameras turned off. melissa? melissa: good point, blake. here now with more is congressman jim jordan. member of house judiciary committee. congressman, do you have a reaction what happened today? >> well i mean look, markets change, markets fluctuate, markets correct. i do think the president is exactly right. the economy is strong. just week 1/2 ago i was home across our district. every single business owner i talked to talked about their expanding, building is happening. they're hiring people. wages are going up. good things are happening out there. we'll see what happens with this market as we move forward. melissa: one thing that wouldn't help would be a government shutdown or no agreement on, all the work you guys have to do with the budget and everything else. >> yeah. melissa: i hope you're aware of that? >> yeah, but only thing worse than that melissa, continued increases in spending. we in the freedom caucus want to stop the non-defense discretionary growth in

government. that's a problem. we're on pace, if the numbers talked about actually happen with the budget we'll be approaching a trillion dollar deficit and an increase in discretionary spending just this year of close to a quarter of a trillion dollars. that could be sending a message to the bond market. that could be driving up, that could have impact on market. control the spending like american people sent us here to do. that is what those in the freedom caucus are trying to accomplish. melissa: without question, but looking dysfunctional does not make people feel confident about the economy and it will continue growing. where do we stand on biggest issues? >> fund the military for full year. not increase spending on rest of the government. that is the package. that is where the freedom caucus will be. we are having a meeting where we talk about that ever growing government built into the baseline and over next couple years continues to grow. we're at as you know, debt-to-gdp ratio one-to-one. that is not a good place to be.

get handle on non-defense spending. we need defense to protect the nation. you can't keep growing government like democrats do. that is the real fight. melissa: you have gone so long without a real budget. when you say stuff like that, out loud, continuing resolutions none of us can run our homes like that. can't. >> i agree. melissa: is there any chance we'll see more working together. >> let's hope so, democrats said three weeks ago. they weren't going to fund our troops. they weren't going to fund the government because they wanted amnesty for people that work here illegally. that is the democrat's problem. i can't do anything about it if that is their position. they woke up and saw the light. we'll change and keep the government back open. we'll see what we need to do for national defense. everyone agrees bipartisan issue. one agrees what that level of funding be. not increase rest of the government. american people elected republicans to do just that. remember what we told them what we were going to do. get it accomplished, on the

right time frame. not continue to have short term spending bills. if we continue do that that will be good for -- melissa: are you getting any closer to a deal on daca and the wall? that seems to have fallen apart a bit. i mean it seems like the president offered democrats what they said they wanted. they jumped to another position which seems to telegraph to everyone else there is not a deal to be had? >> i'm much more concerned what we said, than the american people sent us here to do than any kind of deal. proposal put out by senator mccain and senator coons was a bad proposal. graham-durbin proposal is bad proposal. it is not consistent with what the american people elected us to do. focus on that. border security wall needs to happen. ending chain migration. stopping crazy sanctuary city policy. e-verify, get rid of visa lottery. those are key elements of an agreement need to happen.

that is what the american people elected us to do in 2016. melissa: congressman jim jordan. thank you. >> you bet. david: meanwhile president trump wrapping up a speech on the positive economic effects in tax reform in ohio just as the market was dropping over 1000 points. jeff flock is live in blue ashe, ohio, tough timing on this one, right? reporter: i will say it. i've been to a lot of these speeches. the president touting his economic accomplishments, mentions market, high flying stock market. take it compared to where the market was to where we are now, it is way up but today is not a good day. as the market was in freefall, the president was talking about, because i listened, being happy that nobody took a knee at the super bowl. that may be something folks in the crowd liked but you know, other things were going on in the world. here is some of what the president had to say about the positive things he feels that

are going on in the economy. >> your paychecks are going way up. [cheers and applause] your taxes are going way down. nancy pelosi, what she is doing to this country and she has gone so far left and schumer has gone so far left, oh, i look forward to running against them. they want to raise your taxes. reporter: it is about the economy but let's not get too far ahead of ourselves. a lot of people in the crowd, the president was talking to main street today. we're talking about wall street here. i know our viewers want to hear about wall street, the fact in this crowd a lot of people are not invested in stock market with individual stocks or etfs or 401(k) plans. a lot of these folks live from paycheck to paycheck. those people did not lose any money today as the market was in some ways crashing.

so, just important it note that not everybody, i guess watches us and is heavily invested in the market. there is a whole piece of america out there that, today was no big deal. david: i got a surprise for you. some people are not in the market and they still watch us, jeff, because that is how good we are. reporter: that's true. believe that or not, huh? david: that's true. melissa: adam and lenore are back with us. lenore, that's a great point. you know what people are watching from home, there were a lot of people who remarked last week they got their first paycheck that was bigger. >> it is fantastic, having more money in their pockets, private sector having more money is a good thing. when we talk about the stock market, the stock market was priced for so much perfection. a lot of benefits of tax reform was already priced in. you had record level margin accounts. people borrowing to buy more stock was at record levels.

the level of bulls versus bears was also really disproportionate. at end of the day who was left to buy the stock? at some point, who will buy the pullback? melissa: dan what do you think about that theory? >> the pullback was inevitable but jeff flock is speaking a a good point. the people out there at sheffer manufacturing, they are working through employee bonuses, job numbers show the first real increase in wages in at least eight or nine years. so i think at that level what you're seeing something that president was entitled to brag about, the growth in the real economy. we have warned him many times, do not hit your star, mr. president, to the stock economy. those stars are shooting stars. they come down occasionally. melissa: adam, what do you think? >> i think jeff should be a little bit wash schuss. those people may may not be playing the stock market. many of them have 401(k)s and

many have pensions and many have jobs at companies that do have publicly-traded stocks. i think furthermore, to echo what dan said, i was in the davos audience when president trump referenced the '86 records that the market had had under his presidency, it is irresponsible talk because he encourages people, you need to invest in the stock market. he should not be endorsing that one way or the other. it is unhelpful and it is counterproductive. as we see on days like today. melissa: well, i mean that is assuming that the market isn't going to come back. that is assuming right now, apple isn't a screaming buy. that is isn't a opportunity to get into amazon. there were a lot of points on the way up people couldn't get in because it was too pricey? >> i know that. all i'm saying is, for whatever reason if you got in and you have lost money, you don't feel good about that and he is not investment advisor. he shouldn't be giving investment advice. melissa: lenore. >> i don't think we really want where the president, one guy is

able to have that big of an impact on the stock market. and i think it is dangerous for him to say that he is really responsible for it, when it is much more complicated. yes, today hurt, this wasn't fun for anybody. but it was about time, but we still have really in rich territory. it was painful one day but we're still very, very richly priced, particularly when you look at other markets outside of the u.s. investors have choices. if you add how rich our market is, compared to what is happening with the dollar, there is markets overseas that look a little bit more attractive that has impact on us as well. melissa: dan, the truth is, when you talk to people around the country, people who are the least optimistic in my opinion of people i talked to, are folks on wall street who were saying they were nervous this market had gotten way ahead of itself. they are not people that open up the paycheck, see it a little bit bigger and are happy about that. these people did get rich over the past eight years as wealthy moved ahead of the poor. who now look to, what looked like a big run and thought, i

don't know if there is enough sport. that would make a healthy turn not related to the let's of it. >> i think that is right, melissa. people in the stock market like to think they understand what is going on. for eight years they were getting rich while we had relatively weak growth in the obama years. melissa: totally. >> now after the tax cut you're seeing the real economy taking off. i think they haven't been quite able to square the experience of the last eight years what they're now experiencing as the economy grows in 2018. there has to be rationalization process where the markets come to grips with the kind of economy that they're living in right now. melissa: guys, thank you so much. david? david: all right. this was, the steepest decline in the dow since november 2008. for the s&p 500, sips august of 2011. coming on the heels of the worst week for markets for years. let's go back to new york stock exchange where trader

steven guilfoyle. sarge, does it feel like beginning or end of a correction here? >> i think we're in new environment. we all have to adjust to a new environment, adapt to overcome new obstacles. we heard treasury. they will need to borrow a trillion dollars next three years, off of 600 billion last year. how will we get our struck built? how will we spend on military. how will we build the wall? it will be very tough to reach a deal. david: let me correct one thing. that is what the cbo says how much money will be coming into the economy. really a stat, a static analysis. not taking into account the fact we may have huge economic growth that would actually create more revenues. it might not have to borrow a trillion dollars. i take your point. i want to get back to the feeling itself on the floor among traders. do they feel, i know it is very subjective, but this is the beginning or the end of a correction? >> i do think that we are in a

long-term bull market. i think most traders feel that way. however, i think we're in obviously in a rough spot. obviously you saw this little "flash crash" we had when the s&p hit 2700. that was algorithmic by the way. they have to reempower these guys so they can reempower the marketplace for mom and pa at home. they need these guys. they don't need algorithm rider taking us down 500 points. they need a specialist here to fix this. that is what they need. david: we're talking about the difference between main street and wall street. a lot of folks on main street, that some of these big move days are generated by computers. how much of what happened today was computer generated? >> "flash crash"? that was 100% computers. that wasn't humans. humans didn't have time to get in a way of that i tried to buy back at bottom. by the that time, i market went

up 400 points. david: if that is true, sarge, if that is true, a lot of this is computer-generated, it is not the entire market providing its opinion what is happening with stocks, shouldn't we all feel that if you just let things settle, leave your money where it is, let it work where it is without panicking getting out, it will be okay after a couple of weeks? >> i can't promise you okay after couple weeks i can tell you what i do. i bought shares late in the day. i bought energy shares. i tried to buy financial shares but i didn't get my prices. i bought nvidia. they have earnings coming out and high-flyer coming in hard. i only bought late in the day today. i will let you know in the morning that works out. that is how a professional trader acted today. david: sarge, thank you very much. >> you're welcome. david: historic day on wall street. dow seeing a biggest point drop in history. the president was talking up the economy in ohio earlier. take a listen. >> wait until you see gdp over

next year or two. wait until you see what happens with our country. people can feel it. billions and billions of dollars are being poured back into the united states. at the center of america's resurgence are the massive tax cuts that we just passed. david: is there a disconnect between the economy and markets. here is tony sayegh treasury department public affairs, a good fingerprinted. you and i used to do it all the time. markets move, relate to the economy. what do you think happened today in the markets. >> david, great to be with you, my friend. think you are always going to expect fluctuations in the market day-to-day. corrections tend to happen prior to markets going up i will remind people. i will also remind people since donald trump has been elected president, market is up 33%. adding $6 trillion in value even with the dynamics of the last two days. the fundamental economy, i think we can all agree is very robust

and very strong. robust projections out of the atlanta fed, plus a percent, released on friday. 200,000 jobs added on friday. you have wage growth and wage inflation is frankly something perhaps causing part of what is happening here in the market. 2.9%. lowest unemployment rate in 17 years. fundamental things driving equity market upward are still there and we feel strong about this economy. david: i was talking about earlier when you have a market downturn in the midst of a recession, in the midst of a lot of bad economic news then you have a long-term drop. but if you have a downturn like we had today in the middle after booming economy, such as we're in right now, it doesn't last that long, does it? >> we expect it not to. markets correct before they bounce back upward. reality is, david, this is

important just for everybody, not just wall street and main street but the entire country, you have renewed sense of optimism since donald trump became president. for most of the obama years, people felt the country was going in the wrong direction and their own economic situation was going wrong track. 60% of americans feeling optimistic about their personal economic situation. that is no who the president talked to today in ohio. people who seen bonuses go up since tax reform. seen major wage growth in companies. 40 companies since the tax cut and jobs act increasing their own minimum wage, making billions of dollars of investments in this country this is exactly what we hoped would happen once we enacted such switching tax reform. david: tony, october 19th, 1987. one day that market went down 22%. today down 4%. miniscule today's drop what happened then but what preceded that drop, the day before it went down, the treasury secretary of the united states, then james baker was talking down the dollar.

last week we heard comments from our current treasury secretary mr. mnuchin that many people interpreted as talking down the dollar. some people today said that is what led to pan nick in the markets. what do you say? >> is simply untrue. secretary mnuchin has been consistent about the dollar. he mad factual statement about the what short-term impacts on dollar and trade and other opportunities. he stated it is liquid market. we don't look at short term. we look at long term. he affirmed our position, we want stronger position in the future and remain the world currency. david: reapfirming the point you just made will you do more to tack up the dollar or make markets believe you will not do anything to try to move it down? >> i think our economic markets are making the markets believe and country believe again. that we can grow the economy in meaningful way, get back to sustained economic growth and create massive opportunities for

all americans to thrive in this could not my. that is what the president is focused on and that is what the president is working on. david: you and i, have problems with the cbo what happens after tax cut that they're not dynamic enough. they have static analysis. they came out with they say, a sure thing that the markets, that you're going to have to borrow more money because you will end up with fewer tax receipts as a result of these tax cuts. what do you say? do you think they're way off? spell it out for us? >> look, we have anticipated this from treasury that we would have to make is borrowing amount. the federal reserve got rid of $175 billion from their balance sheet. this is something we expected but the idea that we could somehow not grow this economy and solve our debt and deficit problem i think is just backwards thinking. david: do you think their calculations, that we'll be receiving fewer tax rereceipts as a result of the tax cuts is wrong? >> in the short term that might be true but in the long term we'll have massive is growth.

that will lead to trillions of dollars in the federal treasury, you say long term, how long is long term? how long before we start seeing more receipts of tax cuts? >> it will grow year by year. if you think what we've done on expensing side, david, five years of immediate expensing, these are all things that will drive massive reinvestment into the economy. drive up revenue. david: one more point, last week we heard from gary cohn, the economic advisor and from the president himself, that there are plans to do a fades two in tax cuts, focusing on individual rates which a lot of people complained didn't come down enough, making them permanent, are you guys in treasury working on plans to do that? >> we would love to have democrats invited again this past round to the table to make middle income tax cuts permanent and work on lowering taxes on all americans. that is exactly what we want to be happening. that unfortunately was not an offer democrats took us up on this last year.

but the offer still stands. we want to make the middle income tax cut permanent. david: are you going to do it on your own? you didn't have any democrats cutting taxes with you when it was done in december? are you guys in treasury working on phase two of a tax cut? >> we are always focused on reducing taxes for he have american so long as donald trump is president of the united states. we'll do it every year if we could. david, reality is, there is mechanism in congress which makes us need over 60 votes in order to do that but when you see the massive economic benefit, stimulative effect much tax cuts, we've already seen in one month, whether it is on wage growth, economic growth, companies reinvesting billions. we anticipate when you do repatriation trillions of dollars back into this country, look, proof is in the pudding. tax cuts and tax reform work. we hope to make it permanent on middle income side an personal side. david: tony sayegh, from the treasury department, good to see you, tony. thank you very much. >> good to see you, david. melissa: in case you're just tuning in, the dow and s&p

wiping out all gains for 2017. many are blaming concerns over inflation. here is tim kaine, hoover institute research fellow. thank you so much for joining us. what signs are you seeing on inflation? >> i would caution a little bit it is not the short term wage inflation that showed up in the last jobs report. it spooked people a little bit. i would say slow down. there is correlation between that and price inflation. the fed will look at price inflation and i think the bigger issue you see growth roaring. when gdp is taking off as it seems to be doing, and tax cuts as your previous guest was saying it will fuel inflation a bit and fed will be concerned about it. melissa: you say gdp roaring. atlanta fed thought first quarter growth would be something like 5.4%. we have other guests say that is nonsense. what do you think about that? >> we should put away the

crystal ball as little bit and not, not worry about the number. it will be robust. i would be, i have said it could be north of 5%. and it would not surprise me. the fact is, you know, just put off your partisan sunglasses whatever your persuasion, there will be a boom from the tax cut. it is good news. but it mines there is probably some inflation concerns. melissa: riddle me this, that is great news. what you just said is what we've been hoping for and complaining about for the past eight years. we did not see a v-shaped recovery after the last recession. we said we need growth in this country that is not artificial from the fed but is actual true growth for more jobs, higher wages, people buying. seems like this is all good news. why is the market selling then. >> it is great news. the bad news is the fed has been

overstimulating i would say almost a decade. there is latent inflation with artificial money sloshing around propping up a very late recovery. the bill will come due in some sense. i don't think it is bad news, but i think everybody is waking up, realizing there is a new sheriff in town at the fed. probably a little more hawkish. i think that is good thing. when the market seems to wake up to that reality, maybe was today. this is consequence. melissa: i don't think there is coincidence a new fed chief sworn in today, janet yellen who did seem to indicate that she felt like the chickens were never growing to come home to roost on all this loose money flying around everywhere. >> yeah. melissa: that is exactly the type of thing that really props up a stock market. what does it mean for the average person out there, if we see some inflation, we see the pullback in the stock market, but at same time as you

described, the economy is booming? how does that net out for the average viewer at home? in other words, is it good or bad? >> well, number of one, calm down. average person out there, don't worry, your stock portfolio, your mutual funds, they're not going to collapse. you're going to see a little correction and a calming. number two, if you are thinking of buying a home, rates may be rising and this might be a good month to look at interest rate. that is probably people where you see immediate, here is advantage to move now. melissa: so that's really interesting. because one of the things that's happened as a result of these tax cuts, we've seen a lot of real estate markets freeze up. people are looking, can i deduct local income tax and a lot of markets have seen a slowdown. you make a great point. we'll see interest rates rise from here on out. if you think of doing something, now it time. melissa:

>> i taught economic classes, that don't think of house you will buy some day, talking to college kids, don't think that of a investment. think of consumption. live in it a long time. hopefully raise your families. and but, if you're just thinking about consumption, not selling in next ten, 20 years, you want to get lowest rate possible. it is probably good advice to lock down a rate, if you're looking at paperwork right now today, go ahead and sign. melissa: lock it in. lock it in. you are so rational i have to ask you one more question before we let you go. whatever people have been saying the stock market is six-month predictor where the economy is headed i feel like those things have come apart. it just doesn't feel like that has been the truth over the last couple years. what do you think about that theory now? >> two very different animals. i wouldn't ascribe to that i think the economy should be fine. i'm very wary about making predictions. we don't know what the future will hold and what the shocks

will be. look, energy prices are low, tax environment is good, regulatory environment is good. if there is a risk right now, it is overheating risk hey i've been saying that for years and i've been wrong. take it with a grain of salt. melissa: i can't let you go, one more for you. there are a lot of people looking at companies they love that are clearly going to grow in this environment like apple and amazon, people are using more and more of their products. they understand the game going on in this country. making moves that make sense both in terms of their tax policy. they have weathered all kind of various storms. could they possibly be good investment for the average person right now if you really believe in that company? >> oh, yeah. i'm a tech optimist. melissa: totally. >> you to be worried about investing in bubbles so to speak, and throwing money at crazy ideas. i thought about it coin was crazy. we're inventing the future in this country for the whole world. i think these companies are

amazing. i'm not a stock investor myself but as economist yeah, would i have faith in the new technologies and companies behind them. melissa: tim kane you're wonderful. so smart. appreciate it. david: dow falling more than 6% at session lows today. ended down about 4.6%. making history is the biggest intraday point drop in history. none of the 30 dow stocks finished up. here now is our own charlie gasparino. what are you hearing? >> david you know it and i know it, we've been debating this on email, you and i last couple days. there is a debate in the market right now. do we have an economy that essentially going to lead to higher interest rates, bigger deficits because of a massive tax cut, possible trade war, which leads to maybe higher interest rates there. bigger deficit which leads to even more higher interest rates. the fact is, do we have an economy where the tax cuts, corporate tax cuts really don't produce enough gdp, not 3 1/2%.

forget about 6 1/2% or atlanta fed was calling for, does it not produce enough gdp growth that makes our deficits even bigger? people are digesting that theory right now. the way interest rates are on some rise because of all factors i talked to, particularly inflation factor. i happen to look at it differently. this is my bias. i believe in tax cuts. i'm like you. david: yeah. >> we come from the art laffer school of economics rather than the robert rubin school of economics. david: or cbo school of economics. >> we believe if you cut the corporate tax rate down as much as you can, they did, by the way, this blew away the puny obama stimulus plan, what trump did, trillions of dollars. it will float corporate balance sheets. they will buy back stocks. not only that, corporate balance sheets are going to expand. gdp is going to grow. that will dammen the initial impact of the deficit growing because of the tax cuts.

deficits will be dealt with. inflation despite all we know, worry about with higher wages, inflation isn't that bad. trump has instarted a trade war yet. he may never. you take that view, then this is just indid i guess shun in the markets that it has sort through -- indigestion. the first scenario i laid out, which i guess you can get from a lot of left of center market types is not implausible, okay? it is not implausible these tax cuts lead to just marginal growth, deficit bros out. people should keep in mind this stuff. david: as a part of that, charlie, it is not all from the left. david stockman is not a left-winger. >> okay. david: nevertheless he does have fears about, he never really believed in the supply side-view of economics that if you cut tax rates you get more revenue as a result of more economic activity. but he does make a good point which is that there are a lot of bonds for sale on the market. you have the treasury will have

to issue a lot of bonds if it has 1000 or one trillion dollar deficit over next year. >> right. david: the fed has to unwind $600 billion worth of bonds. with all the bonds on the market they will have to raise rates in order to sell the bonds, and that is causing a problem, right? >> that is simple economics but people may step up to buy those bonds. david: that's true. >> it may be -- david: buy it with money they make selling their stocks, right? >> maybe. maybe they buy it, maybe the chinese want a safe haven to put their money because globally china has got some issues. david: good point. >> this is a dynamic process, if the economy is growing people have more money to buy stuff. melissa: right. >> i'm telling you this is not simple. there is no magic here. there is no science here. we can only, all we can do give you one side and other side. you know tell you this is what happened in history. i can just tell you that the bear scenario that i laid out is much as it kills me to say this

because i'm a low-tax guy, that is plausible. david: it is plausible. it is take a breath kind of moment here right now. charlie, great stuff. thank you very much. appreciate it. mainstream media is giving market declines a lot more airtime than the dow milestones we continue to hit. this all according to mrc research, mainstream media evening news spent 250 seconds covering friday's market drop, but only 88 seconds covering dow 26,000, and dow 26,000 milestones. we have robin biro. they want to focus more on the trump bad news than on the good news, right? >> of course. that is really interesting, those of us who cover business news and who pay attention to the market, you understand this is just all a part of it, right? the news comes in cycles and once you crest a wave you will go back down, et cetera.

we know this for them to make this the biggest story of the week is ridiculous. everyone watches markets and knows that for average everyday american, why provoke extra economic anxiety that we're doing well? david: robin on other hand, four 1/2% drop is huge. this is big downturn. tough cover it. the question whether they will put it all on trump. whether they put it on the other factors charlie gasparino and i were talking about, what do you think? >> david i think it is blatantly unfair to pin this solely on donald trump. anybody that knows better, knows the president's first year after an election is always continuation basically of administration before it. so now we're starting to see some of what he is, his policies are giving us. but this, just not fair or appropriate to pin this solely on donald trump. what goes up must come down. the only thing i will say is

fair to pin on donald trump, he tossed aside typical presidential caution about cheerleading the stock market. now he is kind of eating his own lunch right now. he set himself up for this. david: right. >> i don't think it is fair he kind of did it to himself. david: kirsten, i have to tell you, robin is one of the fairest people that veer on the left side of the political spectrum i know, for him to say that it is not all donald trump's fault, but on other hand, he makes a point, robin, president touted stock market as one of his successes. ronald reagan never did that he focused on gdp growth, economy in general. he never focused on the stock market. he says the stock market goes up and down, i don't know what moves it. did donald make a mistake focusing on stock market as one of his benefits. >> many people in the administration felt so as well. there are so many indicators can point to thriving or declining economy beyond just the stock

market. as you talked about earlier, so much economic health as perceived by every day americans is how much money they have in their pocket, how much they spend, not necessarily the dow which is made up of top companies, not those that average everyday american is investing in. in that regard, yes, he did make a mistake. once you see the boon of tax reform and other things coming up in the economic begin today, republicans have in 2018 saying you have a more cash in your pocket. see what we've done. we'll see how this is affecting markets abroad why you saw downturns in europe as well. it will be interesting to see. david: not just the story, robin, wonder, democratic party, do we hear from democratic politicians talking about the stock market or is it too early? are they going to hold back on their fire here based on what happened today? >> truly i really hope that they hold back on their fire i said it would be miscalculation,

misstep on my party's point to do that we have to give this more time to see where the market adjust. i'm glad the housing and real estate market is still going strong. david: right. >> and that will help everyday americans. these, americans are just now seeing benefits on their paychecks from the tax cuts across the line. so i think we need to give this -- david: robin, do you think we have gotten over crumb rhetoric on part of democrats with regard to benefits received by middle america? >> i thought we had until paul ryan sent out i am -- infamous about the costco membership, democrats latched on to that. i saw it coming a mile away. david: a lot of democrats feel burned by comments of nancy pelosi and crumbs, referring to significant increases in the salaries of middle america or the bonuses that they're getting.

>> just paint as picture them being very, very out of touch with their constituencies that they lost in the last election cycle. republicans and democrats need to be better on messaging preparing for 2018 midterm elections. if they don't they will make people very upset. david: kirsten, robin. good to talk to you. medical list -- melissa. melissa: joining me on the phone, jack hough. dow jones is reporting vanguard customers were not able to log into their accounts. t. rowe and other investment firms suffering website outages on monday. we had a guest on earlier. struck me as the market was going way down if i was able to buy, people saying they couldn't get in. what do you think about that. >> the selling looked panicky to me. there were big gaps down. dow was dropping by 100 point

increments. i would not be surprised if investors had trouble logging into their accounts. that is kind of action we saw. investors see more, faster rate of hike of interest rates. let's be honest. we've been looking for wage gains for a long time now. corporate earnings will be double-digit growth this year. we'll see fastest growth in corporate earnings since we saw in the great recession. let's keep it on the rise. keep things in perspective here. melissa: that is really true. for the past eight years, can't tell you how many times i explained on the show, someone on the street why you need some inflation. why inflation is a good thing. why it keeps the world going round. we think of inflation as very negative thing. it is part of what happens when the economy is actually growing,

>> that's exactly right. the market goes straight in forever, the interest rates have been so rock bottom for so long that we've come to think of this as normal. it's not normal with a 10 year treasury 5% or 6% is more normal than on a 10 year treasury and guess what if you get bond yield s up that high, then stocks lose some of their relative attractiveness, and maybe the market sells off a bit. it's not the end of the world the economy is strong and getting stronger and there's still plenty of good deals to be found on u.s. shares. melissa: absolutely the other thing people had been saying for a long time was that the market was the only place to make money that there was so much extra liquidity frothing around in the system there wasn't great other places you were making any money off bonds it didn't make sense to make long term bets because you had no idea what was coming next now we know what's happening with tax policy you see the economy expanding the

stock market lost its relative appeal. >> maybe if you tell me i have to take a decline in my 401 (k) the trade-off is we get better wage growth across america i'll take that. we saw a lot of the growth is going to managers i want to see a little more go to the rankin file so we're not quite where we want to be but it's a start. this is what it looks like late in an economic expansion. you start to get a little more inflation. you start to get a little reaction on interest rates. melissa: although, i'm not sure that we've really gotten that expansion. i mean, we have been very slowly sort of going upwards and now it looks like when we hear people make forecasts of four and 5% it makes you fall off your chair because its been so long since we've seen that. >> well don't make me fall off my chair melissa. i'm not quite there. i know. i know all about the atlanta fed

model and i know they're saying 5% is moving toward 6% that's a little bit of a statistical outlier but the consensus of a calmness out there is between 2 and 3% and that's better than we've had and it's good enough i'll take it. you know its been a slower expansion but its also been a longer one and that's been pretty good for workers. melissa: jack hough, thank you so much. voice of reason we love it. david: he is indeed and again, the real question is whether or not people come into the market right now. there's still a lot of cash on the sidelines, hedge fund managers will tell you this. there's trillions of dollars still waiting to come into the market. they've been waiting for exactly this kind of downturn. they're probably going to wait for another couple days to figure out whether this is going to continue but you better believe a lot of cash wants to come into the stock market because they seen the economy booming and they think that as a result of that eventually stock values will increase even more than they already have. melissa: and you think about

some of the things we've heard in the past hour we've heard so many good things one from the hoover institute he was talking about the fact this is wonderful this is why you want to see a pullback if it's inflation it's because we have growth taking off right now. that's good for all of america. people's wages going up the economy is all good news. david: even charlie gasparino. charlie gasparino believes in the surprise side effects of tax cuts he thinks the economy will increase as a result of that revenue will get better so a little bit of relief after today 's massive sell off a super bowl victory by the philadelphia eagles could actually be good news for the stock market. the melissa: stocks go up for the year if the team from the nf c, the national football league conference like the eagles wins but stocks go down if they're from the afc like the patriots take a look at this. the average full year return from the s & p 500 is almost double the performance when an a

fc team wins the super bowl. david: i'm not going to argue with history. melissa: okay. david: it's a little bit of superstition there. bottom line, it was a fantastic game. melissa: i'm going with the hoover institute . that does it for us here is risk & rewards. liz: the dow plunging nearly 1600 points today the steepest intraday point drop in history closing down 1175 and that intra day 6% fall it did rattle wall street and it is the biggest since the august 2015 flash crash. the dow has shed nearly 23 points, 2300 points the last two weeks. all of this amid a historic bull run both the dow and s & p are negative for the year the dow is up 33% since election day. we've got wall street pros for you and whether to buy or sell and it's memo madness. we are on the democrats counter memo watch. a vote could come tonight by the house intelligence committee to release the democrats