-- 101 is -- the russell down 41. nowhere to hide. [closing bell rings] it's a day in the markets if you're a bull. that will do it for the "claman countdown." david: 1000 point loss again. stocks getting shellacked in the final hour of trading. folks inside the beltway spending your money and affecting the economy on main street. the dow closing about 1034 points right now. it may settle even lower. this is the longest stretch of days with more than 500 point swings since the height of the financial crisis. the dow, s&p 500, now in correction territory officially, off 10% from record highs. all of the major averages ending down more than 3%. all three of those averages are now back negative for the year. hi, everybody, i'm david asman. melissa: i'm melissa francis. this is "after the bell." we have you covered on the major selloff. we're keeping a close eye on

capitol hill where congress just eight hours to pass a budget deal to keep the government funded. we are just hearing there may be some big complications. a live report from washington. but first, get a handle what happened, down on stocks. nicole petallides standings by on the floor of the new york stock exchange. and nicole, we really saw the selling accelerate here into the close. tell us about it. >> absolutely. what we've seen last five days, more than 500 point swings. we come in today with second biggest-point move ever in history. down over 1,000 points. today alone, down 4%, 4.15% on thedown, -- dow jones industrial average with more than half the names on dow jones industrial average hit being correction mode, off more than 10% for their highs. dow jones industrial average closed on january 26th at the awe time high of 26,616. a correction mode as well.

bond yields are on the rise. treasurys moving to four-year peaks. that pressured stocks. budget in place moving forward. that is spending over next couple years. that weighs own everything as well. we've seen that is a new range. last but not least, watching some much these movers, including the dow laggards, ge, intel, american express, caterpillar, we're in the thick of earnings season. so many great things to celebrate. court earnings year-over-year on the upside. great tax benefits. the american tax plan. so much in the economy improving, wage growth. nonetheless people have gotten hurt. we're down 10% off the highs. people have been buying. as you look at tech titans, twitter with up arrow there today. they have seen ads on the rise, engagements on the rise. that is up 12%. amazon, facebook, also to the downside, down 4, 5%. i will keep you posted as soon as the news corp earnings come out. back to you. david: nicole, thank you very

much. to trader alan knuckman at the cme. alan, i know you guys focus a lot on commodities but it is all about stocks. did you sense a feeling of panic last couple minutes when it crossed 1000 point line? >> no i didn't. we come down to test the lows. we still haven't taken out lows from monday. these two days, mon and thursday were big point moves, 4% which is manageable. they don't get into the top 20 for all time downward moves. keep an eye where we are. if we hold the lows after we test them, see how the market reacts that will give us much better clue. in big picture, s&p up 70% last five years. 98% in the last 10. david: alan, you guys focus on fed futures, you predict what happens with interest rates. how much does that play into what we're seeing with the market losses right now? >> i think focus moved over. people keep eye on 10-year note. that is 2.85, 2.87%.

that had people spooked. we had new lows, bounced early on but gave up gains once again. the bond market keeps doing nothing but going down and down for almost two weeks that has the markets attention. but in the big picture, moving up from 2.7% to 2.85%, a .15% is not a big deal. i think psychology has shifted. people are fearful of the big picture, the fact is that rates will continue to rise but that's only natural. that has to happen in the long term. david: rising rates has something to do with what is going on in washington. if they're spending hundreds of billions of dollars more, they will have to borrow more, and that affects interest rates, right? >> that and obviously the stimulus from the tax cuts. there are moving parts as far as how it is going to affect the economy but the markets had priced in a lot of earnings growth. if you look at corporate profits nothing changed there. david: that's true. >> they will make a lot of

money. that is what drives the economy. not economy but corporate profits. david: good stuff, alan, appreciate it. melissa: kevin kelly from benchmark investment, heather zumarriaga from vision forward. heather, let me start with you, at least two major things are driving this selloff. one is the fed chickens coming home to roost. we had lose monetary policy forever and ever. looked like we would never pay for that money. right now the prospect of interest rates going up is a having a huge effect. also all the spending going on in washington also having impact on interest rates. all that pressure on the treasury putting pressure on stocks, what do you think? >> you got it. there is no coincidence the start of the selloff on monday happened on new fed chair jay powell's first day after yell en. melissa: it is not a coincidence. >> he is supposed to continue janet yellen's policies. it shouldn't be a surprise to the markets. the fact is the certainty is not

there anymore. we don't have a floor in the market so to speak. they used to call it the greenspan put. then we had a yellen put. meaning if the markets were to go down the fed would prop them up with all easy money. we have printed over $12 trillion. all central banks around the world, party is over. there is no more subsidy in the market. i know corporate earnings do matter. i know the tax cut is huge. guess what, this selloff started monday when new fed chair jay powell is in office and that is no coincidence. melissa: kevin the fed punchbowl is gone, obama punchbowl is gone and that is what reaction we're seeing. what do you think? >> that's a good point. the fed artificially suppressed interest rates and volatility in the markets. we're seeing it come back. this is normal thing. the fed basically blew out everybody's expectations when it came to chasing returns. here we are, we're trying to balance risk, figure out what is

going on. it is important to note when you see a selloff like this one of biggest buyers of stocks is not in the market but companies themselves. there is blackout perdue to earnings. melissa: good point. >> when the blackout period is over this is your best chance to see your stock as the cheapest in two months. melissa: has to do with growth in the economy. tax cuts, it is all good news. some of those the talk of growth what kicked off fears about interest rates. at same time, heather, if interest rates go up, does it eat into those new corporate profits for tax cut because the cost of borrow something higher? or do they have enough cash, not that big of a deal? >> the cost of capital will go up, and dollar is weaker as well. i don't think inflation is sparked by wage growth of 2.9%. i think that is more after tight labor market issue. melissa: yeah. >> the market is weaker from

systemic standpoint. not just analysts and investors but president trump himself is tweeting, hey, good news in the market is now bad news, and bad news may be good news. we were there a few years ago when every time the fed said that will be supply, more easy money to the markets and here they are, taking away the punchbowl. now potentially good news for the markets at leave is bad news right now especially today down over 1000 points. melissa: kevin, the result, the end of that whole conversation, what are the chances that market stablizes? it adjusts to the idea of a higher interest rate market balanced against backdrop of a stronger economy? maybe the government is spending a lot more but you heard our own blake burman ask at the press conference, what about the government spending so much, the response was the white house comes back with their own budget on monday. we're not spending like drunken sailors or whatever. >> sure we are. >> there will be end in sight.

melissa: yeah, i know. what do you think of my goldilocks scenario i am trying to paint there? >> i love your goldilocks scenario because one of the things you need to consider we haven't had 5% move for over 410 days and we're finally getting it now. that is because the market is trying to recalibrate what earnings metric we'll be at. we were trading 20 times earnings. then 17 earlier this week. the market is trying to assess what is right multiple evaluation for this market given two rising costs are embedded in the e in pe, that is rising labor cost, rising debt costs. the market is recalibrating risks right now. melissa: heather, what do you think about that. >> i think markets recalibrating risk. pushing capitulation into the close. when we broke through monday's low, i think you ethe algorithms, algorithmic trading, man, put it simply for the retail investor. melissa: computer.

>> computer programs, yes, you have rules-based strategy set up. one may be certain less in the s&p 500, price of oil or volatility index, better known as the fear gauge. when we hit those levels you have these computer programs, computer models step in. there is massive selling. these models react a lot quicker than the retail investor can. my best advice for the retail investor to be very cautious here. i think there is more downside to come, melissa. melissa: it creates volatility even though in the last hour we heard chairman emeritus of virtue say that wasn't the case. seem like it is. david: put the dow number up there again, this is now officially the second largest point drop, put the dow number up there, the second largest point drop in history of the first was monday. that was down 1100 points. now it is down 1032, far from being the greatest percentage loss. i believe that was

october 19th, 1987, when it was 22% loss. this is a 4% loss. this is second largest. in this week we had the first and second greatest point loss ever. this is historical week. so, a lot of it depend on what happens in washington. right now they're trying to figure out whether or not this budget deal will work or not but would a government shut down be better than passing a bloated budget? senate lawmakers delaying the budget vote after senator rand paul's objections. he objects to all the extra spending in the budget bill. our own adam shapiro live on capitol hill with the latest on that part of today's market saga. hi, adam. >> david, we would have had it voted upon in the senate, and approved over its way to the house. it would take a couple hours tonight. but we're in a hold because rand paul, senator from kentucky, wants there to be a vote on budget caps. that is what is being blown out by the way. budget caps first put in place

in 2011 are being blown out so at the can raise military spending as well as domestic spending. here is what rand paul's spokesperson tweeted not too long ago. he said quote, all senator rand paul is asking for a 15 minnesota on his amendment to restore the budget caps. he is ready to proceed at anytime. but then you get senators like john cornyn who is the whip in the senate, who is taking a count here saying look, what are you doing? take a listen. >> they want to cut the military. do they want to deny states like mine the disaster relief that have been promised? a lot of people are waiting a long time, not even back in their homes. and so, i'm going to support, support the deal. it is not perfect. it is far from perfect but i think it is necessary. reporter: so, david we thought we would be talking to you right now about what is about to happen in the house because you have the issues with nancy pelosi, one of the people who helped craft this deal in negotiations saying she likes

what's in it but is going to vote against it when the house finally gets it because she is holding out for an immigration deal from paul ryan. we're in flux. rand paul right now holds the keys. eventually they will get to this vote. could be as late as 1:00 a.m. tomorrow morning. back to you. david: adam, thank you very much. how much is government spending plans hurting the market? moody's john lonski joins us on the phone. john, there are a lot of traders out there i would guess who would much rather have a government shut down than rather have budget-busting bill. >> i don't know about that that would add to -- david: john, think it is important point i heard it over and over again with traders i talk to. every time the government shut down, the market may react to it dramatically. it very soon comes out. when the budget is as deficit-busting as this budget is, that is something that stays with us for a long time. go ahead.

>> problem the government shutdowns are only temporary. maybe what you need is ernest effort being made to perhaps reduce federal spending by say, 1% across the board. that would to over well. treasury bond market, in turn that would benefit the equity market. david: but the bottom line is, looks like it is not going to happen, john. why i think the market is going to keep going down. >> it is going to keep going down until we finally reach that point where a lower equity market drives treasury bond yields sharply lower. david: here is the key yes. question, but i don't don't have a clear answer for it. what is that point, john? >> what we're looking at another 5% drop bit overall market. that could be enough to force somebody on federal reserve maybe some type of statement showing that the federal reserve is not going to sit on its hands if the equity market continues to move lower in response to

higher treasury bond yields. you know what the fed could do? they could go ahead and downsize their scheduled reduction in holdings of treasury bonds. that might relief some of the worry whether or not you have enough buyers for treasurys at current interest rates given the combination of treasurys being released by the fed and -- david: that is very interesting suggestion. we did have a statement from one fed member, bill dudley, who came out today and said this is small potatoes. that was before we had a 4% plus drop on the dow. do you think we have another 5% he would change that tune? >> you drop the market by another 5%, small potatoes turns into a hot toe pate toe -- potato the fed will want to get rid of quickly. they responded in comparable manner in 1987 amid very strong profits growth. don't be surprised if the fed is

compelled to change their strategy toward less accommodative monetary policy. david: not just the fed, john. as you well know it is happening all over the world. central banks everywhere are unloading the stuff they bought up over the past eight years. so do you think, if there is such extraordinary effort as you mentioned, the fed says we'll not sell off bond as much as we thought, you think there will be coordinated effort worldwide in that regard? >> it could be. not so much the fault of the federal reserve. i point my finger at the bank of china where debt growth and monetary growth has been running well above 10% for the longest period of time. they have been flooded with liquidity in china. what do they do? they buy bitcoin. they get into these base metals. price of copper. sharply higher. something has to be done with monetary policy abroad.

david: john, we got to go, but before you go, i want do ask, we don't want to let the guys inside the beltway off the hook. they do have an effect on the market. people are afraid rather than shrinking the government, it will get bigger, we'll all have to pay for it more. if there is no budget deal tonight, would markets respond negatively or postively? >> negatively. that would be the initial response. the thought would be, negative response will force people in washington to come up with some sort of agreement to at least mend matters temporarily. david: if mending matters means spending more money i'm not for that. melissa: thank you. david: thank you very much, my friend. melissa. melissa: here with more from the white house is blake burman. blake, i heard you asking very important questions there, the one we care about the most, what the heck is up with all this spending. i'm not sure that is exactly how you said it. reporter: something like that. melissa: the market is asking

the same question. what was the answer? reporter: we spoke with the principle deputy press secretary raj shah his first time behind the podium filling in for sarah sanders. i thought there were a few headlines or break it down if a few different ways in our back and forth about the deal up and capitol hill and spending in general. shah saying the president is indeed concerned about spending and the president has been concerned about this for years. you know the projections are u.s. will have to borrow roughly a trillion dollars next year or this fiscal year rather. now you have this 300 billion-dollar spending bill, if passed over the course of two years. so i asked shah what is the president's plan to pay for all of this? is it indeed economic growth? he said that economic growth is a lot of it and then shah also saying that next week they're going to release their budget and it will address deficits. here is part of my exchange with raj shah just moments ago. you will still be running deficits at that point and now

you have this 300 billion-dollar tab to raise. is it just economic growth, is that the only way -- >> economic growth is essential to cutting deficits and to restoring fiscal responsibility. again the budget will outline a lot more detail. reporter: shah was asked about this 1000-point drop we saw at corner of wall and broad today. they have been pretty consistent, david and melissa in white house as it relates over to the last week once this started on friday. they're trying to take a step back, trying to point everyone to the bigger picture of this. their stance is, they're looking more so long-term and they say the fundamentals of the economy are strong. the issue of course they're dealing with the president likes to talkthis when things are going good, just like he tweeted about yesterday. david and melissa? melissa: blake, absolutely. thank you so much for that. so, david, just to recap, some big points here. we have the economy is froing growing very well, we know that

one of the things you talked about there, all liquidity floating around. cryptocurrencies when people are going out betting on bitcoin, part of the analysis, wow, there is way too much liquidity out there. when we saw various art pieces sell way above when we thought, you heard smart people in new york, in the markets say, yikes, another sign there is way too much liquidity out there sloshing around. now we're seeing a lot of that getting soaked up. a lot of people said the chickens were going to come home to roost in terms of all the money out there and what the fed has done. that is a lot of what this feels like right now in addition to the spending. david: speculation is usually a sign of too much liquidity, absolutely right. here is arizona congressman andy biggs. he is a house freedom caucus member. when you think of too much liquidity i think too much of government spending of anything. there is far too much liquidity inside the beltway. it is our money you guys are floating in and that is what is ticking us off. just when we thought, we thought

you fees were getting things in order in terms of deregulation and tax rates, we get this bloated budget and wall street reacts with 1000 point losses on the dow. you understand why, right? >> absolutely. we promised smaller government. this is actually doing an about-face, complete u-turn on that. so i get it. i get the concern that everyone has. david: here is really key question. because we face another one of these government deadlines or shutdown deadlines this evening if there is not a budget bill passed. i'm wondering a lot of folks are wondering what is worse, a government shutdown, a partial government shut down or blasting a bloated budget that we have to live with for months if not years? >> well the reality is, it is not a full government shutdown as you rightly note. i don't think it's a shutdown. it is slowdown what we're doing in government. i would rather see that quite frankly, taking adding to what is already projected to be a

trillion 200 billion-dollar structural deficit for this year. 20 1/2 trillion dollar national debt and basically also saying we're going to allow budget chairman from both parties, both bodies, the senate and the house to be able to deem what the budget will look like if we don't pass another budget. that is problematic. this whole thing is floated and it is quite frankly out of control and that is not why republicans have control of both bodies. david: we have you guys in the freedom caucus delivering your message which is this budget is wrong for a very different reasons than why a lot of democrats are saying this budget is wrong. we saw of course nancy pelosi yesterday with her eight-hour speech. she's against it because it doesn't have anything on daca on it or anything about daca in it. are the nays, do they outweigh in any way, shape or form the people who are for this? >> well, the fact that things seem to be being slow-walked

over in the senate, we're not getting it back just yet, kind of indicates they don't maybe have quite enough votes. i personally believe you will get the votes out of both bodies on this deal but it will look very different as you're going to get cross-sections of republicans and democrats voting against it and some voting for it. david: will the president sign it? i mean the president has been one of the chief preachers of government, smaller government, stronger private sector? this goes in exactly the opposite direction. is this something the president can sign? >> i think he is going to sign it if he gets it. that is the signal that they have sent. and i, i don't know when we'll start cutting government. you know we sent a cr over there earlier this week that would have maintained levels of domestic spending, discretionary spending but it would have funded the military for a full year. i don't know what happened from the house to the senate that we come back and we've got this

massive increase in proposed spending. so, i think he is going to sign it if it comes over because i think he is really concerned with the military spending but there is so much in addition to that in this -- david: there sure is. just last week the biggest downdraft in the market from where we were going which was straight up for several months, came because we heard the government will have to borrow $1.1 trillion because of new spending. this budget makes it even more than that. when the government spends that much in deficit, they have to put bonds on the market. the only way the market can sell all those bond is by raising rates that increases inflation expectations even more. there is a whole, there is a whole snowball effect what's going to happen. i'm just not sure anybody inside the beltway has really real thought that through? >> there are people thought it through, freedom caucus, a lot

of people voting no, but let me tell you, we hear $300 billion increase above the cap, they're not even including the disaster relief which is projected to be almost another $100 billion. it is really closer to 4 to $500 billion. that is adding to the gloom that i feel about this. david: you know what kills me is, it sounds so worthy, disaster relief? >> yeah. david: child health care, whatever, they put all these wonderful sounding names, how can you be against that, you must be hard hearted person against the wonderful government programs, but you look at waste and fraud in these programs. i'm wondering only possibility of a saving grace here that the president can do with these programs what he did with deregulation. that is, without going through congress, to look at each particular program, medicaid, medicare, cut out waste and fraud. you could cut out hundreds of billions of dollars if you do that. is there any will to do that? >> well you define what i consider to be the biggest issue i've seen since i been here, the

lack of political will because we know in the current disaster relief going on now there is fraud like crazy of the we have seen reports of this week a single person company receiving 157 million-dollar contract to provide 30,000 meals offer something like that. and they, provided just a fraction of that. and i just find myself saying, is government, is so big now, that it is very difficult to put the squeeze on it. we have got to do that if we're going to, if we're going to save this country for our children. we don't want to be bankrupt. david: it's a good fight. good luck to you fighting the good fight. andy biggs thank you for being here. melissa. >> thank you. melissa: breaking news, news corp reporting second quarter results. let's go back to nicole petallides with numbers on this one. nicole. >> we're talking about news corp, dow jones, "wall street journal," "barron's," harpercollins and

"new york post." earnings per share a win, 24 cents beats estimate of 19 cents. revenue 2.18, a beat there as well for the estimate. that is a beat on both the top and bottom line. strong paid digital subscriber growth that is some great news there. the other key point here, 29% growth in digital-only subscribers at "wall street journal." here is a big one. circulation and subscription revenues increased 6% primarily due to healthy contribution from dow jones. so that is also key. big picture, the other factors that go into this quarterly, ad revenue, 702 million. also the publication revenue, that comes in at 469 million. they also benefited from foreign exchange fluctuations. that was some good news. and continued growth in digital real estate services. so here is look at news corp. can't quite see what it is doing after-hours but a beat on top and bottom line. virtually flat for this year, 2018.

over last 52 weeks it has been stellar performer, up 32%. winner on top and bottom line and seeing growth in circulation, subscription and digital which is key. back to you. >> nicole, thank you so much. let's get back to the markets right now. the dow plunging 1033 points, the second biggest drop in history as interest rates continue to rally. joining us now on the phone is brian wesbury. he is the chief economist at first trust advisors. what is your take in all of this? what is causing big moves in the market. >> hey, melissa. great to be with you. there are probably 50 things. the most important we haven't had a correction in almost two years. i think two days short of two years or something like that. and, and as a result once that happens, once we get one, people start coming up with reasons

that it is happening. everyone of those reasons for the most part are that the world is coming to an end one way or another. so then it starts to feed on itself because there are a lot of people that got into the market because it was so strong last year. because they thought everything had changed, because they finally thought there was no risk in equities after two years of no correction. what they find out, there is rick. there is always risk. but i will tell you there is no fundamental in my opinion reason for this to happen. it's a correction. and corrections are designed to scare the not out of people, to shake out the weak hands. melissa: i love your explanation and i would like that to be the case. let me give you challenges to that. two bills are coming home to roost right now. one of them is easy money around

all over the place. we had a new fed head just come in and we're seeing interest rates go higher. we know there is way too much cash out there. you can tell by the way people behaved with it. taking crazy bets and interest rates were so low. whether cryptocurrency or see bitcoin, crazy prices people paid for art, made people nervous there is way too much money out there. the other factor wild spending going on in washington. finding out today we'll see another $300 billion in spending potentially. the only way republicans and democrats come together is spend your money. what do you think? >> yeah, sure. well first of all let's deal with the interest rate stuff. i'm going to tell you, i do agree that bitcoin, bitcoin is a bubble. i believe bitcoin is going to zero. people buying it on hope and prayer somebody buys it at higher price. the stock market is not a sugar

high. if you look back over this last nine years it was not low interest rates. it was not the fed that caused the market to go up. it was earnings and in fact right now, right this very second on 2018 earnings the s&p 500 is trading at 16.8 types those earnings. that is a cheap stock market. so you can not make the case that the stock market is overvalued because of cheap money. really when you go back and look, it is because of earnings. now the second thing i'm worried about, yeah, spending too much. i thought at the were going to drain the swamp and we're not. we're actually filling it up more and it is just amazing. my favorite line about government is that it doesn't matter who you vote for, the government always wins. melissa: yeah. >> and that's what we're seeing right now. yes, we have did he regulation.

yes, we have cuts, no, spending something not being cut. melissa: let me ask you one more question before we have to go. the key thing we've all been repeating since this downdraft started is that stocks are getting cheaper but profits are going up. the concern with that is that our interest rates going up too fast, will that eat in the profits that they're making and profits are based on growing economy, more money out there to consumers which are all good things and those big tax cuts from the government, but do rising interest rates, how much of that gain in profits do rising interest rates eat up? >> i personally think very little. remember, corporations have record cash on their books. you could look at it the opposite way. banks are going to make more because interest rates are up, and companies with cash on their books will earn more on that cash.

companies borrow. when their bonds rolling off they will have to pay higher interest rates. these profits that we've seen in the last eight to nine years, contrary to a lot of people's conventional wisdom they are not engineered profits. these are truly, real profits. apple didn't engineer its profits using financial gimmicks. it wasn't the low, i have never believed this is a sugar high. melissa: okay. >> but this is what corrections do. they make people question and then they get fearful and then once everybody sells and they're finally convinced it is all over, it will start again. it will start again. melissa: yeah. brian wesbury, glad you could talk to us today. thank you. >> hey, melissa? melissa: yeah. >> my forecast for the s&p 500 at end of this year -- melissa: let me write it down. >> 3100. so we still think at the end of the year we'll end up with 15 percent gains in the market. melissa: we can't wait to have

you back between now and then to check in on the forecast. david: we have the videotape, brian. melissa: appreciate your time. david: by the way, you and he both touched on the same thing john lonski did, what the fed may do in reaction. if we see another 5% drop. we saw 4% today alone. if we see another 5% drop by tomorrow or in the short term we may see the fed say, okay we'll not dump everything all at once, get interest rate hikes, three a year. whatever. melissa: that would be, there would be a good reason for that. when they're talking about the taper, getting rid of what is on their balance sheet. if there is no appetite from buyers in the market to buy those products there is no reason for them to go out and sell it. that is what we're seeing. when you see what is happening in interest rates, people saying listen, i don't want to buy anymore bonds. fed, don't offer us your bonds. we don't want them. david: let's head back to the floor of the new york stock exchange. liz claman, host of "countdown to the closing bell" is watching it unfold as she has been all day, what is going on?

>> when you say unfold, i'm glad you used that word. they peeked open a little bit of the envelope waiting for acceptance letter of which college you got into, 3:44 p.m. eastern time, 50 seconds they ripped envelope open. it was peek, peeking, the big rip. traders are telling me in the last 10 to 13 minutes, that is when it got a little panicky. the rest of the day was seemed to be orderly move to the downside. look at final move and volume in particular what we saw. that 1.2 billion shares moved on the floor of the big board, at new york stock exchange on the big board but this 4% loss, while it looks nerve-wracking, when you look at the point loss of 1032 points, the second worst loss ever, it doesn't make the top 150 of losses in percentages are concerned. that to put it in perspective. it was 156.

it is way down the list of worst percentage losses. that said i know it doesn't feel good for people watching their 401(k)s or 529 plans for share kids. i told but the dow. s&p 500 clean 100 points, just lopped off the s&p but the nasdaq, that just got crushed, down 274 points. that is 4% chop for the nasdaq. david, i know you love to talk about gold, i worked with you all those years, you love to talk about gold, barely a blip in the heartbeat. david: i know. >> not even six buck as troy ounce. kind of trade last 14 minutes of trade. david: makes you hopeful we may get through this if there was that much rush it safety i would think you would see gold higher. we've seen it down for the most part last couple days if anything. liz, great stuff all day. thank you very much. what this market could use right

now, melissa and i agree on this, spot of economic growth stimulated by tax cuts, that house ways and means committee chairman kevin brady was speaking. take a listen. >> the stronger our economy becomes, more normalized our fed policy becomes, stronger we are long term. tax reform created a new sense of optimism and a lot more investment here in the u.s. david: so is it possible that we could get another shot of tax cuts particularly in the individual side? charlie gasparino has been looking into this and he joins us now. charlie. >> the market started going down when that guy started talking. david: that's true. it was down 700. ended up over 1000. >> the larger economic debate right now whether the trump corporate tax cuts, and tax reform as a whole which has tax increases whether that is going to increase gdp enough to

essentially pay for, pay down the deficit. that is why you're seeing, wild swings are because of a lot of technical factors, including etfs, you name it. program trading whatever. but underlying anxiety is that this budget deficit this tax plan will not expand the economy that much or as much as they need. higher interest rates we'll have to print more, sell a lot more debt. but the republicans are talking about basically the market deal what they didn't do on the personal side. they did not have a decent personal income tax cut. some people who don't pay a lot of personal income taxes get a few bucks back but a lot of people are getting tax increases because they took down the top rate a couple notches and closed all the loopholes f you live in new york, california, high-taxed states, states with high income taxes and high property taxes you could see a significant tax increase in april. what we have right now are

republicans just talking in broad strokes about lowering personal income tax rates a lot. i don't have, based on my sources i don't know exactly how much they are talking taking it down, it went down from 39.5 to 37. are they talking about just that one, bringing that to 35? but they are talking about taking those rates down. i just wonder what this market turmoil will do to that debate? they felt like they had wind at their back because, you know, they beat the dems on the shutdown and everything. there is a lot of talk among kevin mccarthy and leadership doing this to their members. by the way a lot of republicans like this but i tell you i don't know how that fits into this market. the underlying anxiety about this market is the deficit blowing out because you just did a $1.5 trillion largely corporate tax cut that will not produce, some people believe might not produce gdp growth needed to pay it down. i think it will help. that is me. but as you know, we've had this

conversation before. david stockman down believe it. a lot of smart people doesn't believe it. david: he didn't believe it when he was working with reagan. you put your finger on it. we have to move on. we have so much breaking news. gary cohn and president trump talked about a phase two. that was before the markets went down. that was a week ago. charlie, good to see you. thank you very much. melissa. melissa: here to react is ned ryun. gop strategist, former speechwriter for george w. bush. founder of american majority. thank you for joining us sir. >> absolutely. melissa: what do you think is going on in the market? is reacting to all the spending? >> that is some of it. melissa, spending in d.c., you think what we spend most of our federal money, 70% is entitlement, welfare, debt payments. we're talking about spending more money at some point. we have to have a serious conversation about d.c. spending habits.

at some point you actually will have to figure out how to pay for things. and i don't know if we have enough serious conversations with people right now between republicans and democrats in d.c. what the future looks like. at some point you have to pay the bills. we're at what, 20.6 billion in debt. that is pretty staggering figure, what that all entails and how we get out of that hole. the other part mystifying, melissa, the 2000, the tech bubble burst, based on pipe dreams. 2008, based on mortgage crisis. interest rates going up because of conservative fed and returns will be down, therefore stock prices going down based on returns are down. i'm like, fundamentals when i'm looking at these things. we had 50,000 more jobs in january. wages are up, highest they have been since 2009. you're seeing small business saying we'll take compensation up to rates we haven't seen since increases since 1989.

i think all fundamentals are good. we have a situation in d.c. at some point we have to deal with. i'm not sure republicans or democrats have the courage to say we have to deal with social security, medicare, medicaid, because at some points those things will start falling apart. you know, looking into the future, i have four young kids, what does their future look like if we don't get our debt under control? i'm not sure we have political courage to deal with it. melissa: no, i don't think we do. maybe some people thought if we drained the swamp that might happen. but this idea they signed up for all the spending right now, makes you think there is officially no one in washington that has interest in curbing -- let me go back to the first point but talk about the fundamentals still being strong. that is for sure true. only challenge, if interest rates go up how much does that cut into profits companies. but we had guest after guest come on say you make it up

everywhere else. banks are making more money because interest rates are higher. everybody is earning more money on money they have sitting around if interest rates are higher. you spend more to borrow you make more everywhere else it balances out. maybe this is about soaking up the ridiculous liquidity sloshing around everywhere as a result of the fed. we have seen that in wild bets. what do you think? >> i talked to professional investors. they started moving into hard assets. there is too much easy money. at some point the train will stop. interest rates will go up. market will correct itself. so i asked them, are you seeing anything that i'm not seeing in just the fundamentals of the economy, jobs wages? nope. just course correction. these things were bound to happen. we don't think there is anything fundamental wrong although they did tell me, they think there will be more of a market correction moving forward. melissa: yeah. >> i want to go back to this really quick.

we're not actually draining the swamp. we talk about spending increasing, the only waa you drain the swamp you have to break apart the administrative state which is the foundation of the swamp. i don't see political courage on either side of the aisle to say, you know what? we don't have to have two million federal government employees. we don't need 136 billion in spending on government employees. why do we have 430 departments, agencies, subagencies right now? that is not what we envisioned for our government. we have to start breaking that apart. we start breaking the swamp. we have future conversations about what government spending looks like. until we break apart the the administrative state. melissa: ned, i will start crying soon. you will make me cry here. >> i'm sorry. melissa: we all know it's true. anyone who can do math knows what you're say something absolutely true. you're right. i don't see the political will to do it. maybe when the wheels fall off they will be forced to do it. there you go. last word. go ahead. >> no. i hope that some people will start to make this a campaign

issue for 2018 so that republicans can say, you put us back in the majority in 2019 we'll take a serious run at entitlement reform. we'll take a serious run how do we shrink federal government employees, government spending, shrink the size of departments an agencies in d.c. that is how we make real progress. melissa: second one i can see doing. first one is much tougher. ned, thanks for coming on. appreciate your time. david: mount him on top of the u.s. capitol. give him a bullhorn. let him go. melissa: yell at everybody. david: joining me by phone, dominic tavella. diversified financial found irand president. dominic, very simple, are you buying or selling? >> david, how are you? we actually did a little nibbling today. if this caught anyone by surprise they are weren't looking. the average client, going so much up, when is it finally going to come down? didn't have to come down. but the fact it did gives us a

buying opportunity. david: with were talking to gasparino all the money coming back from overseas and money freed up as a result of all taxes whether that will go actually into productive uses in expanding companies, in buying for cap-ex and buying new factories and et cetera. do you think that will happen? if so, when? when will that affect the market postively? >> that will take time. that capital coming back into the united states is going to take some time. getting it into the economy will take some time. if you focus just on that one theme alone, these companies have to do something with that money. so companies are going to increase dividend. maybe we should look at companies that are increasing dividend use that as buying opportunity. mid-cap, small cap stocks are acquisition targets. they have to doing something with the money.

by a smaller competitor company to add to earnings and bod line growth. this gives an opportunity to rebalance the portfolio and acquire good quality assets. if you're putting money to work next week, i have no idea what is going to happen. when you look how well this economy is doing, how happy s&p has reported earnings of close to 15% growth. david: right, right. >> positive gdp i can go on and on forever. david: if it was just for those factors alone i would say what we're seeing now would be historically speaking a blip. that is something that happens, corrects itself in couple weeks. we're back to that great run-up we've been having since the election. however there are two things that auger against that. one is the u.s. budget, government taking a lot of money out of the private sector, putting it into the inefficient bloated government bureaucracy.

number two, unwinding all the stuff central banks around the world have done. buying up bond, buying up in some cases stocks. and they're unwinding that putting it back into the market. those two factors make this more than a blip. what do you think? >> i can definitely agree with what you just said. this is happening intentionally. the market is resetting the premise we're operating on for quite a few years. so it is natural an normal and quite justified that we take a step back, take a breather, that, in my world means you liquidate. put money on sidelines. see how it all unwind. if we're looking at this picture a month, two, three, down the road. i don't know what is going to happen. you know something, david? you and i sat on set in 2008, in october. you and i watched on that day, i have a picture in my office, so i never forget. that day the market was down 733 points. you know what the dow was on that day, david?

you and me? 8577. if we had sold out on that date, we would have missed a 20,000 point rise in the markets. david: it wasn't until march of 2009 that i went in and bought my apple. so it lasted a couple months. there we had underlying problem, the subprime interest. there were all kind of props -- problems we don't v dominic tavella. glad to have the picture in your office. i'm proud of it, melissa. melissa: brace yourself. the rest of media went crazy on monday when we saw the first 1000 point plunge. what will the spin be like tonight, tomorrow? let's bring in joe concha, the sky is falling, panic, this is president trump's fault i can feel it, what do you think? >> you know, melissa, the news is bad it is trump economy. what the news is good, a holdover, carryover from the previous administration. i'm more our media newscast,

evening newscast, 25 million people still watch abc, cbs, nbc. melissa: they do. >> eight, nine million around there for the three. they need to educate their ought yenses who tonight and not sell fear. liz claman had a great stat before. she said that this is not even in the top 150 of drops from a percentage percentage. this is 156th ranked. so yes, you can either sell this two-ways. second biggest drop ever in terms of points or 156th in terms of percentage. so, we talked about 2008 before. david just did. compare the fundamentals then and now in terms of gdp. in terms of our unemployment being at 17-year low. melissa: profit growth. >> profit growth. wages up 9% year-over-year. consumer confidence at all-time high. make sure that if you're reporting this, bring in all those factors. bring in the fact where the dow is and obviously at all-time high. it has to correct itself in

certain capacity, but don't sell fear. i think if you watch it night you will see more fear than education. that is one problem with our media, melissa. melissa: dr. joe concha, thank you for that prescription of sanity. we appreciate it. david: wonderful guy. the budget is facing another roadblock. it is not a done deal yet. senate lawmakers delaying the vote as the clock ticking on a government shutdown. stay with us. #stuffynose #nosleep i got it... #mouthbreather yep, we've got a mouth breather. well just put on a breathe right strip and... pow! it instantly opens your nose up to 38% more than cold medicine alone so you can breathe... ...and sleep. go to breatheright.com today to request a free sample.

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david: the very latest on the budget voting. chad pergram, fox news senior capitol hill producer. chad, looking at picture of rand paul. quickly, we only have minute 1/2 for this. what does he have to do with this whole process? >> he is the holdup. you can make the sunrise in the west if you get unanimous consent. senate was trying to get

unanimous consent to start the voting process to break the filibuster on budget deal, and vote on the budget deal 1:45 this afternoon. 99 senators wanted to make the sunrise in the west. guess what? rand paul is standing in the way. he says wait a minute. we have broken budget process here. he wants a vote on these increases in the sequestration spending caps which is the lynchpin in this deal. all he wants is vote up or down. unclear if he gets it. david: very quickly on the house, freedom caucus, we had a freedom caucus member on earlier. we understand and support his reasons for being against the budget. it is bloated budget times 10. do they have any chance or not? >> yeah they absolutely do. i talked with a senior source before coming on the air. more than half republicans will vote for this. they hope to make up difference from the democrats. that is the problem, because you have some democrats who are not willing to fill the gap there. nancy pelosi minority leader being a no.

joe crowley the democrat uk caucus leader from new york are being a no. how many democrats are willing to fill the gap when you have defections from republicans when there is no agreement on daca. some people think this could be in question later tonight. there could be a lapse in appropriation. first they have to get it through the senate. if rand paul sticks to his guns, they might start the procedural vote until 1:00 friday morning. david: chad, thank you very much. i hope chad will bring beer along with him. that is something you watch with beer. melissa: volatility dominating wall street. what you need to know before the opening bell tomorrow. ♪ from a cardiovascular event, like a heart attack or a stroke. that can't be true, can it? actually, it is true. :

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soi want you to pick a newr truck for your mom or dad, knowing that they could possibly pass it down to you one day. oh. cool. but before you decide, you should know that chevy silverados are the most dependable, longest lasting full-size pickups on the road. which means that ford f-150s are not. (giggles) which truck would you pick? the chevy. there you go. boom. that was obvious. plus it looks cooler. no doubt about it. now they know what to get me. . >> wild ride for stocks. the dow on track for worst week since october 10 of 2008. the longest stretch of 500+-point swings as well. >> so will the crazy market

swings continue tomorrow? the last trading day of the week. anything can happen. last friday was wild. keep it tuned to fox business, got you covered what you need to know for your money. lot of people taking their money out of the bank and putting it into stocks. >> i'm exhausted but i'm going to watch you on dobbs later. here's "risk & reward." liz: the dow plummeting 1032 points. the blue chip index in correction territory, down 10% from recent highs. so is the s&p. the dow is on its track for worst week since october 2008. fears are growing that interest rates will rise and drag down economic growth. now this is the fifth day in a row of 500 point intra-day swings. so what should you, the average investor, be doing? where are the bargains? good questions, we want to cover at this program and this network. we're going to give you calm in a te