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tv   Varney Company  FOX Business  October 10, 2018 9:00am-12:00pm EDT

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woman believes in self above and beyond everything else power enrichment. >> pay 800 dollars to see her and bill speak charging. >> flipping tables screaming at husband would i pay to see that call long. >> dagen mcdowell -- have a great day "varney & company" begins take it away. >> ill charles payne for stuart tremendous stories including hurricane michael expected to make landfall in florida's panhandle this afternoon as a category four storm, 140 miles per hour winds could bring a 13-foot storm surge along with it we have a live report from the storm zone coming right up, and we can initially put sears on deathwatch has begun to process to file for bankrupts "the wall street journal," reporting that a filing could come this week, shares of the stock plummeting, this morning. and senator rand paul warning of violence in the wake of the
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brett kavanaugh confirmation says, he is worried that someone is going to get killed you will hear it in the head of rnc, a you huge day big show. "varney & company" starts right now. ♪ ♪ . >> futures sliding since the ppi number came out inflation read wall street nervous now want to shift gears, go to this hurricane. ashley, do we have the -- ashley: yeah. maybe this afternoon, sometime between 1 and 4 p.m. make no mistake, this is an incredibly dangerous, massive storm. it was supposed to be maybe a cat three when it made landfall. as you can see, a category four, top winds of 145 miles per hour. this really took a lot of people by surprise, and this is going to do a lot of damage.
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at 145 miles an hour, wherever it comes across homes if it continues, roofs are going to be blown off. storm surges now they're saying maybe up to 14 feet. and what's even more dangerous other than the fact of the winds and the storm surge, it's going to hold together pretty well. by the time it gets in to tallahassee and moves into southern georgia, it's still going to be a hurricane. and it's going the finally move quickly off to the northeast as a tropical storm through the carolinas, who need no more rain, as we know, but this is a devastating storm. the barometric pressure in the middle of this storm has dropped to levels that are taking everyone by surprise, and that means it's getting stronger. could it be a cat five? it could, and that that's what's concerning. elizabeth: is that a what makes this storm so unusual, that the barometric pressure p comets to drop? ash. ashley: yes. it's getting all this energy from the very, very unusually warm for this time of year waters of the gulf of mexico. this is incredibly dangerous
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storm, and if people haven't moved out, they're going to have to hunker down, and it's going to be very, very difficult to ride out. cals charles and that the's a big concern. ashley: exactly. charles: let's go to jeff flock, he's in panama city beach, florida, right now. jeff, just how bad is it right now? what's your sense there? >> reporter: well, at the moment, you know, we're still a good eight hours away from landfall, and i want to take you down to beach as we talk. this is the streets of panama city maybe you see deserted. i want to show you what the beach looks like. this is the way we've got to sneak down to beach, so bear with me as we walk. ashley makes a great point. you know, we made a big deal out of florence, oh, it's cat four out of sea. well, it came in, it was a cat one. we're getting conditions now that respect even yet cat one conditions. if this comes in as a cat four, it's going to be something to see. this is where the storm surge has already begun.
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not a good idea to come down to beach if you're just goofing around down here, but i just wanted the show you what this looks like. this is what storm surge looks like. we're still getting the counterclockwise rotation. this is it. this is storm surge right here. it comes right up on you, and this is -- we're still, as i point out, we're still a long way away from this storm. and so as this water continues to get pushed, particularly in this part of the country in the gulf, you know, we get a very shallow depth out here, so this really pushes the water in, and this, you know, it's washing back out right now. but eventually, it will not do so. fortunately, i'll leave you with this, charles, big buildings. theoretically, with withstand the hurricane. there are people in these buildings that believe, you know, i'm going to be okay. it remains to be seen, sir. charles a charles jeff flock -- >> reporter: whoa, another
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one, another one. charles: be careful there. thanks. take a look at the dow from yesterday. just a crazy ride, a very, very choppy ride. i want to bring in a veteran market watcher, jim awad. and, of course, jim, we know a lot of concern about the rapid rise of rates here recently. we're north of 3%. how it might be influence the federal reserve's thinking. this morning we got a ppi number out, some of the headlines are suggesting television hotter than -- it was hotter than anticipated, again adding questions about are we growing too fast, and what will the fed do to derail this. >> it's a tug-of-war between the power of rising earnings and the restraining forces of rising interest rates, rising inflation, supply chain disruption from the tariff issues, and earnings season starts tomorrow. and what companies say over the next few weeks about what they see going forward is going to be critical. you know, they say interest rates going up for the right reason is okay, but if they get
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to a certain point where it becomes a negative by any stretch of the imagination, we've added a lot of debt to economy since the great recession, and rising rates hurt. so this is going to be a tug-of-war. it's very important to see what the forward-looking guidance is. charles: also the inability to pass wholesale regulation, ppg was the stock of the day, 11 is % down -- 11% down. they talk mostly things about weaker currencies and higher things like epoxy. >> uncertainty on the trade issues. so profit margins are going to be a real question mark here going forward, but we don't have to wait too long to get the answer, because we're going to get a clue from companies about what they see. and if it speaks to higher earnings and you keep inflation at around 2%, then stocks can make further progress. if it looks like you're going to get a deceleration on earnings
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due to profit margin pressure and rising interest rates, the market's going to struggle. charles: so the federal reserve watching all of this, can it be argued to a degree with yields rising the way they have and perhaps consolidating right now have done some of the work for the fed? in other words, the fed does not necessarily have to be so aggressive because the market has done its job? >> well, they're sensible, and i put my money on them. in the short term, they seem bent on several more short-term rate increases for the reason that they want to have room to lower them when we get to next cycle. and you're still low historically -- charles: so we hike rates to wreck the economy so that we have the ability to save the economy once it's wrecked. [laughter] >> but the good news now is that you're not inverting. the fed is -- charles: so the audience understands, that is typically a harbinger of a recession. >> and that was concerning the fed, that they can't keep raising short rates if long rates aren't going up. it actually makes the fed's job
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a little bit easier. charles: sears starting the bankruptcy process, this according to "the wall street journal." joining us is retail watcher burt fleckinger. burt, we know, obviously, it's an american icon. it was the amazon of its day. you could buy a house from the sears catalog, guns, you could buy groceries from the sears catalog. you could do everything you to on ammon right now, and -- amazon right now, and now it's biting the bullet. do we take it as a cautionary tale, creative destruction at work here, or is there a deeper meaning to this? >> it's deeper, and the best insight came from jerome avenue and 16 2nd street after the yankees got blown out where fred gold win who does the printing for the retailers and john wallace from great atlantic capital, they said gary sanchez is uncoachable, and the yankees unadjustable. that epitomizes eddie lampert. he might be a a mensa guy from
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harvard, but as my father said, you can't tell 'em much. he had great people in stores, in headquarters, in buying, still does. but cut the circulars out of the store so people didn't know what was on sale, took them out of the newspapers. you're completely correct, charles, should be the amazon of its day, but you let these private equity pigs get away with it, and you let the bankruptcy judges like keith phillips who eviscerated toys r us or judge bob drain -- elizabeth: but here's the thing, the debt on the balance sheet is $10, $11 billion. so does the real estate alone cover the debt? probably not. >> probably not. and to liz's points, the securities and exchange committee is letting all these guys get away with it. retailer after retailer, my partner, paul bower, calls it upstreaming. i call it stealing. taking the -- elizabeth: you're talking about the private equity --
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charles: which is, you know, what happened with toys r us as well. jim, i want the bring you in because i like this point brought up with eddie lampert, when he first got involved with sere ises, he was heralded as the next warren buffett. cnbc talked him up, they said he was a genius, he's going to take this real estate, and he's going to leverage it and now, of course, the company's on the verge of -- >> yeah. well, you have to say the execution was not only subpar, it was awful. and it points to bigger question here, is the debt in the economy that's been added and rising rates as a heldwind and a risk -- headwind and a risk. >> just a fast one, lampert never spent any time in the stores, didn't understand the rhythm of retail -- charles: he's another master of the universe, he knew everything more than anyone else, and he blew it. >> yeah. charles: all right, folks, let's check on the futures here because we were up earlier in the morning, but after this latest report on inflation, we've drifted a little bit.
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it's not panicky stuff, but combined with the last two weeks, the market's in a very cautious mode. of course, we're also tracking hurricane michael for you. that's a live look we're putting up right now, panama city beach, florida. category four storm, it's expected to make landfall in the florida panhandle this afternoon. janice dean joins us in the next hour with the latest on the storm's track and the storm surge. and president trump getting into the health care debate with less than a month to go until the midterms. he says the democrats' medicare for all plan is a disaster. matt schlapp will join us on that. but up next, rnc chair mcdaniel on senator rand paul's dire warning about potential violence. your company is constantly evolving. and the decisions you make have far reaching implications. the right relationship with a corporate bank who understands your industry and your world
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that fits your needs and your budget? call humana now at the number on your screen for this free guide. it's just one of the ways that humana is making healthcare simpler. and when you call, a knowledgeable licensed agent-producer can answer any questions you have and help you choose the plan that's right for you. the call is free and there's no obligation. you know medicare won't cover all your medical costs, so call now and see why a medicare supplement plan from a company like humana, just might be the answer. charles: take a look at amazon teaming up with travelers on home insurance. the stock, though, off this morning, looking like it'll open
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down. procter & gamble received an exemption from the 25% tariff on imported steel from japan and sweden that's used in its razors and, of course, venus razor blades as well. senator rand paul does not like the climate of bitter political division can. roll tape. >> i feel that there's going to be an assassination. i really worry that someone is going to be killed and that those who are ratcheting up the conversation, they have to realize that they bear some responsibility if this elevates to violence. charles: joining us now, rnc chair ronna romney mcdaniel. what do you make of the senator's comments? >> well, i agree with him and, of course, senator paul was there that horrific day when congressman scalise was shot by somebody who was deranged about politics. the difference right now is you have democrat leaders in congress escalating this. they want to anger their base and create that passion so they'll go vote. but the problem is by not
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assuring their base and saying, listen, this is our democracy, we're going to have differences of opinion in washington, but the country will go on, they are escalating passions to a point where it is frightening, and there are threats out there. and we've seen confrontations of families at restaurants like with sarah sanders or ted cruz and his wife. this is not something we want in our political discourse in our country. and it's going to take democrat leaders stepping forward and saying we need to stop this and tamp this down. so far we haven't seen that from cory booker, maxine waters or nancy pelosi, and it is concerning for our country. charles: in fact, on the contrary. hillary clinton just saying you cannot be civil with a political party that wants to destroy what you stand for and what you care about. just the language, you know, the tone this which she's -- and what she's talking about is added slow candidating incivility and the kind of things that you're talking about. and this is the person that the party elected to run for president last time out. it is worrisome, and you got to
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wonder who in that party will finally stand up and say enough is enough. >> yeah. i mean, they're doubling down on division, and democrats have done this for a long time. they like the politics of division. but now it's taken a new level, been taken to a new level with the hashtag not my president, with democrats boycotting the inauguration. we've seen this for two years, the resist and obstruct campaign. this is frightening. listen, i didn't support president obama, but he was my president when he was elected, and i wanted him to do well because it's our country, and our country is more important than our political parties. democrats have said we don't like president trump, we are going to do everything we can to divide this nation and make sure we stop our work in washington to show our dislike of this president. this is not what our democracy is about, and it's the democrats who are pushing this. and it's scare isly to see it from -- scary to see it from hillary clinton and the leaders. the leaders need to be leaders and help heal our nation, and we're not seeing that. charles charles it's one thing to resist and obstruct, another to advocate getting in people's
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faces and incivility that will ultimately lead to violence. of next one for you, if you will, pop star taylor swift is getting political in tennessee, enforcing democrats and a lot of people registered to vote after she did this, i think like 75,000 people. how concerned is the republican party? >> well, one, i think you can't attribute all those registrations to taylor swift. i know she's very powerful, but it was the last day of registration, and we usually see an uptick. you know, my daughter likes taylor swift, we all like taylor swift, i would love her to come to rnc headquarters, we will educate her about marsha blackburn and the candidate that she endorsed who has a history of hiding sexual harassment cases, not a big champion of women, in this candidate that she's enforced. i don't think she had the facts. i think we could go give taylor an education, and she'd come out on our side. charles: yeah. you know, of course, historically a lot of her claims are historically challengeable anyway. to your point, someone needs to explain when women's rights
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issues were actually passed and the fact that marsha blackburn wasn't old enough to have any influence. last one, of course, nikki haley's resignation yesterday, u.s. ambassador. your thoughts at who may take her place. >> well, first, nikki haley did a phenomenal job. she is a role model for women across this country, for young girls, a champion of the united states. she has restored us as a global leader. she is tough, she has called out bad actors, and we are going to miss her at the u.n. i don't know who the president's going to choose. i've seen the short list, obviously, i know dina powell who's fantastic, i just know whoever president trump chooses will do very well in that position. the president has put together the best cabinet, the best administration that we've ever seen. charles: thank you very much. always a pleasure speaking with you. let's take a look at the futures. the market's opening in about ten minutes. we're under some pressure. the pressure built a little bit after an inflation read this morning.
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coupled with the pressure we've seen in the last two weeks, a lot of cautiousness out there. meanwhile, hurricane michael just hours away from making landfall in florida. that's a live look right there that's brightington beach, florida. we are tracking its every move for you. also checking google, two states' attorneys general are now investigating following that massive data breach, and senator mark warner now calling out the company on twitter. we'll tell you exactly what he had to say. introducing add on advantage,
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charles: we are keeping a close watch on hurricane michael for you. here is the current storm track. the storm, now a category four, set to hit the panhandle of florida this afternoon. now to google data scandal. two states' attorneys general investigating. ashley: yeah, new york and connecticut now look at this situation where data was exposed back in march on google plus. that's google's social media network, if you like, names, e-mail addresses, occupations, genders, ages all exposed. "wall street journal" said that google claims they put a patch to this to correct it back in march but didn't report it because they feared regulation. that has got the a.g.s
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interested in both new york and connecticut. and then we have this tweet from -- >> mark warner. ashley: thank you. the v democrat i was going to -- the virginia democrat. he put this out: this is a big deal. the company's latest attempt to evade security or scrutiny. both of its business practices and its treatment of user data. you know, he is on the senate intelligence committee, he'll the unofficial tech watchdog in congress. that, to me, spells regulation. elizabeth: yeah. and, you know, it's a great point ashley just made because here's what's going on overseas in places like the u.k. they're saying, you know what? take mark zuckerberg's word for it. he's called facebook a social utility. regulate them like utilities. they're not just media companies, they are big advertising engines, they're data controllers, they develop algorithms, so they better watch it. they could be regulated like a utility. charles: the e.u.'s already talking about fines, and mark
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warner's still upset from that september 1st meeting. market's opening in a few seconds, in the meantime, we are tracking hurricane michael which could be the most catastrophic storm ever to hit florida. we'll be right back. hi i'm joan lunden.
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charles: opening bell's going to ring 20 seconds, folks. there's a lot of anxiety, that's probably the best word to describe this. earlier on the markets were up, the read on inflation a little bit hotter than market professionals would have preferred. again, remember, it's been all about higher yields, questions about what the federal reserve is going to do and also the impact of all the debt we have and perhaps future corporate earnings. there you have it, the first tick was higher, but as we populate the board, you can see more red on the screen. intel your biggest loser along with microsoft, a lot of tech names under pressure be recently. home depot be, generally a winner. unfortunately, you know, whenever there's a a major storm, home depot's stock typically does well. mcdonald's got an upgrade from guggenheim this morning, so it's also a winner. let's take a check on the s&p 500, our broader measure of the market, just off fractionally this morning. the big, big question is nasdaq. it's been getting hammered, and the question is what do these investors do when they take
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money out of tech stocks, they have not been putting it in other areas. all right, the journal reporting that retail icon sears will file for bankruptcy protection. that stock off 31% to 41 cents a share. joining us now, keith fitz gerald, liz macdonald and ashley webster. we've got to start with sears. it's an american icon, of course. the company goes back to 886 -- 1886, actually started selling watch of all things. keith, is it a cautionary tale for retail, a cautionary tale that you don't need antitrust legislation, that hedge fund managers shouldn't try to run retail scores? [laughter] >> do i get, d, all of the above, charles? [laughter] this, to me, is modern day piracy. eddie lampert has stripped the company, this is right out of gordon gekko's playbook, and i think it's a crying shame because you're taking a once-iconic, very proud american brand upon which millions of
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consumers depended, and it's going to vanish. charles: what'd he do? >> what he didn't do is modernize the stores. they still have, i think, over 900 stores. they should have immediately when he merged kmart and sears, he should have cut the footprint down. he saw the advent of amazon and what was happening online and didn't modernize the stores, they didn't go online, do any of the things they should have done. there's a lot of asset stripping going on there, and the money wasn't being applied back into the company. charles: when he first took over, the stock was a hot stock -- >> 144. charles: he was considering the next warren buffett. ashley: he was the messiah. he's not a retail guy, he's a money guy. everything that -- [inaudible conversations] >> no, that's a very good question because part of the interest, i thought, was he was going to spin off all the real estate properties into a trust and do something like that, which would have made a lot -- elizabeth: sorry, it's got $11 billion in debt. does it have is enough real
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estate value to -- charles: we're talking when he came in though, right? he was hailed as the guy -- elizabeth: but now it's a break-up story. charles: you know, keith, what about retail in general in the brick and mortar names made a huge rebound earlier this year. they've pulled back here just a little bit, but, you know, we know there's still going to be a whole lot of these names that are going to go out of business. >> oh, yeah. it's amazon versus everybody else. the retail stores that are going to make it are the ones that have a unique niche, a special way of communicating with customers, something that you cannot offer online. but in the meantime, get ready because amazon's going to dominate it. charles: let's talk about hedge fund manager bill act match. he's re-- ackman. he sees the shares of starbucks doubling in three years. is it possible? >> i think it's possible, but i don't think it's because of what starbucks on its own has, i think it's possible because the market is going to go up that much in three or four years, for sure. but on its own, it's not a
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compelling play to me. i don't quite understand the metrics. their same-store sales are down, growth is down, they're expected to expand in china, that's not turned. the last quarter was, i think same-store sales were down 2%. they've talked down their global growth strategy, so it's not a compelling investment to me. he's in at 51, good for him, he's already got a profit. elizabeth: by the way, he's taken a big stake in tim horton's, chipotle. he has said earlier this year that china could grow nearly twice as fast as starbucks' overall profits, earnings from china. he's going to make a big push into china. watch for that. charles: we've seen other restaurant companies like mcdonald's, darden group, a new ceo came in, that stock went straight to moon. starbucks has had a tough time reinventing itself, right? all these efforts, the breakfast -- ashley: yeah, the food. charles: -- have fallen flat. is it just simply a play on china? >> to liz's and shaw's point
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both, i think they're very astute. to me, there's only so many ways you can serve coffee. starbucks has been so far ahead of the curve that i think it's only natural it pulls back. to me, the more interesting space is coca-cola because of its retail acquisition over in england. charles: also, they're a conscious capitalist company, and i think sometimes these things hurt publicly-traded companies. let's talk about the market. keith, last week we saw an all-time high on the dow, the dow transports hit an all-time high. they're coming down pretty quickly. what to you read? what's the message in the market? >> i think this is normal. there's a lot of profits on the table. there's still a lot of folks who don't like president trump's policies, but they have to deal with the reality of the growth that's taking place. so there's a lot of catch-up. i'm with shaw, i think the markets trade sharply higher over the next couple years, but
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this is normal. i'm not especially concerned at the moment. charles: you pull up a long-term chart, and it looks like we're always going to be okay. but near term people are trying to assign reasons for this anxiety. i think we can be too myopic when it comes to market from time to time, but are there red or at least yellow flags that you see? >> the only red flag i see is the leadership stocks, the bloom is off the rose in terms of the tech stocks. i think the market has been watching the tech stocks for their leadership role. and as we've seen them come down, most of them are testing a little bit of support levels, and if we break those levels, i think there might be exodus -- charles: where does the money go? >> that's my question. charles: financials are supposed to be a leadership -- arkansas. ashley: they haven't. and what if the corporate earnings do everything we expect them to do, and we get a deal with china, and suddenly are we off to races again? another step up despite the rising interest rates? >> i think it's game back on.
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charles you get a blip. you still have tough comparisons going into 2019. the bittersweet part of having this amazing year, quarter after quarter after quarter of growth, you can't match it in 2019. >> the bottom line remains, earnings are strong, and there's nowhere else to put your money. the market is still the best place for returns. charles: keith, do you agree with that? >> well said, shaw. absolutely on target. charles: all right. something people don't necessarily think about, but many pensions and endowments are actually exposed to hurricane michael. elizabeth: yeah. these are called catastrophe bonds. what happened was with insurers started to flea markets like florida. they didn't want to do home insurance, so the insurers said, wait a second, we'll sell catastrophe bonds. so there's a market of $30 billion of this, an estimated $1 billion exposed to possibly this hurricane sweeping in. so what this is about, charles, is investors chasing higher
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returns, higher yields on these higher bond values. and now the storm chasers are coming in and could wreck their principal. they may not get their money back. the way these contracts are written is things like wind speeds hit above a certain average, you could lose your principal investment in these bonds. so the government worker pensions and other pensions are are at risk here, so are endowments. charles: you know, all these major crashes that we've had we've either had some kind of funky investment tool like, you know, the collateralized debt obligations -- >> yeah, yeah, yeah -- ashley: subprime. charles: -- the abuse of junk bonds that ushered in the 2000-2001 crash. would you be afraid of something like this? >> no, very small. $30 billion -- elizabeth:@really a story in the pensions rolling the dice. charles: it's crazy that they have to do that. all right, let's check on the big board. we've been open for about eight
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minutes here and, again, we've seen it every single day this week. if you closed your eyes every single day, the markets opened under a tremendous amount of pressure, we put in several efforts to rally, but right now it's selling, selling, selling. meanwhile, snapchat announces it's got new scripted shows to win over users. remember, those shares down 50% this calendar year. and general electric shares have been up this week, but some wall street folks are wondering if it's simply a dead cat bounce. of course, stuart would buzz me for saying that. [laughter] -- for saying that. tesla shares well under 300, and the questions about elon musk's behavior and even the company's potential profitability won't go away. take a look at oil, had a pretty good session in part to the storm, in part because we think iran is really going to have trouble selling their oil. again, it's down today. the national average for regular gas is now $2.91 a gallon.
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well, president trump gives the green light to more ethanol gasoline. keith, big win for farmers, but what kind of -- what does it mean for the oil companies? >> you know, i'm not so sure it's going to have a material impact given the geopolitical situation. as a consumer and a gearhead, i hate that, because that ethanol tears up any engine. so i'm not happy to see it. charles: shaw. >> >> i agree, i have a bunch of old cars, and they like the high octane stuff. a lot of times ethanol will void some warrantees. charles: corn was down from 2012 until president trump's inauguration 56%, so you can see where president trump wants to find a way to -- ashley: upset those losses. charles: even though a while ago there was the ethical argument whether you should grow food and use it as fuel. all right, guys. shaw, great suit, love it. keith, nice suit -- [laughter] >> thank you. charles: see you guys later. one last quick check of the big board. dow under a lot of pressure. we were down just 121, we're
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down 100. meanwhile, we are, we will continue to watch hurricane michael for you. in fact, take a look at brightenton beach, florida. janice dean is tracking the storm, her forecast is still ahead. more states legalizing sports betting, but could regulations be coming? we're going to ask the chairman of the american gaming association that very question. also check the cannabis stocks. it's a growing trend -- ashley: so to speak. charles: is it time to invest in these? we'll get into that next. ♪ ♪
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charles:
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we're watching hurricane michaet could be the most powerful hurricane to ever hit the florida panhandle. now a category four storm, it is set to make landfall this afternoon. the justice department approval of cvs' merger with aetna could happen as soon as today, this according to a source familiar with the review. meanwhile, walmart canada exploring possible sales of cannabis products. ashley: yeah, and why not? it's going to be day one of legal marijuana sales in canada october 17th, and, you know, it's difficult for the companies like walmart. we know that the booze companies have gotten involved, infusing their drinks with cannabis. but walmart more conservative but also now thinking, okay, this is going to be a big market, charles. so walmart's canadian arm is now exploring the possibility of getting involved in some of these products. the marijuana market, by the way, was $17 billion over the last year. over the next five years, it's going to be $60 billion plus. it's huge.
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cbd, it's a naturally occurring element within marijuana that doesn't have the hallucinogenic properties that normal pot does. that's what they're looking at. but it's interesting even walmart is looking to get into this market. charles: something tells me the cannabis aisle will be next to potato chip aisle. [laughter] i'm just taking a wild guess. let's bring in the portfolio manager with richardson gmp. you are interested in this cannabis sector, and how does the average investor go about all of this? >> yeah. so the average investor, i think, in a lot of cases is actually taking the wrong approach. they're hearing from a friend or an uber driver about -- ashley: right. >> and they're having that fear of missing out. so they buy the name, and over the last 6-12 months it's probably the best performing name in their portfolio. so they've gotten this positive feedback loop, probably a little dislocated from fundamentals. charles: right. but if you've always said, hey, i want to get in the market, it's too late to me to get in on
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the grown floor of amazon but maybe not canopy, aurora, those kind of names. so exactly what are they doing wrong? right now there's a lot of volatility. some of these have come down a lot from their highs. they're up nicely if you bought them a few months ago, so what's the approach you're taking? >> my approach would be to look into an aptly-managed fund or etf and take that, i think it's much like the alcoholic beverage industry with a few major players, a couple craft brewers. right now in qanta we have over 1 is 10 -- canada we have over 110 licensed producer. in three years from now, they're not all going to be around. every bubble has a lot of the same characteristics, access to capital, change in regulation, new technology and broad market speculation. charles: what about first mover advantages for some of the names we know? >> i think those will be around for a long time, and looking at their international growth prospects is extremely important. and you have the time to do the
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due diligence, you can certainly make money in the space. however, at current valuations i think you'll still get a better entrance point -- charles: do you buy something like a constellation brands? the guidance, including their investment in canopy, was very impressive to me. >> yeah, certainly a more diversified, lower risk play to get in the space and probably more prudent than taking a small cap canadian producer that's up 300% over the past year -- charles: i've got a private placement memorandum on my desk. it looks intriguing. one of two of them, though, will end up being a big player, right? how do you sift through them? is there something specific that you're look for that may say, okay, this one will emerge amongst the crowd? >> well, out of all the industries i cover, cannabis sector is probably the most bifurcated between the quality of management teams, the quality of assets, the production capabilities. so you might get a flashy
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prospectus, and i think some of the highest valued companies are so because of their marketing efforts. so you need to sift through -- charles: management is key though. >> extremely important. and the new space of the talent pool is limited and stretched out a little bit too. charles: thank you very much. >> thanks for having me. charles: let's check on these markets here, the dow jones industrial average near the lows of the session. we're about split, but a lot of selling. the down volume has been extraordinary. people are selling, motivated sellers, and not a lot of people aggressively buying. all eyes are on michael, it's a category four storm that's now set to make landfall along the florida panhandle this afternoon. we're going to track it right here. and two states' attorney generals now looking into that data breach at google, and the question, how much trouble, how much legal trouble is google in? judge napolitano has the answer. he's next.
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charles: back to that google data scandal, now two states' attorney generals are looking into it. all rise, judge andrew napolitano is here. judge, yesterday the e.u. talked about these kind of data breaches, fines. 4% of global revenue -- >> right. charles: -- up to 20 million euros to sort of force companies to be honest about these when
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they occur, to share the information with the public and maybe to do more to prevent them. could that kind of legal, those kind of legal remedies come to this country? >> well, it could come here. it's not here yet. the attorneys general, i think of connecticut and new york, that are looking at not the breach, but google's failure to report the breach -- and, of course, that has made things worse because e-mails have popped up showing the reason for the failure. we don't want the regulators the though about this, we don't want them on our backs, showing an indifference to plight of their customers who suffer from the breach. we do not have the automatic penalties that the government can impos. so somebody would have to sue them, or the state legislatures or congress would have to enact legislation; the failure to report a certain level of breach to a certain number of customers within a certain period of time gives rise to this kind of fibro. yet again, i say this even though varney's not here, the
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e.u. is far stronger in its regulation, in its watchdog attitude for consumers than we have here in this country. charles: is there, is it illegal, what they did though? do you have the -- is it legal for a company to know, particularly because it has to have some sort of custodial, fiduciary responsibility -- >> yeah. okay, it is not a crime in america to fail to report that you've been the victim of a crime. even if you are the fiduciary, you're holding data for millions of people. but google can't expose -- can expose itself to civil liabilities from juries in class action cases if a significant number of people whose information was hacked suffered not because of the hack -- these things happen -- but because google didn't report the hack. so you're talking about a lawsuit. you you're not talking about a prosecution or even the imposition of a civil fine.
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we haven't gotten there yet in the regulation of cyber crime. charles: all right. i want to ask you about a missouri judge who blocks part of a state's voter id law. this, of course, just weeks before the midterm. what are your thoughts about that? >> i'm quite surprised. you know, missouri elects its judges, and this judge is imposing his own view over legislation that the federal courts have already found is constitutional. now, his claim is a hot of people -- everybody has the right to vote who's over 18 and lives in the state. some people don't have photo ids. the requirement of a home address as opposed to a post office box makes it difficult for a lot of people. i hope this works out, but i don't think judges should be -- it's the type of thing that trump has quite properly railed against, judges second guessing the legislature. particularly here where the federal courts have upheld this. charles: crazy.
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and, listen, it's the responsibility, you would think, you know, i see people finding ways to get to concerts, to sporting events. people have ways of getting around. to get to wherever you've got to go to get id seems like a reasonable request. >> i don't know how many people this is going to affect, but here we are less than four weeks from the midterms, and there's a dispute over what you have to show in order to vote. new jersey, i just walk right in. they've never asked me for an id. charles: wow. well, everybody knows you. [laughter] >> let's not go there. charles: thanks a lot, judge, appreciate it. well, hillary clinton is at it again. she says that democrats can't be civil with republicans anymore. wait until you hear this one. and we are tracking hurricane michael. it's now a category four storm. high winds and a huge storm surge could slam into florida's panhandle this afternoon. we'll have a live report from the storm zone. and your latest forecast from the fox weather center is also coming right up.
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charles: 10 a.m. on the east coast. 7:00 a.m. out west. market has been open 30 minutes. selling increased in part, louis vuitton saying weakness in china hurting its brands. high-end companies from tiffany's and kors getting slammed after the that -- we'll go to our next market watcher this hour and ask about that. and also ask about how long this uncertainty may last. meanwhile at least two states are investigating a data breach at google. later this hour we'll talk with someone who says tech companies don't feel motivated to invest in ironclad security, be honest, the penalties are basically nothing. hillary clinton says democrats can't be civil with republicans in charge. wait until you hear that. hurricane michael will make landfall in a few hours.
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florida governor rick scott warning citizens in the panhandle, if they choose to stay in an evacuation sown seek refuge immediately. we'll get a view from the ground and the forecast to come. you're watching the second hour of "varney & company." ♪ charles: checking the big board. it is open. we've seen every day this week selling bee gets, selling bee gets selling. more news comes out worst it gets. industrial stocks weighing on the markets. getting a pretty good hit on the chin. mcdonald's one of the bright spots. got an upgrade this morning from guggenheim. they hiked share price target, looking for $200 on the stock. looking at sears, nostalgic look. 39 cents a share. they're filing for bankruptcy
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protection. big tech names under pressure. amazon has news, teaming up with travelers on home insurance. stay with the market. inflation fears, and rate spike pressuring this market all week long. bring in market watcher scott wren. scott, we hit an all-time high with all the major industries. the transpoes were at all-time high. feels likes there wasn't panic, maybe it is starting to set in. >> charles, we only had 2% pullback so far. i would argue there is a lot of technical support we're opening at today. really probably more 100 s&p points lower than this. we've been telling our clients for 15 months at least in 2018, the two biggest risks are one, the fed making a mistake, and two, global growth slowing down. there are some fears that is going to happen.
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our best case is that neither of those things happen. so, i would argue that you know, on the downside here, a lot of retail investors are still sitting on a lot of cash. we don't think the rally is over. these downside days, or these downside weeks, that's a buying opportunity they should take advantage of. charles: scott, i think of your two risks second one coming to fruition at least today. louis vuitton saying sales are hurt, wealthy chinese consumers, demand isn't there, tiffany's is lower, lululemon is lower, watchmakers are lower. maybe we're starting to see that come to fruition. the argument for a while we had a moat to our economy, we were impervious to this kind of risk is. that not true? >> charles, when you think about the s&p 500 and 35 or 40% of the revenues come from outside of the country. you know, we need some help. we need help from places like china. we need help from the eurozone.
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we need japan to be buying our products. we need some international help to get to the earnings expectations that not only the expectations that we have here but also really the consensus on wall street, believe me. there are some international revenues built into that number and you know, that's what people are worried about right now. charles: go back to the first risk. federal reserve making a mistake. and in february, when we saw the sort of velocity of the yield spiking higher near 3%, not even crossing it, but near 3%, the market had a horrific violent selloff. and there were questions about jay powell. people weren't sure what kind of a a fed chair he would be. we had a chance to see him in action, listened to him, watched his actions. are you more confident that he will handle this and he won't derail the market? >> i like jay powell. he is not an academic. he is more in tune with the market and he does know, if you
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have listened to any of the sweeps that he has done really since he has been chair, he knows that the fed has to be careful in here. i will say the market, he gave four or five speeches over the course of 10 days within the last couple weeks and he was pretty excited about the economy. and the market doesn't really want him to be that excited about the economy because that means, hey, you know the fed might increase the pace and magnitude of these rate hikes. what they have hinted at so far which, almost certainly they're going to hike in december and then maybe three next year. i think the market's okay with that, but really the talk lately from jay powell is that, hey, maybe we do more than that. i think that's, you know, you could be crossing a red line there. the market at this point in the cycle is going to be very, very sensitive to the fed making a mistake. face it, in most of these cycles the ebb and flow is caused by the fed making a mistake. charles: absolutely no doubt. they have the power.
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any entity that can create four 1/2 trillion dollars from thin air can do anything including derailing stock market rallies. they have continued to echo to the investing public they will be data dependent. this morning ppi a little more inflationary than people felt comfortable with. in your mind does that change the federal reserve or do you need to see more evidence? >> i look at core pce, personal consumption expenditures, that is what the fed says they look at. now they wanted to get core pce year-over-year to 2%. they wanted to do it for 10 years. now we are finally here. i don't think we'll have a big run up in inflation particularly in global growth don't accelerate a lot. i'm not sure if you have a lot of inflation. hard for me to believe after trying to get inflation up for 10 years, that all of a sudden it is at 2% and fed will come in and step on this thing. if anything, in my opinion, i
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think they let it run a little hot. but you know, it's, when you're trying to fine tune a 20 trillion-dollar economy. easier said than done. charles: sure. >> i think it would be a mistake for the fed to come in here and start talking about more rate hikes at faster pace. stock market wouldn't like that at all. charles: stock market seems to be anticipating that. scott, always appreciate it. >> charles, you too. charles: look at massive waves, hurricane michael creating all of this as it heads towards the florida panhandle. it is due to make landfall this afternoon. jeff flock is in panama city beach. jeff, what is the latest? looks like it has gotten worse since we spoke to you earlier. reporter: i think so and that is going to be pretty much the way we have it for the rest of the day. we're getting probably the worst conditions we've seen thus far but we're still quite aways away from this storm to having it make landfall.
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you can see with these kind of conditions, you know, it is already quite unpleasant i would say. still people traveling though. some people perhaps trying to make a last minute decision to depart. i think rapidly, i think we get ahead of ourselves, well the window is closing, the window is closing. pretty soon the window really will be closed in terms of that. i would just say also to our friends on twitter that sometimes wonder if there is any sanity to why we come and do this, two things. somebody once said, you know what? put a camera out there, let the camera do the work. having someone out here to describe what is going on in these conditions is helpful. the other thing i would say, quite honestly. this is the mountain i like to climb. i enjoy being out here in the midst of this. and i am, for those who say, you know, they encourage somebody else to go out and do something
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stupid, i'm a libertarian when it comes to that. if you want to go out in a hurricane, that is your nickel. don't expect first-responders come save you. if i get drowned in a hurricane, don't try to save me. i'm good. that was my choice. at any rate that is my screed for the morning. charles: if it does happen we'll have one hell after special in your honor. jeff, be careful. we know you're a veteran at these things. this one sounds like will be run for the record books. take care of yourself. we'll be out to check on you momentarily. reporter: will do, charles, thank you. charles: jeff flock, another massive hurricane. he is in the middle of it. more to come this wednesday. remember the protests from over the weekend, hundreds marching on capitol hill to protest brett kavanaugh to the supreme court? our next guest says they were bought and paid for by george soros. she will make her case. venezuela inflation rising big-time over one million%? this is citizens fleeing into
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neighboring countries like brazil where a donald trump-like candidate just won the first round of elections. we're all over that. at this time yesterday we were learning learning that nikki haley was stepping down as u.n. ambassador. i want to know if it impacts the midterms and who might replace her. martha maccallum will join us later this hour. ♪ [ phone rings ]
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hey maya. what's up? hey! so listen, i was taking another look at your overall financial strategy. you still thinking about opening your own shop?
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every day. i think there are some ways to help keep you on track. and closer to home. i'm all ears. how did edward jones grow to a trillion dollars in assets under care? thanks. by thinking about your goals as much as you do. charles: checking the big board. we're off 250 points. selling begets selling and there are no buyers materializing as of yet. hedge fund manager bill ackman reveals nearly one billion dollar stake in starbucks. that helped the stock up yesterday. flat today. new scripted shows to win
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over users. shares down 50% this calendar year. to the tennessee senate race where taylor swift is now a big player, going after marsha blackburn rallying a lot of voters register. connell mcshane talked to her. what was her reaction. reporter: she pushed back. tailor swift was specific with her. her record appals and terrifies, voted against equal pay for women. when asked about that i have a strong record on those issues back when she was teenager, she did vote against the specific bill taylor swift was talking about. the specific in the senate race, turnout, and taylor swift, 100 million instagram pollfollowers. there were reports of a spike in voter registration this week. i spoke to the secretary of state in tennessee on the phone last night. he said, it is tough to say it was because of taylor swift. there are actually normally
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would be a pickup at this time because the deadline to register to vote was yesterday. blackburn and i in her interview spoke about that. here it is. do you think that her, she has any sway in turning voters out? we talked about turnout earlier with young people. >> tennesseans are more interested in the fact that marsha blackburn is endorsed by the u.s. chamber of commerce, by the fraternal order of police, by the police benevolent association and by the national rifle association where i have an "a" rating and their endorsement. reporter: as for her race against the former governor phil bredesen in the state. it is very close. closer than you think in a state president trump won by 26 points. bredesen is popular. he won here twice as governor. a lot of republicans like him. the two of them, bredesen, blackburn agree on number of economic issues. they're both anti-tariff. if there is any shift in
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momentum it might be toward blackburn. bredesen was leading in a lot of polls. fox news had her up by five last week. that coincided with the brett kavanaugh hearings in washington which she is hoping will energize her base and her republican campaign in the state. we're on the campus of the university of tennessee by the way in knoxville, because the two candidates will debate on this college campus this evening. close race. we'll see how it goes. charles: connell, very much appreciate it. our next guest says the anti-kavanaugh protests were funded in large part by democrat megadonor george soros. the headline of her op-ed, quote, george soros' march on washington. joining us now, the author of standing alone, an american woman's struggle for the soul of islam. thanks for joining us. we always kind of heard speculation george soros and others like him were funding these things. do you have concrete proof that is the truth? >> yeah. you know, my exercise in all of this is the very linear.
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i went basically through the entire list of the so-called partners of the women's march, that ran right after the inauguration day of president trump and from that list i then correlated it to all of the documents that are now been leaked by various sources from open society foundations over the last few years. what i did was i cross-checked saw what names were also showing up on the grants and the various planning documents that the open society foundation, which is the philanthropic arm for george soros, which ones showed up there. what i found was that of the, of the partners of the women's march from 2017, at least 50 of those organizations from planned parenthood to the aclu have been funded by george soros and his empire. and then fast forward to this last weekend and this last month
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of protests, i established that at least 20 of the organizations that were involved in the anti-kavanaugh protests were also funded sometime or the other by george soros. charles: right. what's the message then? is it that this is not necessarily ought thentic? that it is not a democrat version of the tea party where people did leave their homes and find the nearest patch of grass to protest what they thought was the demise or the beginning of the demise of our country? you say this lacks authentic feel to it? >> you know like in a democracy we're allowed to have lobbying organizations. you're allowed to have non-profits that spend a lot of money virtually lobbying their congresspeople but what we're not having in these efforts is transparency. they're always presented as spontaneous events. a bunch of people pop up, a bunch of women rising but they're orchestrated from the details of the map that they're
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going to be charting during the march to their documents, if they get, if they get put in jail, they have graphics that have been beautifully created that you can download. a lot of logistical planning that goes into pulling off of a march and a protest. charles: yes. >> what we've seen now is two years of this, #resistance. charles: we heard over the weekend paid protesters were paid in hopes of sparking something. to your point. maybe the public looks through it. maybe it actually backfires. thank you for the work you put into it. we appreciate it. >> there will be very likely a boomerang effect from these marchs. charles: absolutely. thank you. hillary clinton says democrats can't be civil with republicans in charge. you will hear it. also a programing note for you. my show, "making money with charles payne," we're moving to 2:00 p.m. eastern starting
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monday. we'll try to make you money when the market is open. that is when it is the most fun. ♪
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david: check the markets here. a lot of pressure across the board, particularly with nasdaq. amazon, just dipped into correction territory. that's right. that juggernaut amazon down more than 10% from its 52-week high. charles: let's go to janice dean in the weather center. janice dean, there are serious big concerns about the storm surge because the numbers we're hearing on this storm are mind-boggling. >> really is, charles. when we woke up this morning this was a cat-4 and continued
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to rapidly strengthen in a matter of hours and i'm fearful we're dealing with a worst-case scenario for this area that has never seen a cat-4, never seen 145 mile-an-hour sustained winds across the panhandle of florida. reminiscent of charlie for florida residents that was a category 4 made landfall across the west coast of florida. that was 14, 15 years ago. so i'm fearful and, i hope that people heeded those warnings and that no children were left behind here because this is going to be a devastating catastrophic event. in terms of satellite presentation, that is about as good as it gets. that well-defined eye tells you everything. you have colder cloud tops and core of the strongest winds that impact landfall within the next couple of hours. landfall expected between 1:00 and 3:00 p.m. but already seeing those outer bands moving across the panhandle, moving across the big bend.
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30, 40 mile-an-hour gusts and this is also going to impact well inland into georgia and alabama and south carolina. even though this is going to being make landfall this afternoon we'll still feel effects for hours. georgia could deal with something like a ef-1 hurricane for hours, and that will cause structural damage on top of heavy rainfall but the immediate concern is along the coast. the storm surge, that is the big threat, that is the number one killer for hurricanes. if you're in an area that could see 14, 15 storm surge you are risking your life and that is going to be the concern. we'll be dealing with this. one good thing, it will be a quick mover, charles, but we'll feel tropical storm force winds hundreds of miles away from the center of the storm. i'm very concerned for our folks in florida today. it is one of the biggest, most intense storms i have ever covered. charles: janice dean, thank you very much.
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always appreciate it. >> you got it. charles: now there is this, sports betting coming to new mexico, the next state adopting sports betting after the court ruling that legalized it. i want to know how much revenue these states could see. what regulations are they planning for it. talk to the head of the american gaming association next. ♪
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charles: checking the big board, i mean we were down 280 points during the break. so very volatile, a lot of pressure to the downside. remember huge down volume all week long. sellers have been motivated. we're testing the resolve of a lot of investors right now. one of the reasons big tech names, big tech names have come under a tremendous amount of pressure. one. reasons, nasdaq really taken it
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on the chin. in fact moments ago, amazon technically now in correction mode. want to go to ash and emac. ashley: can you believe it, yesterday i was down on the floor, yes there are concerns about rising interest rates and also global growth, what is the fed, where is the fed going to be? it said it can still be mildly accommodative. is this top of this bull market? as you continue to say, charles payne, the most hated bull market ever in history of wall street. it is 10-year old. it feels twitchy right now to be honest with you. almost looking for the moment, that's it, it is over, i'm going to cash in. charles: have we become so skeptical we also are just not great with good news? really we just hit an all-time high. we night normally said in the past this is general consolidation of gains. it feels skeptical that we'll crash any moment. liz: we've been calling it a
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rodney dangerfield market that gets no respect for months now. the 2 1/2 years s&p on track for the worst, five days of downturn since november 2016. so we were saying that rising rates are sign after strong economy. now they're questioning the fundamentals of the economy. whether we have weak auto sales and not so great holiday sales if rates go up and consumers dial back. charles: the best quarter in five 1/2 years. imf says venezuela inflation could hit 1.37 million%. i don't know what the hell that means. it sounds scary. joining us mary mary anastasia o'grady, columnist for "the wall street journal." the numbers are mind-boggling the percentages. we've seen the empty shelves, weight loss of after ran person, people waiting in line for toilet paper. it is becoming a humanitarian disaster now, isn't it? >> i think it is kind of funny
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upping it to something higher, when you get to one million% inflation why bother? this what happens when you basically use monetary mechanisms to finance the fiscal deficit. normally in democracies you have a mechanism, a political mechanism that would demand some kind of improvement to the management of the economy but since this is dictatorship and venezuelan government made it clear they don't care how many people flee the country, the more that leave the better because they're basically want to, cubans have a hold of venezuela. they want to keep that territory and they want to keep control of the oil, what's left of it. so if the country empties out that is just perfectly fine. charles: they can barely drill the oil. they chased out all the multinationals with the expertise. despite the wealth they're sitting on they can't hardly extract it out of ground. they have damaged human capital.
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they have china trying to help them recover. they're betting on a return to 100-dollar oil prices. charles: you think i can use the quote, china helping them extract the oil? >> exactly. charles: the humanitarian crisis. they're fleeing to these different countries. one is brazil. we had the first round of elections. it is apparent they will elect a strong man for lack of a better term. maybe that is wrong way to describe him. far right, law and guy. s what is the ramifications of that. >> it is unfair to call him a strong man. he had a lot of rhetoric favoring the military government and favoring the military but the reason why brazil didn't become venezuela under lula because it has better institutions that venezuela had. don't forget in venezuela all the economy was concentrated in the oil economy. charles: sure. >> brazil has a much more diversified economy. therefore power is more
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diversified and, as i say, the institutions held up, including the press. so i think that this guy will, the reason why this guy is popular is not as much for his policies as because he is considered the antidote to the workers party that lula and delma -- charles: pendulum swings from socialists back to, what? >> again i think that's, an exaggeration what will happen. i think that he will try, basically he has a very free market economic advisor and, what people are hoping for is a more liberal economic plan that will allow, for example, the privatization. not of petrobras. no one is expecting that, but some of the subsidiaries and more fiscal restraint because they really, again, they went crazy on the fiscal side and they tried to monetize the problem. that is why they got back into the inflation problem.
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charles: we know the brisks would take over the world, they ran into issues. maybe brazil will take over an get back on track. five states legalizing sports gambling after the big supreme court ruling this year. tim wilmont, american gaming association chairman. tim, you have to believe regulations will have to come with this. how are you guys planning for all of that? >> well what's happened charles, as you said back in may the supreme court repealed legislation at the federal level that prohibited the expansion of sports betting and now five states are up and running and i anticipate that 25 to 30 states for the next five to six years will enable legislation to allow sports betting to exist and it is going to be legislated and regulated at the state level. states like nevada, new jersey, pennsylvania, are already up and running have demonstrated the ability to regulate sports betting. we're taking advantage of it. my company has 18 states we're
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represented in. we hope all 18 consider enabling legislation the next five or six years. charles: by the same token the states were reluctant and were intimidated and worried about the some of the social issues come along with this you have to believe if those states say we want tax revenue from this, the economic boom they will try to put in some safeguards. what would those look like? >> well, as an industry and through regulation we have responsible gaming initiatives across the united states. customers who may believe they have a problem with gaming can be put on self-exclusion list so we don't market to them. we train our team members across our industry to help communicate, identify, and channel people that need help in terms of problems that they may have with gaming to the right health care professionals. and that is something, not just specific to sports betting.
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it has been inherent in our business going back 30 years. charles: all right, i want to ask but the nhl, expected to make $216 million from legalized sports betting. that is according to american gaming association and nielsen s that accurate? that is a huge number and does it somehow influence the sport? >> your second question about influencing the sport, we know, our argument has been there has been so much illegal wagering over the years, that if you legalize it, regulate it, monitor it, it is going to be a product that has more integrity, not less. i do believe the sports leagues will benefit tremendously from expansion of sports betting. there will be increased viewership for their product. increased sponsorship. increased interest overall in the sport. nhl, nba, major league baseball, the value of these franchises, as mark cuban said when the
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supreme court ruling came down just doubled. charles: tim, thank you very much appreciate it. >> you're welcome. charles: listen to what hillary clinton said about the divide between democrats and republicans. roll tape. >> you cannot be civil with a political party that wants to destroy what you stand for, what you care about. that's why i believe if we are fortunate enough to win back the house and or the senate, that's when civility can start again. charles: but only then. joining me now, brad blakeman, former deputy assistant to bush 43. what is your response when you hear that? >> that is an excuse for bad behavior. charles: is it an excuse or actually a clarion call, is it a call for bad behavior, violent behavior? >> continued bad behavior. this started when donald trump took the oath of office, part of the resistance. the problem with democrats is, they're in a conundrum. what are they? are they socialist democrats?
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are they traditional democrats? you have has-beens like hillary clinton trying to define the party which is clear fodder to us. we want to see hillary out there. we want to see cortez out there. we want to make them the focal point of resistance versus results. we're results. charles: "washington post" wrote an op-ed the democratic party isn't even a discernible coalition, subset of angry sub roots, hollywood hypocrites and hecklers and stalkers on capitol hill. there is no leadership, a vacuum of leadership and you get this kind of stuff. it is one thing and fine politically for the gop, but when you start talking violence that's scary. >> it is scary and we've seen it in the confirmmation hearings of kavanaugh. i suspect we'll see it in the next confirmmation for nikki haley's replacement. this angry mob, i think the president is right to call it so, is against everything. if you're against everything you stand for nothing.
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the clarion call for democrats from those who are sensible enough return to a, at least a policy, a platform that people can be attracted to. this resistance is not going to get them the success they called for. charles: i'm not sure if you saw senator rand paul, he gave a pretty extreme warning about all this, suggesting there could even be at some point an assassination of a politician? >> well we look, incumbent on everybody of goodwill, republican or democrat to turn down the rhetoric and restore some civility on all side. charles: all right. thank you very much, brad. nikki haley stepping down as u.n. ambassador. happened right here on this program yesterday. martha maccallum is going to join me next. we want to get her take on the timing of all of this and the big question, who can fill those shoes? we'll be right back. ♪ e today, we produce nearly 20 million cases a year.
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♪ ashley: the head of the rnc says the angry level of political discourse is becoming dangerous and it's the democrats who are to blame. take a listen. >> you have democrat leaders in congress escalating this and they're doing it for a reason. they want to anger their base and create that passion so they will go vote but the problem is by not assuring their base and saying, listen, this is our democracy, we'll have differences of opinion in washington but country will go on, they are escalating passions to a point where where it is
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frightening and there are threats out there, and seen confrontations at restaurants with sarah sanders and ted cruz and his wife. this is not something we want in political discourse. it will take democrat leaders stepping forward and saying we need to stop this and tamp this down. ♪
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charles: checking the big board, still under a tremendous amount
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of pressure. the dow off 282 points near the low of the session. here are the biggest losers on the dow. take a look at these stocks. well, there they are. nike, coming down hard, intel, boeing. ashley: wow. charles: boeing down $10. microsoft, dupont which has been a big loser, disappointment all year long. don't forget gold should be up in this scenario, still not moving, down a dollar. check google. the company shutting down the google plus social network for failing to disclose a bug that made available hundreds of thousands of users data. we have the coauthor of, your happiness was hacked. your initial response when you saw this news? >> i bet it isn't 500,000, more something like 50 million or some ridiculous number. they're downplaying it and underestimating damage has been done. this is what the tech industry is doing. they keep trying to pretend it
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isn't that bad and a few people impacted by the hacks. charles: is it, is it that they're underestimating or that they're actually, you know -- because some of these memos in the articles suggest they knew once the news is out there, could draw greater scrutiny, regulatory scrutiny. maybe it's a combination of arrogance, the fact they want to hide this from the public? >> charles, so far silicon valley has gotten a free ride over here. i will give you analogy. imagine speeding ticket only $5, the fine for running a red light was $10. that is it, apologize it and you get off the hook. we're all speeding and running red lights because the cost would be nothing. that is what it is like with these nothing. they don't pay the five or $10. they say oops, we're sorry. we'll move on. facebook had hundreds of millions of accounts hacked. all they did, sorry we'll be careful in the future. they get away wit. this keeps happening over and over. we need regulations and fines.
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give you scenario, every time your email was hacked from any big company they paid you $10? if it was social security number, $100. personal data $1000? what would happen? all the tech companies would stop everything they have, fix the security bugs in their system and they would protect us. we'll be waiting for pay day hoping that our information is hacked so we get paid. the trouble is that they are no fines, no incentives. these people get away with murder literally. this shouldn't continue like this. charles: i am glad you brought that up, vivek the whole idea they were protected because they were cool, forward-looking, they talked about climate change, they were cool with the hipsters. there are books out, silicon valley, you have too much money. you're what's wrong with capitalism. someone like senator mark warner who is already angry when they didn't send a representative to september 1st to go to
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congress, lashing out on twitter, maybe we're heading in the direction they will be held accountable. >> my book, your happiness is hacked, details of the game the tech industry is playing. they have hacked us. they have figured out how to manipulate us, get all the information they can about us. using these tools that they have. artificial intelligence against us so they can sell us more and they can control our thoughts. the book describes the games that they're playing and shows you how to win, how you can fight back and how you can use technology the way it was meant to be used to up lift and make you happy. this is the game being played over here by the tech industry. charles: without giving away the book because it sounds amazing, can you give us a suggestion? now once we google something and we go somewhere else the ads pop up all the time. they hit us left and right. reminds me of "minority report." phillip dick was visionary.
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he knew this would be happening. how do theywe prevent the constant messaging? >> as far as ads, pop up blockers, tools for browsers which do that. use different browsers. instead of google you can use, dot gogo. there are a couple of others tools and so on. look at use of technology. do we need to check social mediaone hundred times an hour? do we need facebook accounts at all? do we need to check email when we go bed at night? do we need the phone next to our bed? do we need to post every thought we have and doing this? at work, do we need notifications on? do we need, checking all this broadcast of emails? we have to look at ourselves, how we're using technology and use it in moderate way. i'm a tech freak. i love technology. i'm not saying don't use technology. i'm saying use it wisely. like consuming alcohol. if you have a glass of wine or two it is good. you start drinking to excess it
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is going to destroy you. same thing happens with technology. the tech industry is peddling drugs to us. the drugs are the tools. they're all designed to make us addicted. we have to fight back. charles: right the problem unfortunately some people are too addicted. great stuff, can't wait to read the book. thank you very much. we're at lows of the session. lower 300 points. money pouring out of tech. louis vuitton saying rich folks will get hurt including china where demand is dropping precipitously. the stock market is dropping precipitously and no one hassed in idea what the federal reserve will do with this. more "varney" after this. rade? exactly. sounds like a case of analysis paralysis. is there a cure? td ameritrade's trade desk. they can help gut check your strategies and answer all your toughest questions.
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charles: checking the big board. the market selling is picking up a lot of steam here. ashley: tech stocks, "fang" stocks, are getting killed. financials, jpmorgan just turned slightly negative. financials ahead of earnings friday, but you see the dow off 300 points. charles: what is interesting, only two sectors are up. utilities is a safe haven. consumer staples. ashley: food. charles: for all of the talk, by the way they have been a disaster all year long, feels
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though when you need to mark money, go to general mills, smucker's. liz: inflation fears are not at a boiling point right now. inflation fears are not at a boiling point. the economy is strong. the fundamentals are there. this feels like 2011 yields spiked 4% and slippery ride at that time. we'll have a go into the midterms. beyond that it is worries about the trump agenda. whether the nafta deal will get signed by congress or gridlock in opposition. ashley: we found out that what, producer prices are up .2% in september after being slightly down in august. has that added to a spook in this market, rising prices? charles: before that number the indices were looking slightly higher. we didn't open off a lot. ashley: but this reaction seems extreme. charles: since the show started louis vuitton put out a warning about the chinese consumer, the
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rich chinese consumer. all the names they're talking about, not growth, overall growth of s&p 500 multinationals are almost -- liz: important point what you're saying. the "fang" stocks dropping down below their 200-day moving average. we haven't seen that in 2 1/2 years. charles: this has been happening a while. they have been losing their luster. facebook and netflix under tremendous amount of pressure after earnings reports. more recently apple got a downgrade to sell. it was a middle tier firm. you haven't seen those kind of ratings on these stocks in a long time. liz: yeah. charles: then there is this, one thing we know elon musk doesn't like there is short sellers. with tesla there are so many of them. we'll talk with one of the most outspoken ones, and drew left, is he still thinking musk should go. the third hour of "varney & company" is next. if you're on park street in reno, nevada,
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! 11:00 a.m. in new york on abm in california. dow jones industrial average down more than 300 points. sort of been a snowball to the boulder now. we started out slowly selling off, not unlike the two prior sessions. virtually out the gate. even more so into the downside. we know these multinationals which get the growth, not the majority 60% of the business. where does the money go for little but we saw it rotating. with interest rates higher, maybe investors are okay. jonathan hoenig who we have on the phone.
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jonathan, the selling picking up some momentum. what you make of it. as you pointed out what started out as the technology name. they are holding out. today a knockout international general motors, ford, a lot of those interest rates sensitive and economically sensitive names. when the paddy wagon comes, they take the good girls with the god. today is the day we see the paddy wagon calm. >> i was going to pick up on the analogy. a different approach here. we are breaking some key moving averages on the major indices. the best reforming factor.
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how much damage or is it too early to make an assessment of where this could take us. >> you have to put it in somewhat. 300 points a shocking but it's not uncommon. it's not even 1.5%. it is being done in the technology names, the nasdaq down well over 125%. in particular i'm looking at stocks like tesla, for example. this is your stock over the last couple years. valuation essentially out the door. tesla over elon musk settlement with the fcc. the stock is now below where it was when the announcement, the fcc announcement first came. to your point were seen some technical damage here. they get me out feeling that people say i want no part of this anymore. i think the market tends to trend lower from here.
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charles: it have to be a four digit loss. thanks a lot, appreciate it. i want to say on this topic. bringing in a special guests, perhaps the most famous short seller out here. and now he is lucky not to invest. the research founder. marijuana long and with the investment thesis here. long. there's a lot of overvaluation in this space, but you also can't deny the global movement that's going to be behind it over the next few years. there's going to be winners and losers and that's what i'm looking to find the winners
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versus losers. the publicly traded stocks are extremely inflated in the cannabis phase right now. charles: are their names with the huge investment firm constellation brands. they obviously have some form of legitimacy to them. >> canopy has the legitimacy firm constellation and they also have the biggest production no doubt. some form of legitimacy at $17 in july and right now the stock is trading maybe $130. so there's a big difference between legitimacy and stock price. charles: absolutely. we know where in the high space of this whole industry and we've seen what happens. i want to ask you about tesla. i know you've been shorting this one. getting ahead here trying to break down a lot. what is the short vcs on this? >> the short thesis is that the car company.
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they are losing money and a run by ceo who's a complete loose wire and the demand will not either for the model three going forward. the long thesis of this has made it a difficult short is this is not a car company that is the future company in elon we trust. this is going way beyond to the economist alternative energy and other factors. so it's been a battle. charles: it has been a battle. we've seen a couple of major short squeezes after the last earnings report. elon musk is promising a strong number. are you going to be sure to the earnings announcement? >> for me it's a small short position. it's very tough to have -- this guy has nine minus did nothing else to be said. someone who wants to make money in the market i go look for lower hanging fruit. i think it's out there. it means the people who own the stock are true believers in the stock. so now we'll see what the market deleveraging how much they're
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still believing. obviously believe in a lot less now than a few days ago and it seems that the more he tweets in the more ethics might be losing the support of the shareholders, but you have to respect the fact of the people who own the stock in what they look at it. charles: no doubt about it. they're sort of a cultlike for some of these investors. i agree with you. we've got to let you go. great talking to you. thank you very much. at this time we've got to give a shout out. she was right on the money and she called it. she said the fcc and tesla. take a listen to what e mac had to say. >> he lost about 25% of its licensed musk traded about secured funding. howard schultz sent down from starbucks as chairman and executive chairman to stabilize the company. watch for musk to step down and lose his role as chairman. he will keep ceo and product
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architect. >> listen, let me back. i cover corporate accounting scandals for "the wall street journal" for years. i put people in jail. i'm not saying this about tesla at all. i'm just watching the balance sheet. i can see balance sheet and how they combine together. i don't know why, but i can just see it. the thing with why this is now under pressure. here's another prediction i hope. maybe i'm wrong for the stocks under pressure because they need a capital infusion by the end of the year. 1.5 billion to 2.5 billion is the pre-cash flow of $740 million or that's about two bucks or three bucks per share. you see the downdraft right now. eocene elon musk is a genius by the way. but he has also said we will be free cash flow and earnings positive by this coming quarter in the end of the year. i don't think wall street's going to see that.
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so he's the guy who can raise the funds. he's a billboard pt barnum who said give me the money i will make you money. it hasn't happened yet. without elon musk, this company would've been sold a long time ago. charles: congratulations. small business optimism is soaring. the third-highest level in the rating of the 45 year history. joining us now, when you do, the largest small business association in the country. i've got to tell you those numbers were remarkable, but what really set out to me compensation, compensation wages and things like that, remarkable. it is that's going on. >> inks for having me, charles. for 75 years in the economic term support is 45 years old the optimism over the last 22 months has been hitting record high and last month -- yesterday we
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reported we had a record for compensation increases. so clearly what is happening here is small businesses have never been so optimistic for so long. they are hitting records for profits. they're hitting records for inventory increases. they are hitting records for hiring capital expenditures and they have more money to pay for a very very tight labor markets other increasing wages. charles: real quick, interest rates of access to capital is also a concern for small businesses. >> the economic index actually says that our members, small business owners are really not that -- and most of their credit means were mad. they're very conservative when it comes to landing. so, what is really driving this is the tax cut in the deregulatory environment, which is given them confidence and optimism and now their business lands are backing out of.
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so you see them hit these phenomenal records particularly profit and they are plowing it to hiring increases. charles: we see that. great news. we appreciate you bringing it to us. thank you very much. we are of course following hurricane markle. it's expected to make landfall in florida is in handle in just a few hours. that picture is the storm from space. coming up a live report from the storm zone. we will also talk to a man who skipped college to pursue a career in construction and now he has this dll. he is proof you don't need a college degree to be successful and make money. you'll hear his tory. president trump getting into the health care debate with less than a month to the midterms. he's calling the democrats medicare a disaster. the big story. the market getting hammered. much more in that. we've a jampacked hour for you. the third hour in fact of "varney & company."
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charles: checking the big board we keep raking through key resistance numbers, really doesn't exist now. the dow up 350 points. want to bring in shah gillani. you are on the phone. we're very optimistic about the market. there seems to be something going on over the last two weeks. is there some other message should be concerned about. >> it's a bit more with the profit-taking aztec leadership stocks have pulled up a bit. i think when the general investor group looks at those leadership stocks is coming down, earlier on your show when you were hosting that those levels, and have been reached now and if they're reaching
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those today, i don't think it's going to be a deep selloff. obviously 200 points is worrisome. i think it's basically we are reacting to the interest rate are reacting to potential terrorists being addressed in a way that we would like to see them address. i think it is perhaps more consolidation in some profit-taking. charles: shah, one of the things about this market has been deceptive. we have markets a couple weeks ago. on the s&p 200 names coming down for the year. we had over 20% of the s&p down 20% and bear markets. it is where you see such a bifurcated market for the have-nots are getting destroyed and it's gone up so much and it feels like maybe the former pulling down the latter and there's no place to go. >> wow, this is something i addressed on your show last week when we talked about it. anything that worried me is the
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selling off of the leadership stock that are driving the etf and the passive investing mutual funds. they are so popular these days are chock full of the big growth stocks, the tech stocks that when they fell off the exit those in basically a circular selling act and that's what were seeing right now. charles: let me bring in the company, too. one thing these higher rates also do as you can move in the cash. it was zero. you can maybe move in the cash and be more comfortable they are as he watched the shakeout. ashley: in us providing equities, especially on the big tech companies. i think it's maybe a little bit of profit-taking. in the past in this bull run that's gone on for a decade, these kind of events are
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ultimately replace by buying opportunities. i wondered what the broad rest of the selloff in the conviction that seems to have whether this happens this time around and how long it takes to recover. >> where you start looking at the buying? >> probably a lot of opportunities here. it makes perfect sense because if you have any of these tips come you've done very, very well. earnings are fantastic. we are coming into earnings season. i don't think very many negative surprises on the horizon. i think they will be double-digit gains in earnings and i think coming into the spending quarter. this is just a knee-jerk reaction to a lot of negative press in terms of how it's going to last. since 2009.
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>> they've lost amount of monks were thinking. back in the beginning of september. just some day. the issue for the markets as the avalanche of corporate data. let me back. microsoft and johnson & johnson are the only aaa rated corporate bond issuers in the country. i think a half of a corporate bond index is on investment grade about level. the question is which companies have the cash flow to service bonds. charles: to your point we have the ceo of pinnacle on. it's not unlike the story we started with tears. how important is that when you start to do your sort of decision-making.
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>> it's only a problem if the debt service is an ordinance and there's not enough cash flow. it's remotely close to that. we talked about some of the stocks in the s&p 500. the bank stops. charles: thanks a lot. appreciate you pitching and particularly right now. i looked at all the key moving averages because wall street follows all about. the two major indices, s&p and nasdaq have blown past the averages. >> the computer algorithms now come you know this better than anyone. it is self-fulfilling prophecy. charles: selling begets selling because the algorithms play a role in. the only index holding above the 50 day moving averages the dow 26006. about 50 points there.
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>> to your point about louis vuitton earlier now, dragging down when you see a market action like this, it actually makes an important point. they start kicking in and dragging down the broad-based etf's with other baskets of the same sector stocks in there. charles: i like what shah said. people need to look into these funds. they all on the same talks. the new horizon fun, the western american fund, eclipse fund. and you look at them and they all run the same thing. yesterday apple got a sale. deutsche bank today celebrating of clorox, kimberly-clark, the point is i haven't seen a lot of sell ratings. from wall street. i think we've got d.r. barton on the phone. do we? >> you do indeed. hey, charles.
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charles: you're looking great yesterday. he lost some weight in your very good. are you eating some ice cream right now? getting a little nervous. >> what is interesting here grinding and gnashing of teeth. her only done three by 5% off the highs on the spiders, on the s&p 500. i've got a key level. you and i always talk. 2800 year about another% in the house below us. that is where i'm going to be concerned. until we get down there, this is just another pullback to be bought. charles: if we do get down there, and how vulnerable -- what would be your next level. >> from their you've got to drop down to correction level if we clear because that is not just a whole number.
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it is also some key support levels from july in areas where we pullback you for. so if we get down below there, i think it brings a fullbore collection correction into play. it's a no-brainer we got down there, but it does breach a key level. so when we get down to their comment that just means that the caution flag. that's not even a red flag yet, charles. for now, i think there are places that were going to be able to buy. you talk about dirty fingernail stocks. i called and things that companies make things that hurt when you drop them on the foot. those are things still unplayable so look for in some areas of strength right now or at least not such big drops. the banks have not been hurt badly today or not nearly as much as the rest of the market. there is though some places to be able to look for respite
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here. charles: two things i want to pick up on. you're 2800 number. we're 28.33. the s&p is down 38 points. one more day like today. we shatter your support number and the selling picks up according to your work. that is number one. they're not doing too bad. the big banks that we need to really live up to the hype. when we came into 2018 every major firm on wall street said you've got to on jpmorgan. you've got to on goldman sachs. you've got a big tanks because the fed will raise rates and make money hand over fist. they have not lived up to the hype. how important is that we get some crushing amazing earnings on friday morning to get some new leadership in the market. >> well, and you and i have talked about the regional versus the big tanks before. they are doing better this morning actually than the big tanks at the k. re: the kr rios up a few pics while the market
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is selling off. i believe that in a rising interest rate environment if the banks are picking up that is something to say. of these rotate out of those big tanks into the regionals that are being more efficient with capital right now and giving a better head -- getting a bigger bang for the tax reforms, too. charles: thank you very, very much. the dow -- ashley: fundamentally what has changed. people in our hedge properly enough. >> it does point to the fact a large part of the rally has been fast money. the problem is these funds are having a tough time just to find 2% fees. a 20% they take of your profits and other things.
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they've underperformed the market for so long that they all pile into the waiting trade. gave away the hedge part. so the value has been there. the value looks intriguing, but who wants to buy value if it's not moving and you happen to miss the next bounce on amazon. ashley: where is the money going? liz: quickly before you get to your next guest. higher rates, higher raw material costs. the weaker fund currencies, tariffs and weaker demand from china. you talk about that in the past, charles todd akin at the market. charles: i am not a big imf person per se. they put out a special report about china's weakening economy. i want to bring in jeff sica was on the phone with us. very bearish on this market. the rally, you know, just a couple weeks ago at all-time
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highs are starting to come down in the silliness picking up momentum. where do you think we go from here? >> well, i think as i said the market obviously you have a lot of these investors that are in the market right now that would normally bond type investors that got starved out of the bond market and came into the stock market. they're going to be the first to sell. i anticipate this is going to be the beginning of a major selloff. i think this is going to be very typical, very dramatic selloff for a period of a couple weeks and then it's probably going to bounce. i do believe, you know, i him long-term. i do have a more bearish opinion in the market going forward and i just think that there is going to be a tremendous amount of volatility because now you're starting to see what we were concerned about when you have 50% of the market, 50% of the
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appreciation in the s&p 500 in the past year, year and a half from five stocks and now those five stocks are not able to keep up the momentum that they've had in the past. you're not going to have the upswing that we had, that we've had in the past. i think it's going to get ugly. it's going to be a shorter term and then bounce again and i think we'll see a longer-term selloff. charles: said the bounce would still perhaps then be the big tech names that everyone flops into. because let's be honest, and if you bought the dips in big tech over the last decade or so, you've done pretty well. he would be maybe just investor force of habit? >> yeah, you are going to have a lot of people have really enjoyed this volatility. you have traders out there that are going to look at this
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volatility as an opportunity in your exactly right, charles. investors have grown very used to the big valances. it's been on most 100% of the time they have been in a relatively short period of time. when we're going to know that the market is going to be in a longer-term downtrend is as those bounces get less and less frequent. as they get less and less frequent you'll have less than a month coming to know, of interest from investors who were trying to trade goods. i get very nervous when you have volatility because what happens is a lot of the traders are not really experienced interacting more on emotion and those are the ones that caused the bigger decline. train for jeff, liz macdonald here. the market take the staircase up in the elevator down. the markets are forward-looking by six months or so.
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are they looking to 2019 and what are the markets trying to digest for 2019? looking at s&p revenue of 9% this year. that is pretty solid sales growth over the last few years. go ahead. >> what it comes down to is amazing when you mention the word inflation how markets react. we've grown very used to the slow inflation market. when you look out and see that there has been great economic news and then you have a market that still continues to decline. what that means is the market most likely was priced to
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perfection. that is a concern. charles: jeff sica, thank you very much. always appreciate it, buddy. ashley: charles, i followed the trees for one of the traders at the stock exchange. he says not capitulation gang. if it were, gold with pop. this is just the pricing and the changed conditions. charles: what are those changed conditions? i would say more the interest rate. charles: let's not forget the first warning we have this earnings season was pepsi and they talked about the strong dollar. if we are talking about novel overall sales, but the growth of profits outside of america, those dollar numbers really really are tough. you couple that with higher interest rates and it's a real tough one. arthur robbins, ceo of national bank. iraq, welcome to the show.
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we are going to have to think about this. more of a reasonable bank. you see the market pulling back like this. what's your thought is the ceo of the bank. >> i think obviously the customer self and the concern i have right now is the first time home buyer the potential impact the rate does on the long end and what that does to the affordability. we know housing is a significant driver of our gdp. charles: speaking of housing today we saw the mortgage applications down. another major bank firing 400 people in the mortgage division releasing a mixture of banks and non-banks firing a lot of people who work with respect to mortgages. that's a key component of our economy. as much as we like to brag about the markets from peoples home ownership and appreciation. what you see with respect to home ownership? >> from a refinance perspective the market instead.
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the affordability as to how quickly it is moving out than when you combine that with where we haven't seen that much wage inflation, it's a significant problem for first-time homebuyers and other people attempt to access new homes don't have the affordability to really die. charles: also, look at the average home and i think the average house is $390,000. or used to be starter homes so you had first-time buyers. are there even any homes for 100,000, $200,000 anymore? >> of the problem. the first time home buyer or the ones who are going to the wal-marts and the other resource under a toaster is fine furnishings. when that slows down as a ripple effect to the economy and we begin to see that now. charles: the federal reserve. you've had a chance to see jay powell in action. what's your assessment from a wall street to come in the jury
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is still somewhat out. listening very closely in watching speeches and even some of the other members of the the that is going to take great pains not to derail the economy or the stock market. >> the gradual transparency he shows the market today i think is wonderful. the concern becomes at the backend in other areas he doesn't control as much as he would like to. the concern is that the gradual effect, but the uncertainty and speed as to what happens on the backend but in my mind creates the impact of what we see in the market today. charles: is in a rapid move through 3%. something like that today. but the selling seemed to slow a little bit baby and today we didn't see the velocity per se. are you then it's got to stop at some point very soon. >> overall for banks with more sweetness and the curve promise
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for the consumer and concerned about in the backup of the long and treasury it concerns me. charles: speaking of consumer. we talked about housing, what about auto. >> gets back from the 0% financing and what that has done a shifted the demand for new cars to used cars. we've seen significant shift us to where the used car demand is coming off a leaf as well, but the new cars are really a difficult proposition today. charles: thank you very much. appreciate it. we've got gary kaltbaum on the phone. the dow 400 points right now. nasdaq down even more percentagewise been led by the highflying, high diving tech names. your assessment. >> the most important part of the equation is this didn't start in the last two or three days. every time i watch the market on a daily basis we follow 2000
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stocks, every country, every commodity. two weeks ago with the dow and s&p near new highs you have a lot more new yearly lows. you had things like gm and ford going to new lows. if you see the chart of barclays and deutsche bank in all these foreign market, you just knew something was up and all of a sudden we started to notice everything else starting to join in, starting with the small and mid caps as the mid-cap 400 break down first. then we see the distribution in the amazon and apple and the like and now we are getting what we are getting here. the biggest problem we have is who is still in the market that's very overlooked, overleveraged, on those big names. my biggest worry when i see international paper at new lows, when i see whirlpool at new lows, when i see the =tranfour absolutely wind right now i'm
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just getting blasted, the market flushing out something going forward. i believe china and europe are going into a big slowdown if not more. i suspect the fall even though we are the biggest and the best in the head honcho big cheese come in the interest rates in the oil prices have finally demonstrate to a certain extent in the markets have had a good run. normal to pull back but in a leverage market we pull back a lot worse than normal every time. charles: you reference the market breath and i write about that a lot myself. the 52 week lows have been enormous versus new highs. dow volume has been significantly more than other volume. with the rally like this, don't you occasionally needed to be tested anyway? do we need to say it's been a heck of a run. let's shake out the weaker hand.
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because we are not that far off the all-time high. even down 400 points in the hike today. >> as commended greatest thing bowl market can have his bearish phases because it wipes out excesses. it wipes out fraud. it puts a lot of dow back in the market and make it easy to turn on. recently the access and the bit coin, marijuana stocks, a $20 billion market cap of 25 million sales. 80% of the ipos this year coming out losing money. you've got to watch a little bit about. i can promise you it will wash a little bit out. the big worry is we really have not had a pretty darn good bearish market that lasts a while. typically we get a drop and everything is all well and good. the pixie -- shows up and return back up and maybe this is going to be the same thing. i'm open to anything.
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i will let price dictate to me, but as we speak right now the big boys are distributing. the big boys are overrun and stock in the big names. you said it best in the last couple weeks about how 20%, 30%, 40% of the market was down a certain amount. that was a narrow leadership market and are easier to sell off when you don't have as many soldiers going up the hill doing the battle. you know the names that were doing the track, especially in the nasdaq 100. charles: you mention international paper. this one international paper announces a $200 billion buyback. they will raise the dividend and do some other things. when do these companies like not find any sort of love for these big events are as were these big investors under so much pressure and how they underperform for so long that they continue to pile into a handful of veins?
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>> look, i'm a big believer that i don't argue with big investment believe. i just deal with price action. i can tell you i keep lists every day of leadership, how many things are leaning, where it leaving and i've been utterly amazed how the dow and s&p have held up so well and every day across enough another name in another name in another better broken support. on top of what's already been weak. it is a narrow market at this juncture. my best guess is we have more time in pricier. i don't know what percentages. i always worry about this location because of how much margin is out there. that is always something we have to watch for. down the road if earnings are strong, interest rates stay low, the economy stays sound this'll run its course and that will be
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okay. it is probably the ugliest of ugly. compare to this hurricane northwest of me right now and i just don't think you want to get in front of it at this juncture. charles: thank you very much. always appreciated. the dow jones industrial average today. the s&p and nasdaq crashed fares. a lot of technicians and i'm talking people who manage billions of dollars when you break the game clicking up to 200 day because the market has been so successful, not suggest a lot more room to the downside. the moving average for the not taxes 7499. s&p is 2765. about 25141. if these numbers continue not to hold and we breakthrough them, that suggest a lot more downside. the guy who's a master with the chart to boycott them on the phone right now, dan shafer, also very cautious and bearish on this market.
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is this the tipping point you been looking for? i believe it is, charles. i've been talking for the last month from this chart from 1929 to 1937 and we have the exact same correlation. 95% correlated. 1929-1937. in 1937 the federal reserve raised interest rates begin they were coming out of the depression. at that time the economy just couldn't handle it in the stock market drop about 50%. that is what i see happening here. i sent it over to you. i don't know if you can use it. there's a very high correlation. i expect this current drop it just started because we broke mondays slow to technically october 24th of this month. now is jeff sica was talking about before we'll get lower highs and higher lows.
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charles: 1942, 43 before the dow broke even. in between there were a lot of bull markets in bear markets have 20%, down 20% kind of thing. he talked about the fed's role in all about. is that where the real mistake is going to happen. have they been raising rates too much already? >> absolutely. everybody keeps talking about inflation. if you look at commodity prices they been depressed and continued to move lower into this current month and now they're starting to turn on, which is usually what you get at the end of the growth cycle. what the numbers of gdp coming out which i said several times i believe they'll go negative. the situation is tapped out on a financial basis based on the amount of debt. you just get the service. how is this all going to be paid back? it's impossible. 1929 similar to what we had in the bottom here in 2009 and then we go to 2018, which is similar
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to 1937 and not correlation just as the fed raising rates and they've been wrong since 193rd team into an era where they think they are getting ahead of the curve when they're actually destroying the curve. if you look at the yields between the 30 year coming tenure 30 year come in tenure and two-year that they are very tight and declining to go to an inverted many long-term rates will go below because it keeps raising. charles: 0% gdp, it's good to be soon. charles: can we just take a breath at the beginning of september levels. which just wiped out a month of gains. i hear what you're saying that the income tax revenues are coming in pretty strong due to the tax cuts. the question is what has got the markets jittery and twitchy. it's looking at a 2019. it's trying to digest the higher rates, higher tariffs, trade implications and its weaker foreign current v.
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charles: any of those things we know that 2019 is going to be tough with respect to compare a sin. it does not match the magnificent revenue and earnings growth we saw this year. that is something every investor are ready understands. what you're talking about is cataclysmic. you're not talking about earnings of 26% in 2018th mlb up 10%. you're talking about a complete economic implosion >> i'm expecting in 1929. hold on a second. the stock market as a predictor of the future. with earnings coming out now, and the stock market is already predicted. that is what it's ahead of the yield curve. charles: we've got to let you go, but two weeks ago the dow is predicting an amazing future with sunshine, blue skies are at all-time highs on transposon
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through the roof. we always appreciate your point of view because you do some serious detailed work and we like hearing it. by the way, the dow was up 1.3%. it is not panic time, we do have to make sure we understand what's going on. we called them back because they have a great singer but because because -- all right, shah so te your bullish two hours ago. are you feeling? >> still bullish. charles: it's your chance to make amends. your chances have made them tick. >> nocona support levels below here then i'm going to change my entire outlook and i'm going to put on some more defensive position. we are not even close to that. the market was always going to do it. the fact that the tenure got to 325. that scared a lot of people. in february we got 3%.
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>> were approaching it in the market for doubt. the rates were approaching it. >> this has nothing to do with tariffs. if be baked into earnings so far. charles: i agree. obviously the wildcard is the federal reserve. they are the only entity that has the ability to curb an economic juggernaut. what's happened with taxes and regulations, the only entity i think weaker global growth will hurt the multinationals, but only decide that can kill this thing. i've had confidence that jay powell's going to do that. >> let's not forget the federal reserve engineered interest rates lower to create a wealth effect, which meant -- the fact that we've had since it didn't inflation is a positive. charles: we saw 4% on the u.s. 10 year treasury in 2011.
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it feels like a slippery ride right now. jpmorgan is already said when it turns to get punitive to equities is on his darts rising above 4%. okay if the trends towards foreign buttons. >> a long way. ashley: to your point, the rate the fed has now, is that appropriate? >> i think it is pure ashley: does it change their mind at all? authority built another quarter% hike. >> they say they don't look at the markets but they always look at the markets. if we have a nasty selloff absolutely you will. charles: the minutes of the fed always reference the stock market. of course they are watching and they're watching us on interest rates. some are doing and i want to bring in keith fitzgerald. maybe the spike in rates taking rates were there supposed to be anyway in such an amazing economic doctor out.
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keith fitzgerald, your thoughts. >> i do agree with that. the fed lost control long time ago. what people don't realize is it's the bond traders to really separate. they started as a function of risk. today's selloff, where we were two hours ago, this is a purely technical move driven largely by institutional traders who are skittish and trying to get ahead of the debate. but never as well so individual investors need to take a deep breath or the underlying economics are still good and again, and there's a lot of upside here even though we've got ago downside. charles: keith, bank of america, merrill lynch does a big survey of the managers around the world. about 250 fund managers. 700, $800 billion or they were bullish in january. at the 5% exposure to equity. that went down to 19% in july. to your point they've missed
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this whole thing. they look better or this pullback does not work out and we start to turn higher, they've got to participate. >> that's right. they have to participate in a real hurry and not the function of leverage and right now they've got historically too much of it. they will bleed that often avoid the margin costs. they're scared to death that institutional investors are the ones with the advantage of the one smart here. now it's time to simply take pause and get ready. charles: you know, i like the american association of individual investors. they do a great array in my mind and what's been interesting to me is the biggest emotion with bearishness and bullishness, which to me has been neutral. just like institutions, bullishness was well over 50% in january.
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it's calmed down dramatically. even though we've been at record highs come the people of a knee-jerk reaction. i haven't seen any love for this market. >> you said this many times. to keith's point in terms of institutions on the sidelines of missing this rally i see your point investors turning neutral since january. the buying power in the sidelines. it's going to digest some of this news in terms of the rate, the tenure, 23, maybe goes a little bit above. they'll digest. earnings will come out. the stocks a lot lower sing about getting here. transfer the s&p is way below then where was the 1999. charles: i'm lower than beginning of the year. the earnings part is fine.
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nasdaq is now where was july 5th, keith fitzgerald. let's not forget september historically a bad month. it was a great month. the best quarter for the markets and the fourth quarter 2013. i'm bringing this up because we are obviously talking about the pressures to the downside. we owe it to our viewers to do that, but by the same token i'm not sure we are anywhere near the panic selling. >> panic is creeping around the edges a mother that's where it's going to stay at the edges. individual investors who participated us for being lower by tech stocks. those are other reasons. they have nothing to do with the fundamental business model. the real linchpin here is the social pressure. this got her grow up. everybody understands their bunch of spoiled brats with no consequences in understanding the products they create and now all of a sudden there is turned on them and they don't like it. most of the institutions on most of the big expensive stocks which is why the magnifying.
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charles: keith fitzgerald, thanks for coming back to the dow up almost 100 points. we started it held on the first time probably won't be the last that is tested, but it always good to see. what you make of that? we've seen twitter, facebook getting hammered after the last earnings report. netflix has been under more pressure than normal also. can we get either new leadership because i'm thinking it will be one of these names when tech turns back a bit people buy rather than stay at facebook. >> i don't disagree with that, but i think i'm starting to accumulate stock down here. i agree with what keith said. i'm going to turn this on the technical side. when you look at the graphs of these tech leadership stocks, they've all gotten some kind of support. now they've broken through that support. for traders who look at chart in the psychology, but that support
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level other investors say there's a chance to bounce higher here is diminished down with rope enough support. this is what we see in the tech stocks on the part of the selloff of what we see today. people are a little nervous. they were consolidating go higher. charles: facebook is in a bear market off more than 21st time. amazon women to a correction which is more than 10% of the time. if you were to pull up a one, two, three, five year chart, and parabolic. this is almost indiscernible if you were to look at this a year from now and say did we have a bad day? this is why investors have missed this rally with the tech stock leadership. these stocks are so high they can't go higher. they continue to go higher because they got the earnings growth. you look at a company like
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facebook. charles: they are starting to matter though, right? we gave them the benefit of the doubt. we didn't care about the bottom line. eyeballs, all that kind of stuff. it feels like now that facebook didn't live up to it. >> suspect her of regulation. >> to ashley's point, that may be the one heavyweight that is holding these tech stocks down. as justification for people to be of little worried about. these companies or brands. i don't think congress will change the way that technology assist consumers in the united dates come has brought prices down. they are not going to fight that. charles: the e.u. is just a money grab more than anything else. we've got todd horwitz on the phone. last week you treated out stuart was too giddy. maybe you are right.
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although i do want to clarify an giddy about the economy in main street america getting higher wages. i am happy about the market even with the selloff. you are not. you are concerned what's going on? >> hi, charles. i'm a long-term or. from a traitor standpoint, the market is overdone. a lot of issues play out with earnings season. number one they have to pay higher wages. that will create forward guidance. interest rates higher. so all of those problems create plus the fact what i see here now is the last of the retail investors who a year ago would've been thrilled to get 3% on a 10 year note. they do want to take it because they don't want to miss out on the market. the fear of missing out, this is always what happens when we reached the pinnacle and i think we will see a substantial selloff.
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investors to stay in and continue to invest because markets over long-term go up 8% year-over-year. if you're a short-term trader and looking for although i wouldn't be surprised if we had 100-point rally. other than the debt balances we are headed lower now. charles: todd, on the fundamental side, wages are going to go out. interest rate, that goes up. that was the topline. the revenue growth. some companies are exhibiting pricing power. would they be exempting your mind? >> certain companies will always perform better than anything going on. the general view of the market, the general book will be a bearish sentiment and more to the negative then i think again with the federal reserve these rates would get out of hand. i think will be three-point by% to 4% before the end of the year that tenure and that will create a much bigger problem as well. a lot of signs out there
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including massive amounts of debt to investors recently are buying on margin debt to buy stocks they can afford. charles: thanks a lot. we always appreciated. thank you. dow jones industrial average of 362 points. you can see that. we hit the low spirit bounced bounced a little bit here but we are making 50-point clips at any moment. we can go to break and come back and be at a low for the session. ashley: something gary kaltbaum said earlier this is good, getting rid of the prosper this is something the bear market can use to flush out, take a couple days and rebuild on a small solid foundation. when you think of that? >> absolutely. what has happened since 2000 i never selloff has been a tremendous buying opportunity. i don't think we will see anything close to that now. then i'm going to be a bit nervous. right now this is an opportunity over the next couple days. charles: is interesting because they want to caution oaks about
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trying to guess. we know march of 2009, a lot of people sold into that abyss if you will. a lot of them promised themselves they would buy back. they never did. in fact, most they will wait for the next shoe to drop. we are just trying to keep it balanced here for 401(k) holders. if you're a traitor like todd horwitz, not only would she be cautious, but you might have an opportunity to play the downside as well. it's a difficult game but those who are nimble can make a lot of money. liz: who can never tell when my question for shah and you and the gang, is the market fundamentally safe from "flash crashes"? we havedown drafts like this. all of sudden something goes haywire. we saw the etfs in the "flash crash." >> the good question, and answer is scary.
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no, we're not safe from that. liz: why? >> mechanically what caused "flash crashes" still exist. has to do with high frequency trading. has to do with lack of volume. has to do with etfs how they're constructed, decontributed and sold off in rapidly falling market, etfs, trillion plus dollars in passive etfs could cause a cascade of selling. that begets the thorizeed participants who sell underlying securities in the trusts that are the etfs, not wanting to sellers coming in for etfs, holding position, sell them into a market. they want to get ahead. they start shorting. liz: geared to sell inversion of yield curve. >> start shorting, etfs go down, continuing that volatility will beget more selling. that worries me. charles: people have been talking about passive investing and risk of money held in a few
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etfs what happens when it starts to come out. selling begets selling. we've seen that all day long. under a little bit of pressure with the ppi came out. we've been off more than 400 dow points. the market is under pressure led by tech names. nothing is safe right now. neil cavuto, all yours. neil: i'm glad lizzie mentioned we are back to where we were in september, important distinction, calm in the middle of the storm. financial variety playing out at corner of wall and broad, what is happening around the florida panhandle and gulf coast. we'll keep you updated. as lizzie pointed out we're returning to levels we had little more than a few weeks ago. it has been wildly disruptive, for example in the technology arena, likes of intel and microsoft down north of 2 1/2%. amazon officially in correction territory. down 2%. netflix down 3 1/2%. facebook, apple, down 1% plus. we're also following on

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