into 2018. you guys are going to lose a lot of money buying these stocks. i can tell you that. [closing bell rings] liz: ross and john have done buying stocks. another tough day. looks like we're closing down 520 points. nasdaq clipped 91. david: two days more than 1300 points. volatility is still here, folks. another massive selloff. coming off lows of the session. it was well over 700 points it negative earlier. ended the day about 550 points negative. s&p 500 in the red for the sixth straight session. longest losing streak in almost two years for that index. melissa: wow. david: the tech-heavy nasdaq. bounced off the lows of the session. it had dipped into correction territory. still closing down about 1.25%. that ain't nothing. melissa: you remember the last week when the dow hit a new

record? david: i remember last week, a lot of people are getting out of stocks and getting into treasurys. melissa: i'm melissa francis. this is "after the bell." i will blame you. let's go straight to kristina partsinevelos on floor of the new york stock exchange. kristina. >> definitely way more excitement right now. i can tell because nobody is sitting, people running around, trying to get last calls before the close. markets all closed in the red today. down over 500 points for the dow. i had one great quote from a trader, said you can only lose everything, go to zero. you wouldn't play or invest if you weren't willing to lose. those are his words of wisdom. these concerns, interest rates, inflation, that is affecting the 10-year yield. bring that up for a second. the reason why the 10-year yield didn't go high yesterday. reason being you had an auction today for 30-year yields. it was better. there were people buying and you also had inflation numbers for september came out lower than

expected at 2.3%. if we move on to oil, another mover today down. we'll show you how far it has fallen, down become $2.40. reason being for that, you had numbers coming out, a report from the energy information administration saying domestic crude climbed six million barrels. that is more than expected. so you have a larger supply. you have opec and russia saying that their supply for september climbed higher. of course hurricane michael, the concerns that it could damage the infrastructure in the gulf. so those are weighing in on the energy sector right there. if we just end because i love talking about semiconductors, we got the philadelphia semiconductor index right now. over the past month it has been climbing down. why? there is a talk about cyclical, chip stocks are not doing as well. not enough demand. too much inventory. nvidia could be a good buy. that is what one investor told me. throw it back to you guys. david: we like good buys.

we have adam lashinsky from fortune, fox news contributor. veronica daguerre from the "wall street journal," peter more rest sigh economics professor university of maryland. give us a macro idea, peter what is going on here. >> i think the fed put a bit of a scare in the market. david: we have a fed panel coming up. just talk about the whole market, particularly the global economy. >> put a scare in. it is affecting developing country markets a lot but overall the u.s. economy is pretty strong. my feeling we'll pull out of this fine. as we do, as we do, the big tech companies aren't going to lead us out quite in the same way. each one of them has some sort of challenge or big regulatory problem to resolve over the next year or two. so my feeling the economy will be more balanced. we'll see tax cuts take hold in better ways in terms of more investment, more working training so forth. i think fundamentals remain strong. david: adam, let me talk about

the tech sector. that was leading market higher in many ways. seemed to be no end, no ceiling to the tech sector last couple weeks is all the scrutiny it is getting affecting this in long term or is this is just a blip to the downside. >> they have a chance to affect them long term, absolutely. i agree with the second part of the question, david. this is just a blip. tech is one of the things way down, that was way up. the oil being another great example. i mean, if oil is down, there is so much supply from the u.s. market, that is just not a bad thing. neither is tech having a hiccup. they are the leaders. david: keith, let's talk about what is happening overseas. there is tremendous slow down just recently over the past 48 hours in china. it had been slowing down for quite a while. ever since the trump

administration took it on on trade issues. you have europe slowing down. is what is happening overseas beginning to affect us here? >> my take is not exactly yet. don't forget that many tech stocks led the way lower are in fact big liquid stocks which means they're owned by many overseas money managers just like they are owned by many domestic managers. if there is a slowdown overseas, it is not just about the slowdown itself. it is about leverage and what the businesses will do and of course the regulatory challenges they face and that unfortunately is a real headwind. david: veronica, vis-a-vis china, president trump going to meet president xi apparently this will happen in argentina when they get together for a worldwide conference in a month. what happens if there is real dialogue on trade and leads to solution could that wipe out the

concern on trade? >> may not be in front of people's mind at the moment but definitely a cloud on horizon. we'll see what happens on argentina. bottom line u.s. growth still very strong, inflation still very tame. overall still a good time to be an investor. david: susan li, what we see in markets a direct reflection of corporate profits. they have been booming. are they beginning to slow down now? have they reached their peak? is that affecting markets. >> 19% earnings growth is a bit after slow down for profit growth for big corporates across america. 25% gains in the first quarter, 25% in the second quarter. this quarter we're expecting 19%. that is still very good. as i say rates do, when they bo up do depress stocks but also when companies make a lot of

money that also lifts stocks as well. you do get outside gains and losses during earnings season. melissa: guys, don't move. president trump is doubling down on his attacks against the federal reserve. blake burman is live at the white house with the very latest from the president, blake. reporter: melissa, that's right. the president continuing his criticisms on the federal reserve keeps in theme what we've seen out of the president over last few days as the stock market slide continues. late last night the president described the fed as lock loco and described recent moves as. >> they are making a mistake. it is not right. despite that we're doing very well but it is not necessary, in my opinion and i think i know about it better than they do. reporter: the president contending though his own hand-picked fed chair, jay powell is not in jeopardy of losing his job.

>> no. no, i'm not going to fire him. i'm just disappointed at clip. i think it is far too fast, far too rigid, far too fast. reporter: the fed did not very comment on president's most recent criticisms. they pointed back to comments that jay powell made at end of last month and was asked about president's criticisms about the fed then, at that point, we don't consider political factors tore things like that. back to you. melissa: thank you, blake. looks like about four mores raises of rates by 2019 do you hope they rethink it? >> i hope they rethink it, pretty good consensus economists that watch the fed, highest rate should go, equalibrium rate is

3%. they have penciled in a lot more than that through 2020. that's a mistake. market crashing, out comes a fed official at least three more rate increases. you would think they know enough to keep the mouths shut when the market is panicking. one thing not to be there to prop up the market, but gee whiz you should know -- melissa: adam, are you totally disagreeing? >> yes. melissa: go ahead. >> last person i would ask for their opinion on interest rates is real estate developer. i know the president thinks this is part of his persona do what no president has ever done to criticize the fed but that is my comment on that. i think the fed is communicating clearly and transparent endly, what we want them to do. consistent with my last comment this is sign how relatively the strong the economy is. we shouldn't get freaked out by

two days of market downturns and neither should they. melissa: veronica? >> nobody wants politicized fed, nobody wants the fed to get it wrong, but if you're a consumer you have to focus on what you can control. you have credit card debt. interest rates will go up probably even more. pay down the debt. if you have student loans, you haven't already consolidated might make sense to do that. if your mortgage will go up, you think about i might need to save money, pull back in other areas of my life so i can afford the hirer mortgage. melissa: keith, that sounds like a slowing economy but seems like what has really changed with the economy at this point we would see that dramatic of a change in interest rates in the market and in people's habits? >> you know the fact that the fed thinks it knows better than rest of us who live with real money as opposed to academic models scares the you know what out of me. they should keep their mouth. didn't see crisis coming.

didn't see recovery coming and don't understand the relationship between what people feel in their wallet which is different than official inflation statistics. i love powell that is not in our models. he should revise the mod did he. my breakfast costs 60% more than three years ago. that is inflation. melissa: peter morici, you want to step in defense of models. >> i don't, excuse me, i don't want to defend the models. the problem he is surrounded by macro economists. a fed chairman a lawyer. >> bingo. >> doing this off cliff notes. he is having macro economists from johns hopkins whisper in their ears. those models are based on historical information. they hardly incorporate the consequences of financial crisis, globalization, you know, these kind of things that we're experiencing now. robots and so forth. they're looking back to see the future. the fed has the best rear view mirror in the world. unfortunately that is not where we're going. >> well-said. melissa: adam, let me ask you,

as the fed goes in, seems like sudden moves are bad no matter what. that is what feels like they're doing now, no? >> i don't know. i'm one of old-fashioned people who is in favor of experts doing their jobs rather than people on television thinking that they know more than -- >> oh. david: whoa. >> i think they do excellent job. melissa: who was that specifically direct, my friend. >> i would include myself in that. let me be the first in line of people talking on television. david: throw yourself to the lions. >> absolutely. melissa: who wants to go back at that? peter? >> there are basic questions, why wasn't i nominated to the supreme court. if we can have a lawyer run the fed in the sophisticated age, why is it that i didn't get kavanaugh's job? there are people in the world other than the two or three macro economists that are whispering in his ear that do have credentials and experience with this the fed has gotten

wrong a lot in recent years. david: that's true. >> these are the people that got it wrong in recent years. fair game to draw some criticism at then. to say maybe take it slowly and be quiet in market. >> can i jump in here? i feel like the only president that has ever been positive when a federal reserve chairman raised interest rates in modern history, i would have to go back to the '80s and ronald reagan, with paul volcker when they were dealing with rampant inflation and prime rate was above 20%. don't forget that george h. bush blamed alan greenspan for losing the 1992 election to bill clinton. there have been criticisms from the white house about federal reserve chairman. melissa: it is true. why wouldn't they criticize the fed? they're basically jacking rate which they're borrowing money to spend like crazy in the government. very obvious to everyone what their incent i have is. keith as ask you someone myself who studied economics in college, it is all about the rear view. they're good sitting there

making a model explains what already happened because you have the answer ahead of time but predicting is not so great. >> well, that's right. this is about the christopher columbus school of management much you have no idea where you're going, you have no idea where you are when you get there, and when you get back you have no idea where you've been. all joking aside, the fed has no clue how real money works, how the robots, how the services all of which are impacting our economy. i submit they have, best thing they could do, not only shut their mouth, hang up a sign we're out of business, we failed. melissa: robots working from phds from mit. david: only person that never criticized fed because he had zero interest rates for most of presidency? what is to criticize there? one thing separating from yesterday to today, the surge in the price of gold. the metal settling up nearly 3% today.

close to 40 bucks as dollar came down and traders were looking for sate ring. phil flynn at the cme. looks like they found it in gold today, phil. >> it really has. the movement in gold, dave, really started last night overin asia. in recent weeks, over past couple weeks the biggest driver of gold has been asia, china and india, they have been noted not buyers in the market because mainly their stock markets have been doing fairly well. when we see the concern go across the globe in the china market, going here into the u.s., you saw the safe haven trade kick in. highest close since august. if we see more of a shakeout in the market, dave, the gold may have put in a long-awaited bottom for the gold bugs. oil is another situation here right now. everybody is talking about this big build in supplies. i'm glad we got a big build in supplies, we'll need it when we lose iranian oil couple weeks

and start rebuilding three or four states after hurricane michael. i'm not, i don't think that the selloff in oil is, it is just about the supply side. it is more about the fear of what could happen to demand if the stock market starts to unravel a little bit. one of the concerns i saw in today's report. we saw a big drop in distillate inventories like your diesel fuels, jet fuels, things like those. we'll need those this winter but they're falling. they're below average for this time of year and that will be exasperated when we start to rebuild from the storm. there are things in the report that make me concerned what we're doing. but the energy stocks hated today. the xle fell below 200-day moving averages. the big ones, energy, exxonmobil, chevrons they really took a hit today but quite a reversal from where we were a few days ago. david: you bring up some great points. phil flynn, great to see you. thank you very much. melissa.

melissa: the state of the american economy, north rocky day on wall street after the dow's dramatic 831 point drop yesterday but are fundamentals of the economy still strong? joining me on the phone liz ann sonders, charles schwab senior vice president. gate to have you on show today. do you think something fundamentally changed in the economy? >> not necessarily but this is something investors miss when they connect the economy and what is going on in the stock market and overall theme around i'm something fond of saying, saying for decade when it comes to the relationship, better or worse matters more than good or bad. investors tend to focus on level of economic data. they look whether consumer confidence or unememployment rate or job growth, whatever the metric, they see the high levels, they think great, what is there to worry about? the problem markets tend to focus on rate of change, that second derivative move and you are starting to see some cracks

and to kind of highlight how this works, you can go back to the ultimate peak in the market of march of 2000, look what the economic data was at that time. it was off the charts good but that didn't prevent what became a pretty brutal bear market. i'm not saying this is a like period to that but this notion that the market waits until the actual data deteriorates is not born out by history. melissa: when you talk about the second derivative in growth are you talking about in gdp where we see things up above 4% and you don't think there is that much acceleration before that or where specifically are you looking? >> combination of issues. because we have extremely tight labor market right now, the fact we got massive fiscal stimulus, certainly around tax cuts at a much later point in the cycle, we're providing stimulus at a point we don't have supply to meet increasing demand. that is the case in terms of

skilled workers. most of the job gains in last several months for people that have no more than a high school education, which calls into question the stronger productivity down the road argument that some have been making. consumer confidence may be has more to go on the upside but consumer confidence tends to be fairly closely linked to the stock market. so i think we could probably see rolling over in consumer confidence if this weakness in the market continues. earnings growth, earnings growth has been fa nam noll this year. the problem the stock market is a forward-looking mechanism, when you get to 2019, simply the way math works, going into 2019, compare the first-quarter earnings to the first quarter of 2018 when we had the first initial push much tax refor, the math doesn't allow you to compound earnings above 20%. you're back into single digits. melissa: okay. >> those are examples of things even though at that point we're not in dire straits in terms of the level of economic data but

the market tends to sniff out inflection points and -- melissa: i totally hear you. before we run out of time i want to have a chance to poke a few holes in there. talk to me, you said increasing productivity already is back in the market who has above a high school diploma but the way we're seeing more expansion through the idea of more automation, more robots. that doesn't lead to more productivity in your mind? >> that is a longer term benefit to productivity. you know actual human workers tend to provide shorter term boost to productivity. we've seen a little bit of a pickup in productivity. i think that is probably more on the technology side than it is on the human side. but again, as we get into this incredibly tight labor market it is hard to find the type of workers that allow more traditional measures of non-pardon me productivity to accelerate from here. if i'm wrong and we get a significant productivity boost, that is the best case scenario,

best-case scenario for the market and economy, keeps pressure off the fed, keeps inflation in check. we'll probably get it but i think it is harder given tightness of labor market. melissa: when you talk about places where we have pockets or see this second deceleration of derivative, you see potential trade war, trade skirmish we're in, if we get better deals as happened here in north america, doesn't that provide another place where you could see better than expected growth or better than expected growth? >> i don't think we're on a path with this stage of game with china like we were with mexico and canada. i also think china has ways to combat us in this so-called trade war that go well beyond tariffs. you know, they don't have the ammunition from a tariffs perspective to come at us but they have other forms of ammunition. i think reason why the market got a little bit of a lift today was hope on talk announced between trump and xi but the problem is, if we don't have

anything sort of near term in terms of the resolution to this, i think we're starting to see it. i think yesterday's weakness had a lot to do with fairly decent number of companies coming out, actually starting to put hard data and figures on what the tariffs so far mean, whether it is their capital spending plans or their near-term earnings outlook, you're starting to see it actually filter into the data now or at least forward guidance from a corporate perspective. earnings will still be strong, but if you have more and more companies saying hey, this is a problem, we may hold off on cap-ex, here is how it hurts us in terms of profit margins, i think market has not yet priced that in. yesterday is a reflection of that. melissa: liz ann sonders, always brilliant. appreciate your insight. david: brilliant is the word. meanwhile we want to shift gears a little bit. the market selloff coming 26 days before the midterm elections, what impact will it have if any on the elections? let's bring back our panel.

peter, the main question, this market correction, if we call it that, it may be a little short of a correction with some indexes is it that going to spill over as liz ann sonders was suggesting it might into the economy? >> only if we keep tumbling down. if we level off and start to recover i don't think it will have much consequence. the economy is not doing the republicans much good. they have not had good messaging on this and this election -- david: i don't know, i've been to those, i've seen those rallies that the president is always touting the economy. frankly he gets involved in too many other things. other investigations but he does tout economy at all of them. >> if you collect my students together and they will tell you i'm brilliant. barack obama did it. david: you are brilliant. your students are right. go ahead. >> barack obama did it. donald trump does it. they like to speak to gymnasiums full of true believers. the big question does it influence swing voters.

david: this is 2016. >> this is not 2016. this is this 2018 this is fought out in suburbs of pennsylvania, new york, california. they're in trouble in the house, suburban districts where a lot women shift to the democratic side. social issues matter. abortion, health care is really big issue. the democrats are outspending health care two to one on ads because it has traction. david: adam, they're not talking a lot about the economy, they haven't been, democrats up until now because they knew the economic fundamentals were very strong. other than medical care, other than getting back to the old obamacare arguments, they have been avoiding the economy. i'm wondering now, because of what's happening with the market they may get into it? >> democrats were trying hard to talk about tariffs, worsen with china -- david: frankly a lot of democrats were with the president on tariff issue. >> some, i agree.

i'm happy for this opportunity to say i agree 100% what peter said. david: i thought you might. >> a moment ago. he is right about this. the economy was in a multiyear expansion in 2016 and it didn't matter. i don't think the swing trump voters are that tuned into the stock market anymore they were due to the fact we had low unemployment at end of the obama administration. they're focused on other issues, not the stock market. david: the fact is, keith, as president pointed out many times, economists certainly have, we were in stable state the growth that was under 2% for a lot of the years, it really wasn't getting -- there is old expression in economics, if you're coasting you're going downhill. we were coasting and politically that was downhill. that is one reason why the president was getting so much juice because of the economy, because of his business approach to the economy, which we hadn't been seeing from the obama administration. >> well, i think you're spot on.

people historically voted not because of their wallet but because of perceived impact of the election on their wallet. it is a subtle difference i think time around in 2018 will play significant role. particularly with unemployment and job situation and composition who is working changing way it is. i think it will have material impact how the election plays out. david: veronica, on other hand, markets are great predictors of the future, unless this is a blip, this may a blip over a long-term, hardly noticed as we note the chart going up and up. fit is more than a blip. if it's a predictor of something that will spill over the economy will it happen before the elections? >> that's a a good question. i wish i knew the answer to that. what i do know pretty sure we'll see more volatility into the election. that is one thing everyone can agree on, midterms, uncertainty it brings could bring more uncertainty in the market, more

ups and downs, especially, that time leading up is pretty volatile time. that is nothing new. we've seen that before. david: peter, one thing voters are seeing, folks with 401(k) are seeing value of their 401(k) go down rather dramatically this week but, for example, will there be some job spillover as a result of what we are seeing in the market before the election? >> no, i don't think so. we continue to create jobs and more importantly businesses are devoting a lot of their tax cut money to training. that is how we're getting the kind of productivity growth we're getting. economy will advance 3% a year which is appreciably better than mr. obama accomplished. that's wonderful, however, fairness issue that no one mentioned. watch the democrats shift to the fairness issue in the final weeks of the campaign. that is where they began. that is where they will end. david: exactly. keith, the bottom line though, is corporate profits that affects markets more than

anything else. are we seeing a disappointment on the corporate profits front when earnings begin to come in? >> i don't think we're going to. i think numbers i'm projecting 18 1/2, 19 1/2%. i think that consolidates as we get some of the earnings. tell you what, god help any company that doesn't meet or lower guidance. market will separate. we'll see companies that matter and companies don't. anybody who didn't -- david: adam, do you agree on tech front there. >> sure. these are highly valued company in the worst of times, they're extremely highly valued in best of times what we're in now despite past couple days. david: stay with us, panel. melissa, you have a special guest? melissa: robert schiller, economics professor from yale and cofounder of case-shiller index. what is your take on what is going on in the market right now? >> i always found data movement is hard to predict. you know back in january we saw

big drops in the stock market, i thought people were wondering is this turning point, turned out to be a correction. looks kind of similar. the other thing i don't think people are psyched way they were. i have survey data on investor perceptions and, investors at least over the last few months have been been positive about the markets. i don't think they read too much into this drop. melissa: what do you think caused it? do you think it has to do with the federal reserve? how many moves they have coming up? is it a normal cleansing that happens or maybe people taking some profits? what's your thought? >> i wish i had good answers to that. the market, we've seen price

declines for about a week now, it become as news story and people start to react to it. major stock declines are typically reaction to that sort of story like in 1987 or 1929. in those cases previous drops were record drops, engendered a lot of talk. here, it was going down. is a mild dysphoria we're going through. melissa: we had liz ann sonders talking about rate of change in the second derivative and what is going on with economic indicators, this is something you focus a lot on. do you feel like we see inflection point, even as we continue to go up, seems like across the board, if from an economic perspective at marked slower pace? >> i mean the inflection point comes to my mind is with earnings growth. if you look at, s&p earnings per

share, ever since the trump presidency that has gone on a strong uptrend. since it is a new presidency, it attracts attention. a president that wants to return to capitalism, i think. melissa: yeah. >> it's a story, a narrative that is driving emotions at the present time. melissa: interesting. thank you so much, peter schiller, robert schiller, thank you for joining us. >> my pleasure. melissa: great insight. david: great insight from one of the best economists in the world. october as you all know is big month for market volatility deirdre bolton in the newsroom. is something more than superstitious? is there something about october? >> there is something more about october. if you look past 50 years it stands out for a reason. some of the big market shocks,

october 1929, black tuesday, the market fell 90%. the great depression fell after this. 1987, drop in one day. financial crisis, continued in late september and october, technically about it through march. in the past 50 years, october is the most volatile month on record, bar none. you have shares of daily moves of 1% in either direction for the s&p 500 on average for that month, again past 50 years. oddly enough know, october shows positive returns on average but volatility is there. so we put together this chart for you. it's the vix. went back to 1990 all the way to present day. you can see that spike, that big ski peak. that is october. harvard business school research citing a few theories why it's a tricky month. one idea, after summer vacations traders come back, put on major trades that often execute in october. another is that the u.s.

government, fiscal year begins on october 1st. so you have influences for big industry contracts and plans. others say listen, companies will be reporting their third quarter earnings. we know financials are out tomorrow. it gives investors a picture how they did obviously over the summer. you get that projection for the psychological year-end. so far obviously, the past 48 hours anyway has been a showstopper. if you look at the group, i'm going to pick out "fang" stocks, because they have really led this year's market rally. they lost the most in history ever yesterday and continuing of course today. it is more than $150 billion in in market cap wiped out completely. you see on the screens, netflix, alphabet, going through a few of them. we're following the bond market, what is different you are talking about with our guests yesterday and today, yesterday we saw yields go much higher. they have come off their yields but mortgages, fast approaching 5%.

that could be a fresh blow to the housing market. that is something i hear a lot about the longer term effect the of the 48-hour selloff we've seen so far. tomorrow morning four banks as we know reporting earnings. we'll see if that can shift sentiment a little bit, jpmorgan, citigroup, wells fargo and pnc financial. we'll see what those results show and maybe give us a little optimism going forward. melissa: that is great report. that's a lot of good stuff, deirdre. david: let's go back to veronica, peter, keith. keith, what do you think about object? you saw suggestions of why this is such a volatile month. do you agree? >> it is obviously a volatile month. there is something about -- why do we have weak first quarters? it is very hard to put a finger on these things because you're always looking backward but the end of the fiscal year, that is a fundamental that's there and with us. it is going to have a consequence because of things like government contracts. the fact we have an election

coming up every other october. that is very big. less's face it. people are nervous about the democrats taking over. do we want cortez from new york making economic policy? i think not. david: yeah. i think, keith, we heard about that from robert schiller, he was suggesting finally somebody taking us closer to capitalism, not further away from capitalism. that does make a big difference. you have to look at the grand picture, we're still in the middle of that. no matter what happens in the midterm, president trump will be president at least couple more years. >> absolute and this is what traders are wrestling with, how do you reconcile the long term perspective you know is associated with the fundamental case, fundamental business case with our economic data and companies for owning them, versus the short term technical correction we're going through right now. that is the uncertainty. simply traders trying to get ahead of the tape in my opinion. we haven't seen the fundamental shift yet and i hope we don't. david: what about the shift in interest rates, veronica?

, we have potential, i don't want to say catastrophic but harmful as far as the economy is termed in payoffs, real estate, car sales, whatever you buy with interest rates will cost you more? >> it will cost more for consumers, affects consumers which affects sentiment. we're seeing tech stocks too. these tech stocks tend to carry higher debt levels. so higher interest rates makes carrying the higher debt level even more expensive for them. we're getting pressure on those stocks. you have to look at the big picture, some of these stocks are up, what, 60% on the year, for example, if you fall 10, 15 percent in couple weeks overall you're still up a lot. david: peter there is the cost of government, that goes up when interest rates go up? >> absolutely. we get crowding out. if we get interest rates up 3 1/2% for treasurys, so forth that makes it more difficult to finance the government but our

government has an advantage, increasingly abroad, not just central banks, not just china. businesses are using the dollar more and more as medium of exchange. here is one stat. the u.s. only accounts for 10% of imports but 40% of trade globally is denominated contractually, payments so forth in dollars. even germany, invoices much more in dollars than it does in euros given the share of trade with the united states and in that environment there is a huge capacity of the united states to continue to sell bonds. david: yeah. >> the typical rules that apply for spain and greece, iceland, all other little countries that went belly-up, even italy don't apply to us and we don't know the limits. david: yeah, keith the bottom line, people want a pies of united states, whether a piece of our bonds or in terms of our stocks. you can't avoid that particularly as the rest of the world is going down. >> i learned a very important

lesson from a very senior trader years ago when i was still young burned into my head right now, the world may hate our guts they love our money and love our businesses. >> that's true. david: veronica, there is no other place to go? >> the u.s. is still the strongest place in the world in terms of economy. try to be emerging market investor couple months you really appreciate the united states. melissa: is true. that is a great point. here on the phone, dick bove, citigroup, jpmorgan, wells fargo report earnings tomorrow morning this is the story what in terms the market does next. dick, great to have you on. what is the outlook? what will they report? >> each one of these companies should report pretty strong numbers not because they're doing better but because the tax rate for them has been cut by, you know, roughly 1/3. the he pretax number will not

look anywhere near as good as the after the-tax number. net interest margins may be flat, flat to down, consumers may not take it anymore. they're being treated extraordinarily badly by their banks because the banks have not increased rates on deposits, therefore consumers i think will be pulling money out. i think the second thing you have to watch is the something called other comprehensive income because as interest rates go up, the value of bank assets go down. which is something that people don't talk about too much but the fact is that you know, if you look at the one sliver that they give you of what happens to their assets when interest rates go up, you can see that their security portfolios which is 3.6 trillion, have dropped by 54 billion over the last 12 months and we don't know what value drop has been in the rest of their portfolios. so we don't know what true value

of bank assets are today. we don't know what the true capital value is. we don't know that they won't see any increase whatsoever in their net interest margin because depositors simply get more. they will have big numbers tomorrow because of the tax cuts. i don't think they're attractive to stocks at all. melissa: jamie dimon always tries to make the case at jpmorgan that federal reserve rate doesn't really impact him because it is based on margin above that where they're lending money or doing business or anything else. do you buy that and do you think that they have, do they care how fast the fed raises from here? that is the larger conversation we're having about the market, does the fed slow down what it has penciled in? how does it impact this group? >> short-term interest rate increases are supposed to benefit banks, right? if you're a bank like jpmorgan which has hundreds of billions of dollars in cash or cash-like

securities it will definitely benefit you know, the bank. but the bottom line is the customers have to pay the higher rate and you know, there is a tremendous competition right now among banks to get new loans. so i don't think that they're going to be able to get yield on loans up by very much. i'm convinced, think about it. you have money in some bank accounts somewhere. you know that interest rates are up roughly 2%. and you got a decision to make. do i be a good guy, let banks take 100% of the profits because of increase in interest rates or do i tell the bank you have to give me some of it? and the banks are saying no, we're not giving you any of it. therefore what will you do with your money? you will take it out of the bank where you get that 2% because why should banks make all the profit and you get nothing? therefore i think margins are going to be stressed for banking companies. melissa: that is very logical. i wonder how many people have

time, flexibility, foresight to do that. that is total rational behavior, i completely agree with you. i don't know how many people have the time and with all to do anything and move around? >> you can see the deposit numbers. federal reserve puts out the numbers every week. you can see the fact that growth rate in deposits four 1/2, 5% a while ago, dropped to 2.5, 2.7%. what you're seeing is that people are reacting. they are making the logical decision because, you know, just how long can we play the greater fool game with bank depositors and assume they just don't have the brains to take the money out and get a higher rate because they love their bank so much they want the bank to take 100% of the profit? melissa: as always you make a brilliant case. dick bove, david asman right next to me, nodding away. david: i did exactly that. melissa: did exactly this calculation. david: i saw money in checking

account not getting anything. i saw interest rates going up, pretty much guaranteed 2 1/2% for three-year, six month bond. where do i put my money? i don't want to give to banks. they have enough. jamie dimon is nice guy. i don't want him to have more of my money. melissa: dick bove, thank you. fantastic. david: running on a booming economy. wall street on edge ahead of the midterm elections but will signs of a strong economy keep voters optimistic about the future of the united states? charlie hurt of "the washington times" coming next. so no matter what you trade, or where you trade, you'll only pay $4.95. fidelity. open an account today. because when you want to create an entirely new feeling, the difference between excellence and mastery,

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the kavanaugh, i mean kavanaugh confirmation was a big boost to this administration. so they were so happy going into the midterm elections, they thought they had it made but then this, what are you hearing from inside the administration about their feelings what is happening in the stock market? >> well, certainly, anytime you have moves like this it is kind of disconcerting but, they do feel confident that the fundamentals of the economy are still good. the jobs that have been created under the trump administration are still. there. people are still working. at the end end of the day, i think this is probably true, voters, the stock market, you always want them to be better than not but the real things that matter are, what kind of money am i taking home personally to spend on things i want to buy. david: they do look at 401(k). >> sure. david: the president made such a point of attaching himself to the market gains, taking credit

for it, when it goes bad, i mean he is kind of stuck with what happens to the stock market now. >> he really is, you know, that is a risk he has taken and this certainly a president who is not afraid to take those risks but i think that, underlying all of that is a real genuine belief that all of these very simple things that the president is doing, such as cutting regulations, cutting red tape within the federal government, trying to, you know, let the markets sort of operate on their own, all of those things are a recipe for a better economy. david: right. >> i think they really do believe in it not just as talking points but it actually improves things. that is what we've seen the furs two years. david: we heard a lot of people last couple days, making frivolous analogies to the 1920s and '30s. >> my god. david: even to the year 2000. list and sonders was just on, i

don't mean to down play her analysis of this, the year 2000 was example where the market went down even though the fundamentals were strong. that led to a recession. well, remember a lot of what was happening with the dot-com boom was smoke and mirrors where as what's happening now is real profits. >> right. david: not just sort of expectations about what might happen, but profits based on what is happening and what is selling. >> yeah. but you know, the other side of it is, you have the media, which is a big, has a big, has a big impact on things. we have media for 90% of the coverage of this president is harshly negative. david: yes. >> they tend to blame him for everything and they renews to give him credit for the things, for his successes. and so i also think that sort of baked into people's view of a situation like the economy is that well, you know, they're never going to give this guy credit for anything. so he gets a little bit of

leeway in that department as well. but as you say, i do think that as long as people still have jobs and they're getting take home more of their money and spend more of their money on things they want to with their family, a situation, an issue like the kavanaugh situation, or perhaps even more important, doing, having footage of barriers being built on the southern border, those things have a big impact. they excite the base that elected donald trump in the first place. david: right. >> i think that all of that is going in a good direction, not to say that republicans aren't going to lose seats, i think they will probably lose seats definitely but these are all good signs. david: charlie, great to see you. thank you very much. charlie hurt from the "washington times." melissa: leaving a path of devastation. recovery efforts are underway after hurricane michael hit the florida panhandle leaving the region in ruins. we are live on the ground in one of the hardest-hit areas.

that's next.

melissa: breaking news right now. the death toll from hurricane michael is rising to at least six people, including one fatality in north carolina. this is according to reuters. connell mcshane on the ground east of panama city, florida, with with the latest on damage there. connell. reporter: the devastation is overwhelming melissa. as we travel from southwest florida to the georgia border. this family's doctor practice, you can barely make out the sign. many of trees are down were in the road and authorities have gotten clear of that. i want you to introduce to debra mccloud. she lives mile 1/2. like many people you stayed here

last night. tell me what happened in your house? >> a tornado came at the end of the storm and twisted off a huge pine tree and slam i had it down in the middle of my house. reporter: while you were in the house? where were you, where was the tree? >> i was in the closet, in my walk-in closet. the tree was right at the end of the house. and it just came down. i mean i could see it up there. and we just hurried up, scurried out of there. reporter: the house is about destroyed, right? >> yeah. reporter: what are you going to do? >> i will stay in it until fema gets here and hopefully fema will help you? reporter: insurance? >> i don't have any insurance. reporter: what are you going to do tonight? >> stay it tonight. reporter: just like last night. >> sleep on the sofa. reporter: we wish you the best. we have a little bit of signal for your kids. thanks for telling your story to us. david, melissa.

this is the thing, one story after another. absolute devastation in terms of damage the storm did. but leads to these problems in communication. you can't call people you love. can't get help you need. big one, transportation. very difficult to get around here. will take a long time to come back from this one. melissa: connell, thank you. david: no insurance. can you imagine? melissa: tough. david: tough. something you might have missed today with all the market news going on. this is definitely worth waiting for. stay tuned. ♪ ...

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hundred roads named "park" in the u.s. it's america's most popular street name. but allstate agents know that's where the similarity stops. if you're on park street in reno, nevada, the high winds of the washoe zephyr could damage your siding. and that's very different than living on park ave in sheboygan, wisconsin, where ice dams could cause water damage. but no matter what park you live on, one of 10,000 local allstate agents knows yours. now that you know the truth, are you in good hands? >> my own friends, but this hat , it gives me, it gives me power in a way. we have to make our core be empowered we have to bring jobs into america. melissa: kanye west taking his make america great again message to the oval office.

david: it was quite something one of president trump's most vocal supporters discussing an array of issues at the white house including bringing jobs back to america. kanye west wearing that hat. i dare anybody to try to take it off of him. melissa: there you go. all right that does it for us the evening edit starts right now. >> another wild ride on wall street today the dow ending the day down again losing nearly 1,400 points over two days alone we've got all-star coverage tonight with the forecast you will need as naked fear swamps the markets this as mid-term messaging now on full tilt, just a month ago both parties firing up their mid-term base, tonight, for democrats, it's fear mongering over republicans doing things like stealing your healthcare. it's all about identity politics , and more, but for republicans, it's about an angry democrat mob that can't govern the country that's now threatening the freedom to pr