why we love because because again it is so -- interesting. incredible stories and growth stories. always searching for growth on this program. have a great day everybody. thanks so much for joining us phenomenal panel "varney & company" begins right now. stuart take it away. prchg good morning maria, everybody. federal reserve thinks economy is strong. they raise interest rates and will do so twice again next year. the market sees a weakening economy. perhaps a reare session, it sold off. big time. well that was yesterday. this is today. the market will open flat to slightly well, down 40 points maybe on the the dow. 18 on the nasdaq. there may be some reevaluation if the feds move today and market response to it, throughout the program, this morning -- we're going to ask is if this is now a buying opportunity or a signal to get out. now look at this. oil heading south again it is back to 46 dollars per barrel.

the question is, what does that mean i'll tell you. a christmas present in the form of very cheap gas. prices have continued to come down national average 2.36 exactly. later on the program you'll hear a forecast of another 5 to 7 cents gallon down before all is said and done let's get to politics. no joy for republicans or president trump. the senate passed a spending bill which would keep the government open but does not contain that $5 billion to build the border wall. now it goes to the house will they pass it? and if they do, will the president veto it? as for democrats, flat out jubilant. thursday december the 20th, 2018 "varney & company" is about to begin. >> mr. sullivan, oh, you know,

we played that -- but you can barely hear it. in the background yeah you can hear it now. >> that you can barely hear it christmas carols song in celebration by the democrats on the senate floor yesterday. because the senator passed a stock pupgding tbil to keep the government open until february the 8th democrat senators singing christmas carols on senate floor essentially they won that one. basically -- meanwhile, freedom caucus leader congressman mark medicine meadows mas strong words for the president. pfnght you veto this bill we'll be there and more porpghtly american people will be there let's build the wall and do our job in congress. >> okay he wants president to veto spend bill that doesn't contain money for the wall now

looking at what president just tweeted. the democrats who knows steal flats not sure what that's it be unnecessary for border security are putting politics over the country. what they are just beginning to realize is that i will not sign any of their legislation including infrastructure unless it has perfect border security. usa wins. we're going to have more on that in a moment congressman republican in the house he join us a lot more on this to come. first, though, check the market money first thing this morning we're down -- 50 or 60 point for the dow. joins us now market watcher dennis -- dennis, you have king thely said just over the last couple of months get out of this market. are you now saying maybe get back in because it is a buying tupght what do you say? >> no. i'm saying no. do not get back in it is still a bear market you may get a bounce so only be technical in nature.

things dead cast do bounce off the floor toss down quickly and hard enough but they don't bounce very far or very long. this is a bare market about the fuel needed to sponsor bull market have been quietly taken away. it is the adjusted monetary basis falling now for several years that'ses fuel that kept both the economy and the stock market rising with that fuel being reduced, either the economy goes higher or stock market goes lower. right now the stock market is going lower. no you do not want to be a buyer if you own some wait for a rally sell into it. >> okay would you say that jay powell fed chair just ignored all of the signals coming from the market? and went with what he thinks is data on a strong economy? inch well he's lookinged a data of the economy itself rather than data from the stock market. and i think that that's probably what the federal reserve should be doing. ting that the fed did exactly the right thing. i would have -- i suspect if they have passed on

raising the overnight fed funds rate that stock market would have taken it well for about an hour maybe two hours. but i think that fed did exactly what had they said they were going to do. they've been king the they said they're looking at -- at maintaining their two mandates. low inflation and low unemployment. they have done that. so i think that the fed did exactly the right thing. >> okay. hold on dennis we'll get back to you in a moment i want to switch from money to politics i want to bring in congressman shawn duffy republican from wisconsin. now house will vote on spending bill which does not contain 5 billion dollar for border wall are you going to go for it or yes or no? >> right now there's a meeting of republicans in capitol talking about about this very issue right now as we speak an i'll tell you last night on house floor as it was whipped again the cr continued resolution. that just keeps funding levels at current pace, and we have no five billion dollars if the wall in that bill. republicans conservatives, moderate ares everyone in

between seem to be universally opposed to it. i don't think this is going to pass. we ran are on securing border building wall we join president trump, and i think you're going see great resistance in the house and we're frustrated because -- we could have had this fight a week or two weeks ago. we have a two-week extension rate before christmas to put this in a bad position to fight for border securities. >> we just read a tweet from president trump this morning. it so manies to imply to me that the president will veto this spedgedding bill if inteed it reach ares his desk. i take it you agree with that. >> i do well i think he's done a little bit of yin and yang on border security with bad advice inside the white house maybe people who were never trumpers and gave his advice. i think by us buying into message on border security, and he's going it fight with us to make sure we do the best we can to get it. >> we just played the democrats on the senate floor singing christmas carols.

look to us like that was a celebration. did they win? >> well if they're able to get a cr and what we have with a cr go into february when we nancy pelosi in speakership we lose our leverage so, of course, that's a and for them. but think of this stuart, this is about negotiation. this is about compromise, we're going to have a bill on criminal justice reform we could do daca all in exchange for border security and what democrats want is republican ares to compromise and all they want to do is dig feet in and i think this is more nancy pelosi was never -- they have to be speaker and they want to be speaker. >> can i just be blungt for a minute sorry to interrupt you like this. republicans lost. and a republicanses lost in part because some of you just didn't show for the vote. you are retiring you didn't come back to washington. you beat yourself isn't that true? >> stuart i'll tell you liewp put it on a date when republican wouldn't show up. this would have passeds last week instead of taken a republican vote in the house, and forcing senate hand what our

leadership did was wait for senate it act to give us a cr put pressure on us because i don't think our leadership team ever wanted to spend a $5 billion sum of money or border security that's the way i see it. >> got it shawn duffy thank you we'll see you again soon. let's take a look at facebook. attorney general in washington, d.c. that's the the attorney general of d.c. by the way he's had suing facebook over the cambridge analytica scandal maybe this is the first or maybe one of several lawsuitses to come. dennis come back in again. i know that you don't invest in this kind of stock. you don't touch technology. i know that. but it seems like, from an outsider's point of view and your part, i see endless bad publicity endless headaches for facebook. do you think bottomed yet? >> no not at all i think you're absolute right this is just the beginning -- one lawsuit with another lawsuit with another lawsuit as i like

to say there's never just one cockroach whenever you have a problem up here there's more follow and google all are face illegal problems and monopoly problems this could go on for a period of time i'm aid trade. >> i want to ask a question here let's suppose that was there a social network and you paid for it. all right five bucks month whatever it is you paid for it and in return your information was guaranteed privacy. would you do it? would you join that social network? >> yeah, possibly. people already pay for netflix a.m. son and apple. would you pay not to have a third party manipulating you and exploiting you. yes ping people would pay it. >> you would not. would not pay for it, in fact, research company about three months ago did that very research and found that 77% of americans said they would not pay. they'll pay five for a latte at starbucks but not five for facebook. >> that would be dennis that would be the way out for a

facebook. >> absolutely. but would i pay 5 i would pay 10 or 15 for that privilege not a question. >> but facebook or whichever company couldn't sell your information so it cancels it out doesn't it? >> right. >> i think going prieflt like that would be a -- a very probable and possible and very proper thing to do. i would be a buyer not a question. >> okay. dennis thanks for that comment on a stock which you would never invest in 25 years and your phone is ring aring that's mark zuckerberg. >> it is no actually that's somebody probably trying to sell me a timeshare. [laughter] >> oh, with please -- dennis -- happy had holidays to you. hope to see you again real soon. >> merry christmas. thank you, sir. check futures how do we open down 350 points yesterday. much of it in latter part of the day we're going to be down 30, 40 points at the opening bell today. here's an interesting story. ann highser bush teaming up with

a marijuana producerray alcohol infused drinks both companieses invest million dollars into this joint venture pot and booze getting together. lawmakers here, or very critical of president trump's plan to full troops out of syria. russia's putin praised the president decision in a big speech this morning. we'll have more on that coming up for you. and the grocery store chain kroger lost a self-driving delivery service in scottsdale, with arizona are they ready for a fleet of driverless car on its roads we're going to ask the mayor, next. at fidelity, our online u.s. equity trades are just $4.95. so no matter what you trade, or where you trade, you'll only pay $4.95. fidelity. open an account today. you'll only pay $4.95.

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president trump tweeting this on syria getting of syria no surprise campaigning on it for years six month ago when i wanted to do it i agreed to stay longer russia, iran, with syria and others are are the local enemy of isis. we were doing their work. time to come home and reare build. hashtag, make america great again. ashley, russia's putin has responded. >> he has in a national news conference he holds at this time every year he says i don't think they're needed mr. trump has made the right decision. but then he goes on to add this and let's not forget u.s. troops there is illegitimate but he's praising move as you say president is say look, russia, with iran, and syria many others

are not happy if the u.s. leaving. despite what the fake news says the president says now they have to fight isis without us so he said don't believe what putin and everyone else says they're not happy because we're not helping them fight isis but we're not the policeman the middle east or world for that matter. >> general jack on americans withdraw from syria later on this program now down about 30 point when the market opens this thursday morning. that will be in about 15 minutes time down 30 on the dow maybe down 5 on nasdaq. you know we talk a lot about self-driving technology. well the great restore chain craiger started self-driving delivery service in scottsdale, arizona come on in his honor mayor of scottsdale jim lane. you know, lots of cities could have gotten didn't want this self-driving delivery service but you accepted it and wanted it, why? >> well interestingly enough number one good morning stuart nice to be with you this

morning. [laughter] but in any case, with you know, they've been with us here and as far as self-driving vehicles quite some time not kroger as well but we have accustom to it and worked in a cooperative way to see if this technology is going to be able to take hold and -- as the new york times said their article a week or so ago in a snarky remark about the fact that -- cars are trying to find their purpose in life i guess. and i thought that was sort of interesting. [laughter] >> but we said about it -- have they accepted this as good acceptance? >> actually we have not heard any real difficulty with it at all. it's they've been testing for over a year and a half maybe even two years now, and this could be cruise now gm and, of course, local motors and as well

as for last mile transportation with smart vehicles as well as, of course, nuro and kroger with grocery vehicles. >> i don't know any accidents or fender benders of that kind any legal problems are police gearing up to take care of this? what -- how do you handle this? >> well one of the things things student all that wanted to participate in any kind of pilot program, generally with manned autonomist vehicles as this is a transition, of course, to fully autonomist vehicles and this is -- this is the test. this is where they really come to bear as to whether or not it's a difficulty or not. but to this point and time we haven't received any reported issues. police department worked early on with all of the aa ton mist

vehicle providers and testing agencies. and we just made sure that they were going to be able to work within our infrastructure. and that their technology was going to be able to read and see and so they've been in the process of that. we have not been making modifications but we've been working with them to make sure that particular items that would happen like construction sites or different things that might happen in the environment that might throw a little bit of a glitch into their -- their intelligence there. >> jim lane mayor of scottsdale, with arizona looks like the state is an experimental ground for self-driving cars and you're right in the middle it have. sir thanks for joining us this morning. merry christmas to you. >> merry christmas to you stuart and thank you. check futures we're going to be down about 60 at the opening bell remember we were down 350 yesterday. another legal blow for johnson & johnson over baby powder a judge in missouri threw out a bid to

overturn a 4 billion verdict against them that judge says j and j knew their product it was dangerous. but market it to mothers and babies anyway. judge napolitano has more on this and he's coming up next. what if numbers tell only half the story? at t. rowe price, hundreds of our experts go beyond the numbers to examine investment opportunities firsthand. like a biotech firm that engineers a patient's own cells to fight cancer. this is strategic investing. because your investments deserve the full story. t. rowe price. invest with confidence.

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all right this is breaking news, it's a bombshell report and it comes from "the washington post." unprecedented mask condemnation of china by the u.s. and more than a dozen allies including britain, australia, canada, japan, and germany. persistent efforts by china to seal technological and trade secrets both from governments and companies within these borders. so this is a biggest effort to date to hold china accountable. it's a -- in china bid to become world

superpower both technologically and economically. the accusation is it ising international norms next step doj unveil indictments in criminal charges to against members of china's military intelligence unit. and also expect sanctions to follow as well with. >> at the market. doesn't hurt trade deal too. yes. and a very good question i don't know if i have an answer for you but that is a bombshell report this on johnson & johnson they've lost their bid to a verdict that verdict had had given 4.6 billion dollars to women who blame their cancer on asbestos in company baby powder judge threw that out and threw appeal out. let's sort this out with judge napolitano this looks real bad for j&j. >> terrible so you have 22 plaintiffs 22 women case tried for all 22 them and jury found that j&j had asbestos in the talc powder knew it was in there

that was important. 4.7 billion -- astronomical number broken down as follows half a billion 550 million for compensatory damages. split amongst 22 plaintiffs, 4.2 billion in punitive now in order to get punitive, the company would have to show all of its financial records to the court. the court would give jury a guideline are you punishing mom and a pop or great j&j what would it take to sting the court? the jury found it would take 4.2 billion to punish them. what happens to 4.2 billion? distributed amongst 22 plaintiffs. ask me what legal fee is -- >> what is it? >> one billion -- for the lawyers. >> wait a minute the cancer society american cancer society said that there's no asbestos there and does not cause cancer. >> not only does american cancer society say that but many reputable cancer research rs say

that so when you have a case like this, the injuries no question these 22 women had cancer, there's no question that they use the powder it is a question of causation and it is a question of who has the better expert. the the expert that's more persuasive to jury each side has a team of scientific experts and the team that is more pee sweysive with jury wins. that's the way cases are tried i've tried dozens eve them myselfs as judge. >> lawyers got it into the right venue missouri that was the right venue because it is easier to win in missouri is that accurate? >> yes. everything you've said accurate now before j&j share hold percent go crazy, there are two more appeals. as this particular judge has been reversed a number of too manies on punishes like this. there's appeal to an appellate court of three judges and missouri supreme court, of 7 justices, those appeals won't be perfected until 2019 or 2020. >> and market shows j&j stock

down to 127150 as i recall so taking a beating. it has taken a beating now they're amounting a massive and to me very appealing pr campaign you see the full page in all of the newspapers this morning. >> got it judge we'll follow it with you thank very much. merry christmas to you stuart. >> we're going down again at the opening bell it is thursday morning big drop yesterday down about 808 when that gets going again this morning. i wish we have a different picture for you but we don't.

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>> all right we've got 20 odd seconds to go before we find out how this market is opening up this thursday morning. i'm sure you don't need me to

reminding you 351 points after federal reserve raised interest rates and suggested it might do another two hikes next year. the market didn't like it. we're expecting a trip pl dimght loss at the a market again today. all right here we go. we're off, we're running thursday morning we're already down 115, 136. i don't think to call this lick a horse race but it seems like it down 137 points it is a sea of red again, among the dow 30. and dow is tweal down to 23,100 that's a loss there of about two-thirds of one percent we're down 160 in the very early going. is that the same on the s&p 500? yes it is. down a full half percentage point there and more, 14 points lower for the s&p, how about the nasdaq where is that in the early going? it is down about half percentage point as well. big tech bell weather where are they today? all of them were down yesterday all of them are down again

today. facebook is at 130 dollars per share right there. amazon is back to 1400 level. apple 160 alphabet that's google 1,021 significantly oil is significantly again and that's down over 3%. big moves on market again today. so is michelle here and liz and ashley all joining in today. all right, stocks drop sharp subpoenaly after the fed decision they're down again now. scott is this a buying opportunity? >> it will be. gosh -- not yet i don't think so. >> but not yet right? >> not yet. we really gosh i hate to say this way and tough to smile on intro here which i do all of the tile is because stuart we haven't seen that complete just throw the the baby out. throw the bath water and capitulation as i like to call technical term here or bar of

bottom in the market it is coming fed, obviously, i think put it closer to our future here by what they did yesterday total mistake but it is coming and you have to buy. >> washout is still to come don't buy until you see it. >> may not get it because bond mark is previewing with two rate hike next year 2 pngt 75%. so bond is tenure dropped which is interesting on news of the rate hikes and news that there may two not four rate hike next year. >> all right well a buying opportunity? >> i think it is a buying opportunity now or you're waiting for seller? >> to say now or or tomorrow if it is february, like 2016 it is really hard to say. however, i have continuously look at fundamentals they look good and that i think everyone is bearish right now is with that very positive thing. i hate when everyone in room is bullish and then i'm like something is wrong. so i would say it is a buying

opportunity. >> federal reserve in statement yesterday lowered pits growth target for next year. the economy will grow at 2.3% when they lower the the growth forecast what does that do to outlook of stocks? fed has been wrong before they were wrong for 2018. i'm saying it is extremely hard to predict. [laughter] >> that's true. okay what do you got scott? >> well stuart, stuart you exactly pointed out key point yesterday that fed talked about -- you know decreases they've seen in business sentiment and in business investment lower of the gdf forecast yet powell comes out and is not superhawk fish i guess exaggerating but testifies hawkish enough for the markets to be like wait a second if this is all turning over or at least pulling become a bit why are are they raising interest rates. >> i think he ignored market and all kinds of signals that something is wrong but -- push back against administration too pibal is element to that. >> i think look market is going

to be all over the place for a while as people try to figure out what's with the federal reserve what's with interest rates what's with china trade right now we're down 0 points 23,200 if i'm doing the math right, we're about what -- 3,000 points away from the all time high here earlier this year. that's a big cut. the price of oil i think that does factor in to the stock markets equation. price of oil is down again this morning. down sharply i have to say, it is become to 46 dollars per barrel. even though saudi arabia says they're going cut some more production opec says they're going to cut some more production, and market ignores that down another 3%. however, we still have a continueing decline in the price of gas 236 is your national average today. scott come back in please. why not buy oil companies right now? >> well you know there will be one stop where they agree here. i would say that would be one

spot to nibbling if you looking at the chart if you look the evaluation on some of these companies, i mean, honey halliburton that's what i was thinking about those would be ones to attack a look at. we are not buying those yet. oil has been thrown out. problem, though, is look at what's happened fundamentally stuart we've had announcements from opec and talks in u.s. too about maybe to pex port more, an all that does is hammer price so to me oil is not ready to bought yet but that would be one palace if one was to pick a bottom. >> we have volatility with five minutes into trading session we were down 150. now we're down 100. look at fedex now they're big drop came yesterday after they cut their outlook for the the future. only a minor leagues bounce today up what -- 12 cent that's all you get from fedex at 162. higher sales at right aid that company is up 12% and, of course, it is starting from a low base. up 10 cents to 92 cents.

higher profit at walgreens that stock, though, is down 3.5%. sales they fell short when that happens you go down, down 5% on conag arera this morning. attorney general of washington, d.c. suing over cambridge analytica scandal michelle at 132 on facebook now is that the bottom or close to it? >> my gosh stuart, the headlines just keep getting worse and not to say that headline hads aren't going to get more working and particularly facebook is really are caught in the downdraft because markets are going down, we're getting really bad headlines, so -- i wouldn't necessarily be a facebook buyer here. >> you would not. how about you scott would you buy it at 132 where it is now? >> i own it. [laughter] >> viewers are lower i wouldn't be buying more here but gosh you know owning something like this with really good projections next year earn growth may be adding to it because it is

fallen so far so fast. >> okay. and they think it is important to pig gee back off his point that you need tech and you need broad base names but to individually single out facebook is really hard to say here. >> got it ann highs bush teaming up withray to test cannabis infused drinks some will get you high with thc some would be purely for medicinal purposes. is that you laughing scott? i can hear giggling away here recipe moneymaker for certainly forray anheuser-busch looking good this norpg. >> i think it is great hearing you raze read that made me laugh maybe that's the first drink we'll have together stuart who knows an my mom is watching too so i should take that back but beverage companies whether it is consolation brands with investments they've made into cannabis before they need to be creative they need to be cutting

edge on forefront of what a lot of youth is going to want frankly. i think starbucks by the way guy, is another one that's going to start looking into this venture too keep an eye on them. >> wouldn't surprise me at all we have altria class pick tobacco company nearing deal to take a 35% in jewel, the e-cig people at 35% stake how much of they're paying or new qort? >> basically reason why they're buy them is because of the 75% margin this company post on its products also the international reach of this company. so it's -- >> don't they want to get into smokeless -- >> yeah. they're the smoking company. so it is going down, they want to get into -- >> fell 13 billion cash injection for 35% stake. it is coming out of a 38 billion evaluation but it comes on same day in and around that u.s. surgeon jrn said there's a youth vaping and toxic chemicals in product so striking thing. >> i like it. but you'll is jiepght in e-cig

market nearly 80% market share for jewels sop even with regulation coming down the pike they believe that it is a good investment. i have one real fast question for everybody. let's suppose that facebook completely changed its business model. you pay to get on their social network. and in return, they guarantee your privacy. scott, would you pay $5 a month for that kind of facebook -- >> guarantee. i think that's about the price stuart i've seen ten floating out there that is too high so something in low single digit to get people to take it i believe. >> would you pay -- >> define guaranteed? they've constantly stated -- [laughter] if they lose your info or they sell it to somebody you sue them they're liable. >> maybe. you would join that? >> i'm just not a fan of facebook in general. >> all right indicated to nbc earlier this year that could be a paid model indicated that. and by the way facebook has lost

215 billion in market value since july so they go to a page model. >> 133 this morning that's about 100 bucks away from it high i think. it's that time i have to say good-bye to michelle an scott thank you good stuff. check that big board we're coming back in first few minutes down 150. now we're down 90. not much of a comeback got emitted. check out this video from california a tesla model s, burst into flames after getting flat tire. we've got the story for you. and a warning to anyone who might been getting new ipad for krems. apple saying they may come out of the package slightly bengt apple says that's normal. we will explain it after this.

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we're down some more. the dow is now up 164 point. down .7% getting down to 23,100 as we speak. let's focus on the economy for a moment. joining us now is jeff, he's the chief global investment strategist at charles schwab we welcome him. most welcome sir. lots of trouble brewing in europe with brexit, loss of trouble all around world china slowing brexit trouble, europe slowing, is america the standout world economy? >> well, the u.s. is certainly outpace rest of the world in 2018 that was not the case in 2017 or 2016 but certainly maybe with the tax cuts and some other maybe less geopolitical threatening environment and u.s. has shown itself to be a

standout in terms of growth but next year, well that cub a different story. we're looking at the fed continuing to hike rates next year, and then they slow not just the rest of the world but u.s. as well ploog to inversion of that three month to fen year yield curve a reliable signal of coming recession. >> you sowpgd rather not bearish because that's a silly term but you don't sound very optimistic about america's economy or market next e year. >> well i'm afraid the -- the market in 2019 may be headed towards a bear market and that's to not only to this inversion of the yield curve that's reliable signal. but even if we fake a look at unemployment rate versus inflation rate you know when those two become same number it is reliable signal of a peek in the market and economy and we're very close. u.s. is only 1% away from two numbers being the same and happen in 2019. all right jeff give advice to our viewers please because come

january, everybody who has a 401(k) can reestablish where they want their 401(k) money to go. stocks bonds, cash, a mixture, whatever. what would be your advice to our viewers many of whom do have a 401(k) what's the allocation come january? >> few thing you can do what if you have an asset and we have a period of weakness in market but if you have it look to trim the more volatiles asset classes and merging market stocks it shall >> cut aside jargon for a second would you suggest to viewers that you put more money into stock or less money into stocks in their 401(k)? >> you would want to trim money in the stock market and put that into bongdz look for those high quality bond portions of that 401(k) all lo kition like treasury market we've trimmed emerging stocks into treasury that's something to do for the near term. >> jeff thank you so much for joining us i know you're a big hilt per i know we limited your

time but that's how we do it here and move real fast. jeff, schwab good stuff. see you again. tesla car catches fire after a getting a flat tire. now, you better explain this because it sounds bad but i don't think it is bad. >> it happened in northern california. and tesla car got a model s got a flat tire and then they started to tow it to an a autobody shop and it got damaged and a lithium battery got damaged it ignited. the firefighters watched this waited accident is hours because sometimes these batteries take 24 hours to put out. they monitor it, and they saw that it was going to possibly reignite it again. and they took it to another autobody shop and these are highly flammable lithium batteries and take foam to put them out. >> but the fire caused because the car was dragged along the hard pavement and that's what

made it caught fire. >> highly flammable battery. >> okay. well complex stuff but you have to get it right. check had the dow 30 check the dow industrials we're on parking lot downside 16 minutes into the day. down 176. 27 losers on the doug. make that 20 -- 26 lose percent and 4 winners among dow 30. price of oil, still right around 46 dollarss a barrel. down about 2 and three quarters percent today. price of gas down again -- just a little. $2.36 per gallon. next, though, we're going to talk to someone who says it will get cheaper than that. we'll be back. our dad was in the hospital. because of smoking. but we still had to have a cigarette. had to. but then, we were like. what are we doing? the nicodermcq patch helps prevent your urge to smoke all day. nicodermcq. you know why, we know how.

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low of the day down to 350

yesterday, down 206 as of right now. just 20 minutes into this thursday morning session. quick look at carnival cruise line lower profit down it goes 4.6% in a big down market. i want to get to the price of gasoline. overnight we have a national average come in at 2.36 cents per gone joining us now the analyst who got oil right. let's see what he's got to say about gas. okay, 236 national average how low are we going andy? >> i'm expecting that slide is going to continue projecting to get to 2.30 a gallon national average by new year. that's it no further down? >> well, it is possible to go even further below that. but you know, as volatile as oil market has been, it is hard to say there's changes afoot in supply dynamic although oil continues to be under pressure now from fed decision and what the equities market is doing.

it is certainly possible to see 225 maybe even below that come january as we go into the weak pest gasoline demand part of the year. >> okay now tell me about the west coast because i see a list of how much it cost per gallon, california, oregon, washington, nevada, and it is all over 3 dollars. way above national average why is that? >> well it is quite expensive out there number one due to taxes that are imposed on the driver in california. number two, is that the california west coast market is isolated and whenever we have a refining problem of over there, we see prices start to shoot up. so if you would have looked the state average for california is like $3.40 a gallon but if you're fortunate and live in missouri, the price is about a dollar 95. so you can clearly see the geographic disparity by being isolated. knch you go back to price of oil for a moment it is way down 46 dollars per barrel.

is that largely because of american frackers and american trillers -- are we ones that is driving price down primarily? >> i would say the majority of price fall is due to that. but it has also been contradicted by russia producing at a record am of nearly 11.5 million barrel a day and opec has become very -- less effective in controlling supply, we saw qatar leave opec. >> yeah. well -- they say they're going cut production. but it doesn't affect a price we're stl up 46 dollars a barrel coming down. >> well i don't think they've cut production are enough in order to get the oil market back and balance when we see refine products we see, you know, good supplies of gasoline not only here but in asia. if anyone on the west coast has anything to look forward to, it is fact that there's new refining capacity in a significant am of it coming onis line in asia, and that excess gasoline is going to make its

way over to this hemisphere. sum it up like this and down another 5 to 7 cents per gallon by early part of next year. we with like it. and andy thank you very much indeed sir. see you soon. thank you. a physical -- they say that bent b-e-n-t ipads are normal tell me more. >> i wish i had the story but i don't. [laughter] i'll get it for you next -- this is a bigger story. some emerge bengt i don't know how that works but -- doesn't sound good. bengt whatever. far more important chaos in london now remember these are -- this is a giant airport and it is -- south of london shutdown there's 11,000 passengers at last report. trapped in this airport that shut down last night because of two drones spotted flying over the perimeter fence on to runway

or near the the runway. they've scrambled but they cannot reopen the airport because they can't get to the operator of what they're calling industrial, style drones every tim they get close to the operator they believe the drones disappear, and reappear later back over the runway. they brought in armed police who at one thought they were trying to shoot drone down but now decided against it and stray bullets could end up anywhere. holiday travelers have nightmare dream and hopes of, you know, having a great holiday of being ruined by someone operateing two drones over the airport it is still shut as we speak. >> this is just a few days before christmas. it is a friday. 110,000 passengers to go through there in daylight hours today flights are rerouted all over the place london to paris to amsterdam and those in the airport are absolutely trapped fop no flights are taking off many, many flights are now canceled true from last night from 9:00 last night through

till maybe -- 4 p.m. london time which is coming up what's the time now it's coming up to 3:00 now. local time in the u.k. still shutdown that's one the world largest airports. very different shutdown days before christmas what a story two drones what a story. >> do you want that apple ipad -- >> no. [laughter] expendable that's this morning. by the way, dow is i keep saying it will get you've got volatility here and down 230, now down 190 up and down all over the place okay now this. you know, this is really are different i think time for reevaluation i've given elon musk a hard time and time he gets some credit for being a brilliant entrepreneur, and i'm going to do that in editorial top of the the hour, coming up.

. .

stuart: elon musk doesn't give a

hoot what people think of him or say about him. he took a lot of heat smoking marijuana on camera. he was ridiculed for his wild middle of the night tweets. a lot of name-calling because of his behavior. okay. i think it is time to reevaluate the man. i think it is time to look at the man's achievement rather than his public image. like him or not, elon musk is surely the prime example of a brilliant entrepreneur. he makes the state of the art electric car. okay. he leaned heavily on green tax credits. but the tesla is standout vehicle. he had the vision. a lot of people talk about their vision but he went out and he did it. you have heard of spacex, that is an elon musk company. he had a vision for reusable rocket the. he went out and did that too. spacex is launching a network of satellites that will enhance the internet. he brought private enterprise to the space business. that is an achievement. you heard of the boring company?

that is play on words of course. it bores tunnels. this is musk's contribution to future mass transit. the point is, he did it. he just offered a tour of the tunnel he built in southern california. it is not just talk. in the age of social media we tend to, fixate on the negatives. easy to pour score on someone who believes like elon musk. step back to see what he has actually done. he is in the car business. the space business. the mass transit business. he has a product in all three industries. that ising at thattable success. get the man some credit. the second hour of "varney & company" is about to begin. ♪ stuart: all right. thursday, 10:00 eastern time. that means the latest on mortgage rates. the number? ashley: on the edge of my seat as always on a thursday.

freddie mac. it's at 4.62%. which mean it's down from 4.63% last week. i will say though that the lower rates, we have seen existing home sales go up in both october and november, after a downward trend. i think homebuyers are very sensitive to these movements in rates. we've seen the rates come down. we were close to 5% earlier in the year. we are down to 4.62%. pretty good. stuart: 4.62. i would take that. ashley: yes indeed. stuart: quickly. top of the hour. i editorialized about elon musk. i think the guy is a brilliant entrepreneur. let's bring in jeremy owens, market watch san francisco bureau chief. and a guy who has had harsh words for mr. musk in the past. i hope you heard what i got to say. i think the man is a brilliant entrepreneur who does what he says he is going to do. have you changed your opinion on the man? >> no, not really.

i don't know why the boring company demonstration would cause you to change any opinion on him. i agree tesla, spies x done amazing things. one thing you didn't mention they're doing this all in america especially manufacturing. i've been to reno. that city has been changed by having the gigafactory there. i think tesla, spacex deserve a lot of praise for everything they are doing. i don't understand how boring company would be in that discussion building simple tunnel over year-and-a-half that will allow employees to avoid traffic when it actually works well. stuart: he has done it. how many entrepreneurs have we all met, have a great idea, they think about it, talk about it, they don't actually do it f they do do it, it doesn't often work? musk is completely different. he is a visionary who went out and did it. would you give the man credit for that? >> sure i will give him credit for lots of things. just building a tunnel underneath l.a. is not one of

them. stuart: just don't think on the tunnel, for heaven's sake. it a lot more. what about spacex and the cars? >> i understand tesla and spacex needs that praise. stuart: you are calling the guy a jerk. i don't think you do that. i call him p.t. barnum, i withdraw that completely will you withdraw your jerk comment. >> he acted like a jerk on a conference call. he apologized to everybody admitting that he was a jerk. if you read the piece last week, that is not a surprise. a lot of ceo's are jerks. i don't take anything back i said of him. stuart: do you think he should be running this company, tesla, spacex, the boring company should he be running it? >> i don't know that he needs to run all three simultaneously. i don't know that he needs to be ceo. i think he gives positives at some other position without him

having to manage people. him being relatively unstable. hopefully he is in more stable place. we have gotten through the model 3. he has shown he is a little bit more stable. hopefully that maintains. stuart: you're in the middle of san francisco, the technology capital of the world just about. what is elon musk's standing among the techies of san francisco? >> he is an engineer god, stu. his ability to do what he has done especially with tesla. and so many cool things, really made him an engineer god. people wonder whether he can run the companies same as i do. stuart: okay. you don't think he cap? tell me now. >> we'll have to see. he keeps making more companies. he has the brain computer interface company he is trying to do an ai non-profit in addition to the boring company, spacex, tesla. he is spreading himself thin. we saw this summer when he could spread himself too thin an have too much to do at one time.

stuart: jeremy, we hear you. you will be back with more on mr. musk in the very near future. jeremy owens. see you again soon. >> thank you, stuart. stuart: president trump tweeting about the democrat this is morning. here is what he has got to say. the democrats who no steel slats wall in parentheses, i'm not sure what that is about, necessary for border security. are putting politics over country. what they are just beginning to realize. i will not sign any of their legislation including infrastructure, unless it has perfect border security. usa wins. bill mcgurn, "wall street journal" editorial board guy is here. so, senate passes spending bill, no money for the border wall. >> right. stuart: now it goes to the house. the president says you pass it i will veto the thing. >> he said that before, right. we're in this confusion because it is going back and forth. look, i give the president a lot of credit. i believe that the border wall

was his signature issue. so he can't back down on it, right? that is his signature issue. but he managed i think to get the worst of all worlds now. he has given the democrat as triumph this week. has the republicans in disarray. so people really want the border wall upset because they think it will not happen now. stuart: right. >> a lot of people who don't angry at him. what it comes down to is, he is right about the democrats. they're in resist mode, full resist mode. they don't want to give him credit on the wall. i don't think they would make a deal for anything right now. stuart: and they're winning. >> right. but he needs to take that case to the american people. he needs to go into battle with the democrats with a unified republican party. stuart: he hasn't got it. >> no, he hasn't got it. look, i always wondered the president has been very good, people critsizes him for twitter and his rallies. i think they're very good. they're connecting with his base in ways that other presidents haven't before. i give him a lot of credit for

that. however he has to go beyond that a little bit to win, to triumph in these things. i'm amazed he has not given an oval office address on the border wall. oval office meeting with nancy pelosi and chuck schumer, designed to show it is not just the border wall, they don't want i.c.e. and border security. that may have worked. what we have is chaos. don't get into battle with your own side divided. stuart: your own side is divided. so republicans didn't even show up. you have 30 or 40 of retiring. >> retiring, right. stuart: they haven't come back. >> outrageous, some of the democrats too. it is outrageous. what do you do with a party like that? >> i think he needs to work more -- when the president works with the party, mitch mcconnell on judges, the tax bill they got through, it works very well. he tried to do it on health care i think he came in too late when they had the repeal. when he works with them, i think it is really well.

democrats are going to resist. he has to unite his own leadership. they need to know where -- they can't have herky-jerky, you can't be the leader, give one signal one day, another signal another day, then back to the first signal. you can't do it. they will get scared. stuart: when that vote was taken in the senate yesterday, the vote to pass the spending bill with no money for the wall, no 5 billion for the wall, democrats were singing christmas carols. >> he should have made it clear to the republicans if you do this is what i will do. rather than react to the fact. he needs to have meetings with the leadership and try to unite the party. it is especially important to unite the party now that democrats will control the house. stuart: good luck with that, okay? >> yes. his job, not mine. stuart: that's true. thank you, bill mcgurn. better check the big board. you want to talk volatility, this is moments ago we were down 200. just a few moments ago. ashley: poof. stuart: now we're down 50. it is called volatility. got it.

check the big tech names please. now they have all turned positive. facebook's up, nearly 2 bucks at 135. amazon reached the 1500 level. apple at 161. microsoft just 20 cents higher. alphabet is at 1044. fractional gains. the dow is just down 60. how about the price of oil? down to $46 per barrel. 46.93 to be precise. show me carnival, the cruise line people. lower profits. 6% down on carnival. we have a big hour coming up for you. president trump says it is no surprise he is pulling troops from syria. he said the u.s. should not be the policeman of the middle east? is that right? is that the right move? we'll ask the question. we're staying on this story, democrats caroling on the senate floor after the senate passed a spending bill to keep the government open. looks to me like the gop lost. we will have the story. altria took a near, took a

very big stake in joule, the e-cigarette company, we talk with a investor who focuses on the space. all the e-cigarette health warnings are actually doing harm. he will make his case. you're watching the second hour of "varney & company." ♪ jardiance asked-

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stuart: here's the status of the dow right now. it will change. right now we're down 80 points. 23,200. there you have it. we're down 1/3 of 1%. this is really a volatile session again. we were down over 200 points just moments ago. now we're down 90. up and down. that's what we've seen for weeks. we are certainly seeing it today. rite aid, better sales. the stock is up nearly 8% but it is a subone penny stock. subone dollar stock i should say. how about walgreens? they came in with better profits today. walgreens stock is actually down 2 1/2%. we'll look more on that one for you. now this, president trump said we beat isis. and now he is pulling troops, our troops out of syria. he tweeted about it. getting out of syria was no surprise. i've been campaigning on it for years. six months ago i publicly wanted

to do it i stayed longer. iran, syria, others are local enemy of isis. we were doing their work. time to come home and rebuild. walid phares, fox news national security analyst with us. there is lots of opposition on this. sprung on us the last minute. is it a good move or not? >> look the president is the commander-in-chief of all armed forces. the administration decides where to deploy, where not to deploy and when to pull the troops, at this point in time one has to raise the question is it mission accomplished by destroying isis is? yes, isis was 80% destroyed. problem is what happened after. we have not heard yet from the administration about the next scenario. is everybody going to the negotiations? is this a fact? will ice is be back? will iranian militias terrible over. there is a lot of questions about the face -- indeed isis was mostly defeated. stuart: are we not just handing

syria to russia? >> more than that. if there is no other scenario, that is very important question, is there no operation after destroying most of isis we leave, we have two scenarios. we could go back in history. i understand this is dangerous. first iraq, we withdraw from iraq without assuring anti-iran, look what happened. iran is in control. like american forced in world war ii. they destroyed the nazis, go back home. tough establish allies. that is the point of concern. we need to hear from the administration what is phase two. stuart: sounds like you're an advisor to the administration on foreign policy you sound like you don't like this move, that you don't approve of this move, and you don't know why it's happened or where it is going. you're not happy with this? >> first of all, i'm not an advisor to the administration. i was an advisor to the campaign. of course i support the administration general policy in

the middle east to contain isis and air ran. this could be dangerous because if we don't have any option on phase two. the iranian administration linking iran to iraq with syria. that is the last chapter for them. they said it already in the media. the russians as well will have corridor running from syria to iran. there are a lot of dangers if we don't have plan b. stuart: are we withdrawing troops from syria immediately or a time frame involved here? i've not seen any reports on that? what do you know? >> stuart, that is the question. i think the administration at any level should come to the public explain exactly what we are doing, when we are withdrawing, what would be the measures to protect all the communities. we're talking about the kurds who fought with us, christians, arab sunnis. we're talking about a very important corridor linking iran to the mediterranean. we are talking about dangerous situation for israel. what is missing here is an

explanation by the administration what is going on the ground if they can explain it. stuart: walid, thanks for joining us. i'm sure we see you again very soon. thank you very much indeed. >> thank you. stuart: we have developments with the bank of england and uncertainty over brexit. this uncertainty is apparently testifying. house of commons announced debate on prime minister theresa may's deal on january the 9th. what is this? what is the bank of england is doing? >> bank of england said look, the economic outlook is what they call highly uncertain. they left their rates unchanged at 3/4 of a percent. significantly lower than u.s. revising gdp to 0.2% from 0.3. the whole uncertainty surrounding brexit and likelihood of no brexit deal has intensified considerably is the words they used. by the way, the talk, we had nigel farage on the show yesterday, the talk of theresa may not getting her deal

through, almost again appears likely. mps in parliament will not want a no brexit deal. guess what, second referendum is getting a lot of talk and momentum is gaining. how the country is going to react to that -- stuart: national humiliation. ashley: humiliation for sure, and for theresa may. stuart: thank you, ash. ashley: sure. stuart: coming up next hour i talk to general jack keane, extremely critical of the president's decision to pull our troops from syria. he is urging the president to reconsider of the he will make his case on this program. check that big board. we're down 150 now. we have a big guest coming up in the next hour by the way. the treasury secretary steven mnuchin, what does he make of all this volatility because it's still right there? we'll ask him. ♪

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♪ ♪ have yourself a merry little christmas ♪ stuart: i will try to keep in the christmas spirit and ignore secular christmas music we played blatantly. they are getting floods of returns even before christmas. 24 million returns this month alone. forget returns for a second. focus on shopping now. hillary vaughn is in a mall in california. i don't see many shoppers behind you though, hillary. what is going on? ashley: 7:00 a.m. reporter: still early here, stuart. stores just opened 20 minutes ago. they are preparing for a flood of shoppers. 134 million people are planning to shop super saturday, the

saturday before christmas. kohl's says there are super shoppers. this pot, is one of the big sales. they sold 60 of these every minute online and black friday. something flying off the shelves, ugly christmas sweaters. tomorrow is ugly christmas letter day. this doesn't look like for yourself, stuart, for refined gentleman. you're in for something like this. stuart: there you go. reporter: these are in high demand. stuart: thank you very much, hillary. i will not be a taker this year. looks kind of cute. thank you, hillary. we're down 120. you have to check them regularly. they move so rapidly. down 120 as we speak. it will change. our next guest has a dire prediction. says that powell, as in the fed chair, his mistake was not raising rates, no. but signaling everything is fine with the economy when the market is screaming otherwise. he will make his case in one

minute. ♪

♪ hold me, love me, i ain't got nothing but love babe, eight days a week ♪ stuart: i did like it. you need this kind of song. keep you smiling. there is a lot of negatives in the news today, starting with this one. check the big board. i think the negative frankly is volatility, we're down again

350. down yesterday, this morning down 120. we've been down all morning. i don't think the market has gone into the plus territory at all today. it is moving all the time, constantly. now it is down 140. check those big tech names, they're up and down all over the place. facebook is 80 cents higher but amazon, apple, microsoft are down. fractional gain for google. mixed bag. anheuser-busch, inbev, beer people, teaming up with tilray, the cannabis people. they will test cannabis-infused drinks. not here. in canada. there you have it. a programing note. this is important. a big guest coming up next hour, treasury secretary steve mnuchin. what does he think of the fed rate hike and this crazy volatility. i know he has got an opinion. he will share it with us. check the markets, now we're down 130 points. got that. our next guest says the democrat controlled house is just bad

news for the market going forward. look who's bad. ed collerant bain capital, former managing director, the man we used to see when governor romney was running for the presidency. he disappeared when he lost. >> thanks for having me back. stuart: why don't you spell it out why a democrat-controlled house is bad news for the stock market? >> i think you can see that in the stock market. for the two years prior to the president's election, when republicans took control of the government the market was flat. it has risen 40% since then to its peak. which is shocking because we're eight years into the recovery and risen 40%. since then, with the mid term elections, democrats retaken control of house, market given up half of its gains. stuart: because the democrats now run the house, does that mean there will be no more stimulus for the economy? there may even be a tax increase? is at that what you're thinking? >> a lot of damage they can do is priced into the market.

part of what is priced in, republicans can't continue to make adjustments to the economy that they could have been if they had control of the congress. so i think a lot of it is what could have been. it is no longer there as opposed to additional damage the democrats could inflict. i think as 2020 draws closer and closer, the more you think the democrats will take, the more markets think democrats will take control of both congress and the presidency, i think that will have a negative effect on the stock market, just like it has at this midterm election and just like the opposite of what happened in the last presidential election. stuart: that is very interesting. i need your comment on the 10-year treasury yield. all the way down to 2.75%. now what is that telling us? is that telling us the economy slows down next year? or is it telling us there is a ton of money flowing into treasury securities as a safe haven? what is it telling us? >> a couple things, people are definitely rotating out of stocks. they rotated out of stocks. they're at end of the year

they're nervous, professional managers, but they probably rotated into bonds. i think the bond market is showing us fed was signaling slowdown rate increases. you can't expect the fed to say we'll raise three times, no, it will be zero. you expect them to say three to. slow down in increases has sort of foreshadowed. stuart: yesterday afternoon, jay powell says it will be two rate increase next year, not three. this morning you're saying, no, no rate increases at all. you think it will keep it down. >> the fed is animal gradualism. it can't swing to zero, three to two, two to one, one to zero. stuart: you think that is coming? >> i think signaling from three to two is a signal they have taken their foot a little bit off the brake. stuart: you wouldn't be a buyer of stocks right now? >> i wouldn't be a seller of stocks. i don't want to be taxed on gains since president was elected. stuart: is that your problem,

capital-gains tax? >> absolutely. that is big recall pa of it. not like i've taken more money put it into the market over last couple months. i've been cautious. stuart: okay. what would be your advice for our viewers who have a 401(k), and who in january, can say i want more in stocks, less in stocks, more in bonds, police in bonds, what would be your advice? average person. >> i think my own mix was up over 70% in stocks, prior to the election. it is down now in the mid 60s. i don't think i would bring it down any lower than that because i'm optimistic about the economy in the long run. i think a lot of the pessimism is already priced in. i would probably hold it where it is. gradually as the market unfolds, my inclination is bring it back up towards 70% because i'm bullish on america in the long run, despite all the short-run gyrations you see. if you split the market between tech and not tech. not tech hasn't performed well. market is pretty much been flat.

if you look out over the course of the last 50 years, not very often you see two years of flat markets. so i think, there is reason to not, to not run for cover here yet. stuart: not run for cover yet. >> i think also the economic indicators are pretty strong still. so the underlying economy still looks quite strong. stuart: ed, it was good to have you back again. don't be such a stranger. we'll see you again soon. thanks, ed. deputy attorney general rod rosenstein and other federal law enforcement officials will announce criminal charges against chinese intelligence officers. go. liz: here re go. two chinese hackers, two chinese nationals accused of breaking into 45 against technology companies and u.s. federal agencies including a hack into the u.s. navy and also the nasa jet propulsion laboratory. an important laboratory at uc berkeley that basically runs nanotechnology and the most sophisticated technology experiments in the world.

so this is in concert with the announcement coming out from the white house that the, about, more than a dozen other countries have aligned with the white house to say, china, you are violating international norms. we're watching for sanctions to unfold out of these indictments that were just announced this is ground-breaking news. we have not seen a mass condemnation of china on this scale as these trade agreements and deals are still being hammered out. stuart: got it. they are doing it. got it. thanks so much, liz. liz. sure. stuart: let's listen in to this. >> they can steal sensitive information that gives competitors an ahn fair advantage of the indictment ailings that a group worked to known as cybersecurity experts a apt-10. these groups are designated as apts, advanced persistent threats because they use malware to gain access to computer networks and exfiltrate or steal

data over extended period of time. these defts allegedly compromised clients in at least a dozen countries. united states and 11 other countries. the victims included companies in banking, finance, tell communications, computer electronics. medical equipment, packaging, manufacturing, consulting, health care, biotechnology, automotive oil and gas exploration. and mining. the defendants allegedly committed these crimes in association with a chinese intelligence agency, known as the ministry of state security. this is not the first time that the department of justice has accused chinese state actors of stealing commercial information. since the indictment of five uniformed members of the people's liberation army in 2014, our department has repeatedly cast a spotlight on china for its state-sponsored

criminal activity targeting american corporations. more than 90% of the department's cases alleging, economic espionage over the last seven years involved china. more than 2/3 of the department's cases involving thefts of trade secrets are connected to china. in the last few months of this year alone, our department has announced charges in three separate cases, alleging crimes committed at the behest of a brand of the chinese ministry of state security. it is unacceptable that we continue to uncover cybercrime committed by china against america and other nations. in 2015, china promised to stop stealing trade secrets and other confidential business information through computer hacking with the intent of providing competitive advantage to companies in the commercial sector. but the activity alleged in this indictment violates the

commitment that china made. that was a commitment they made to members of the international community, to the united states, to the g20 and to apec. we want china to cease illegal cyber activities, honor its commitment to the international community. but the evidence suggests that china may not intend to abide by its promises. for example, chinese industrial policy, known as made in china, 20, 25, lists strategic advanced manufacturing industries, that the nation targeted for promotion and development. many of the companies allegedly targeted recently by chinese defts operate in sectors identified in that official chinese policy. whether through computer hackers, operating for china, or chinese nationals recruited to steal trade secrets from companies in other countries, the goal is is the same. to dominate production and strategic i important industries by stealing ideas from other

nations. just as if they had broken into american companies and taken the data information out physically. they're doing it through cyber means. today's charges mark an important step revealing in the world, china's continued practice of stealing commercial data. responding to that conduct require as strategic, whole of government approach to the threats that china poses. why the department of justice recently announced a initiative to address a full range of threats. mr. demurs and director wray have been leaders of that effort. one tactic to increase our enforcement efforts. one to conduct foreign investment reviews. protect against china improperly acquiring sensitive information through the acquisition of american companies. a third is to find ways to better protect our telecommunications infrastructure. china stands accused of engaging in criminal activity, victimizes

individuals and companies in the united states. violates our laws. and departs from international norms of responsible state behavior. exposing these actions through the criminal justice system is a valuable tool in the department of justice arsenal. faced with the detailed factual allegations today, and corroborates statements not just from the united states, but from other victimized nations. china will find it difficult to pretend that it is not responsible for these actions. america and its many allies know what china is doing. we know why they're doing it. and in some cases we even know exactly who is sitting at the keyboard perpetrating these crimes in association with the chinese government. the alleged criminals in this case are named juwa and xulong

we know the day of justice will come with the rule of law in american courtroom. they and other hackers to steel from our companies for the apparent benefit of chinese industries should remember, there is no free pass to violate american laws. merely because they do so under the protection of a foreign state. the department of justice and the fbi will continue to use all available tools to respond to china's economic aggression. and the threat that these actions pose to the prosperity and security of the united states and other nations that respect the rule of law. i want to introduce next chris wray, director of the fbi to make remarks, followed by jeff berman, our u.s. attorney from southern new york. stuart: okay. what you just heard there, from justice official rod rosenstein, with the leader of the fbi right behind him, we've got them cold,

essentially, that's what rosenstein was saying, we got them cold, chinese spies. they know exactly who and they named two people, who is sitting at the keyboard, spying for commercial data out of america. a consistent, long-term process of stealing our commercial data. ashley: they were able to breach the computers of more than 45 entities, according to the indictment in 12 states, and variety of industries were hacked, aviation to space, to pharmaceutical technology. this is broad-based. stuart: across the board. liz: auto industry. news crossing now britain saying yes, chinese hacking shows china is in violation of that 2015 agreement not to do this. so this is a broad-based, global condemnation of china. also the navy suffered an opm type attack, 100,000 personnel of the u.s. navy were hacked by these chinese nationals. got personal information stolen.

opm hack, targeted people with security clearances. stuart: opm? liz: that's right. u.s. navy is considered focal point for highest ad vans technologies in the world. stuart: and they hacked into them. what do you say, ashley? ashley: this is going on so long. finally ramping up on pressure. enough is enough. stuart: later in the program, secretary mnuchin is on the show. i will ask him about the chinese spying what is being done about it. you can see indictments are handed down. we have michael pillsbury on the show. i will ask him how these chinese spying affects trade talks with china. maybe there is a connection. big time guests are coming up. they will address what we've been just seeing. go back into the markets. bring in gary kaltbaum, who has been on this program and consistently been right about the direction of the market recently. gary, i read your stuff and you're saying that the markets were signaling that there was

something wrong but the fed ignored the market and raised rates anyway. go ahead. make your case. >> look i'm a big believer the smartest economists is the market itself and you know, stuart, we don't have oil prices dropping. they're crashing. you don't have the 10-year dropping. it is really heading down. you don't have economically-sensitive areas of the market going down. they're getting crushed. and they're all in bear markets right now. i told you a few weeks ago the norm is going to be that economic as well as earnings estimates are going to come down and surprises will be to the downside. that is exactly what we're getting right now. i don't think the market was hit because he raised rates or even says that they will raise rates two more times next year which by the way they're not going to do. i think the market got hit when he had this devil-may-care nonchalant attitude about 2019

that everything will be ao being when market all these things are talking about, have a bullhorn yelling screaming things are heading south. got the philadelphia fed index today was expected to do 17 number, came in at nine. we already talked about europe and japan. we say what is happening in housing. i think this guy has blinders on and made a big mistake in his rhetoric yesterday. i think that is what the market is reacting to. stuart: what about the markets from here on out? we are down to 23,200. are we headed further south? >> yeah, look, we're in a bear market for stocks. i suspect there is more time and price. bear markets usually last six to nine months. my big worry there is a lot of debt, deficits, leverage out there, that can accentuate to the downside. i'm not there yet. leave no doubt, everything you need to know about markets, you're seeing it. it is really folly to talk about, oh, value and fundamentals are fine. fundamentals were fine. they are worsening as we speak.

again the business cycle, bear markets, they have not been eradicated. we finally have a little bit of downside here. i suspect there is more time and price. stuart: all right, gary. we hear you. you've been right. we appreciate that. thanks very much for coming on. >> eventually it will change, stuart, i promise you. stuart: we want to hear it from you first before it change. >> you got it. stuart: sir, appreciate it as always. straight politics now, back to president trump. he just tweeted this, "when i begrudgingly signed the omnibus bill i was promised wall and border security by leadership, would be done by end of year, now it didn't happen. we foolishly fight for border security for other countries but not for our beloved usa not good. we learned the republican leadership canceled their weekly news conference. speaker ryan says there is too much disarray within the party over that funding bill.

former governor of arkansas, mike huckabee, this is a loss for the republican party and i think an embarassment for the president. what say you? >> without a doubt you are right as you usually are, stuart. stuart: okay. >> just breaks my heart to have to say it but here's the problem for the president, he has a brand. list brand is the wall. it is what he ran on. it is what he won on. if he abandons it, it is as crazy as international house of pancakes trying to become the international house of burgers. that was a big flop a few months ago. and this is a president who cannot abandon, had better not abandon the idea that we're going to protect our border because it is the reason he is president right now, more than any other reason. stuart: that means, that he will veto this or do what he has got to do and shut the government down? is that what is going to happen? >> well, i think that is a better alternative than for him to have sat there with nancy pelosi, chuck schumer and

saying i'll shut it down. we're not going to give up on this wall. right before christmas saying oh, never mind i will give up on the wall. i just don't think he can capitulate like that to schumer and pelosi without getting utterly rolled walking into a new session with pelosi in charge of the house in a very weak position. i think freedom caucus on this one is dead right. nobody wants a shutdown but the way to avoid it to say to the democrats, we give you daca, you give us five billion for the wall, which is less than you were willing to vote for before. but if you don't, yeah, 25% of the government goes home. but, social security still is take care of, medicare is still there, military is paid through 2019. it is not 25% of the government. not the whole enchilada. stuart: governor huckabee. thank you very much. always appreciate it. >> good to see you. stuart: next case, pot as in marijuana and booze, coming together.

canada's marijuana maker tilray teaming up with anheuser-busch. is it something you should be investing in? new kind of drink? some get high, some don't, for medicinal purposes? we're on the story. ♪ what if numbers tell only half the story? at t. rowe price, hundreds of our experts go beyond the numbers to examine investment opportunities firsthand. like a biotech firm that engineers a patient's own cells to fight cancer. this is strategic investing. because your investments deserve the full story. t. rowe price. invest with confidence. hi.i just wanted to tell you thdependability award for its midsize car-the chevy malibu.

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stuart: got to check this almost every minute, because we're up and down all over the place, predominantly down yesterday. down 350 yesterday. now down 150 as of right now. something completely different. canadian pot producer named

tilray, announced a partnership with anheuser-busch, the beer people. they will research cannabis infused drinks. both companies put $50 million to this partnership. greg smith, ec evolution partners. you're founder thereof. you know about the marijuana market and rest of it. that is why we come to you. >> i'm not a professional. i just play one on tv. stuart: anheuser-busch teaming up with tilray, going to produce cannabis infused drinks. some of the drinks will get high with thc, some will not. they're medicinal. >> you have tremendous headwinds for alcohol and liquor companies. as you see consumers substitute smoking cannabis in exchange for drinking wine and another spirit when they go out to dinner. stuart: they almost got to get into this, haven't they? >> that is very smart move. they have big headwinds, embrace a cannabis future, how they don't lose revenues substituted away for cannabis. stuart: before we leave this subject, if you dry something

that has the thc in it, if it's a dose, like a bottle of beer, a bottle of cannabis-fine used drink, is there a specific dose of thc? >> dosing of edibles is always inexact, sometimes it might scare consumers. i'm sure a anheuser and others rolling out something of that scale will work out proper dosage. stuart: how far away are we from cannabis infused drink that gets high? >> i think there are markets on the market today. stuart: in colorado? >> there are local beverages you can buy. the next wave is cbd, it is non-psychoactive part of the plant. stuart: that is the nextwave. >> that is the nextwave. stuart: that is medicinal. >> cbd will become like bottle water. cbd is the none

non-psychoanalytic part of the plant that has medicinal properties. being infused and everything from cosmetic products to food and beverage. stuart: 10 years ago who would have thought. a long way i have to tell you. talk about tobacco. altria, tobacco company, smoking tobacco company, big investment in juule, the e-cig company. just a moment when the surgeon general says the e-cigs are dangerous for you. >> today was a watershed moment certainly for public health in america and embracing smokeless future. look at big tobacco, they have lost 200 billion in market cap alone this year, a lot due to threats from companies like juul in particular. look at my children. they will never smoke combustible cigarettes the way my grandparents did. juul itself will set us down a path of a smokeless future. stuart: you have a piece of juul? >> i've beenen investor for

several years. stuart: do you think the surgeon general and others are success fell really restricting juul sales? >> no. i think people are waking up. they're understanding. i recently saw director geller in of the fda state recently if we get all americans to switch e-cigarettes like in juul, we could save 15 million lives. stuart: but you have to keep it out of the kids hand? >> i think technology will come to keep it out of kids hand. you continue to have bad actors like retailers selling to children. i think that will come with technology. stuart: greg smith, i am sorry to cut this short. i find the discussion fascinating. you walked into the middle of a very big news day. >> happy holidays. stuart: thank you very much, mr. smith. see you again soon. big guest coming up for you, treasury secretary steve mnuchin joins us live next hour. what does he make much this crazy market volatility? and crazy it is? we'll ask him about 11:40 eastern time this morning.

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stuart: 11:00 here in new york city and we have headlines for you. lots of them. first off coming chinese spies indicted by the justice department. moments ago rod rosenstein stood before the podium and said we know exactly who was sitting at the keyboard in china while they were stealing our commercial secret from what is up 45 companies i think it is. liz: and agencies. stuart: car companies and agencies can you name it. they name the chinese responsible for this and they have been indicted. this is a big deal. where i'm at. the senate has passed a spending bill, but that's spending bill did not contain the $5 billion to build the wall that the president demanded. the president threatens to shut the government down if he

doesn't get that money. the house is debating a spending plan today. let's see how that turns out. as for the market, we've not gotten rid of the volatility. in fact its comeback bid time. right now we are down 150 points. remember we were down 350 yesterday. all over the place this morning, but never in the plus column. right now down 150. coming up from an exclusive interview with the treasury secretary stephen. we'll talk allah till it in growth rates and we are going to talk the fed with the treasury secretary. this is the third hour of "varney & company" starts now. ♪ tree until all right, we've got a lot to talk about moody's managing director john lonski. look at the market for a start time 160. and look at the fed. this is for you. the forecast earlier growth rate

of 2.3% next year. that will be a disappointment for me. what say you. >> why is the fed increasing rates? the economy slowing down. profitability supposed to slow down after tax profit this year up by 25%. the experts they next year less than 10%. this makes no sense. that's why the market subset. stuart: that was a mistake. >> it probably wasn't it was another mistake to go ahead and announced he planned to hike rates twice in 2019. where's the inflation. the treasury bond market right now expect cpi inflation next year to comment net 1.5%. and that is well under the 2% target of the federal reserve. stuart: we've had a few economists and market watchers in the program this morning who say they're not going to raise rates once or twice next year. they're not going to raise rates. they can't.

>> and i think these people are going to prove correct. stuart: the yield on the ten-year treasury i don't have it on the screen is down to about 2.75%. when you make of that? >> first of all it's because of a flight to quality. a risky asset like stocks and high yield on spilling into the u.s. treasury bond market. that's part of it. the other reason is inflation expectations have been lowered, but unfortunately i expect nations have dropped because of a worsened outlook for the global economy. stuart: so you're not worried about the state of america's economy going forward, but scheuer worried about what going on with the stock market right now. >> eventually that could adversely affect the economy. i'm running a business in i see 5%, 10% or 15%. do you think i will increase capital spending to hire more workers? i don't think so. stuart: are we still the sound out economy around the world?

>> yes we are. some find that to be traveling because next year we expect to slow to 2.5%, two by 3% growth and if that's the case, the world is not in good shape and we see evidence of that not only because of low government bond yield worldwide did the german bond yield is one quarter of 1%. that's all it is. if we go elsewhere, we find industrial commodity prices are slumping. the price of crude oil less than $50 a barrel. my goodness we've got to be careful with these interest rates. this is no time to either have rate hikes are even talk about rate hikes. stuart: while they did and we've got it in the dow was down sharply and were worried about the economy next year. john coming thank you indeed. timely performance today. we've got big news on china came to us this morning. the justice department has filed criminal charges against two unnamed chinese hackers.

they're accused of stealing data from big companies in this country. michael pillsbury joins us now. all right, michael. this is the indictment of two named chinese for stealing our technology secret. does this affect the trade talks? >> yes it does come a sewer. another notch up on the pressure president trump has been applying now for almost the past year. i think it's pretty pretty significant a deputy attorney general himself with the fbi director had a press conference and talked about this behavior. it doesn't necessarily mean that this action by itself, stuart, is going to penetrate the dilution to chinese leaders seem to have. their press coverage today is to play out the great success of huawei in india and germany. they took a third hostage in the case of the canadians. so far i don't see china blinking at all, but this is another example of ratcheting up the pressure notch by notch on china. trained to use the word hostage

and there is a third canadian detained in china. bachus broke yesterday. you say no hostages? >> the chinese viewers there's no connection to anything. this is misconduct by these three canadians. i should put the word hostage and quotation marks. stuart: but its link to the trade talk. >> welcome in the chinese denied it and this is the problem we've been facing with the whole pulling off. 70 days to go until march 1st. we still see no progress from china and we have this relatively hawkish speech. tough speech by a xi jinping saying the communist party needs to dominate the economy even more than before. i'm trying to be positive at the outcome 70 days from now. i think what president trump stealing you have to praise him as brilliant. he's not offending them are saying really harsh things that would cause him to lose face, but he does ratcheting up the pressure's death by step.

lots more ratcheting to go in the next 70 days. stuart: okay, your position remains that china will never reverse course on its desire to dominate in artificial intelligence, robotics, 5g. they'll never stop wanting to dominate out. >> not exactly, stuart. they continue to say that's not their goal, not their intention. anybody who says that is not a friend of china and they have a lot of friends in the united states who are taking that same line that this is not true. so be careful. in reality yes that is what they are trying to do. but they are going to deny this all the way along and hope as many american friends and quotation marks as possible will agree with them. this is sort of an accidental takeover of the world that they never really intended. the chinese version of things. stuart: were going to run show because interpreted these things

for us and we're glad for that. michael pillsbury, the dust. don't be a stranger, come again soon. >> i didn't use any chinese today. only english. stuart: thank you on the server. see you soon. more recognized, homeland security secretary kirstjen nielsen announcing they may be returned to mexico for the duration of the immigration hearings. that means if you're coming into this country illegally hoping to file for asylum you have to wait in mexico, not here while the courts hear your case. trained to become the u.s. seeking asylum. stuart: that the development. ashley: major development. now this. anheuser-busch teaming up celebrated with cannabis induced during spending $50 billion into this partnership. the drinks will be non-not collect.

and we'll get you high, some medicinal. barbaro investing $13 billion into jewel. that gives a 35 stake in e. cigarette company. new numbers from adobe. online shopping this holiday season. it's big. december the 19th. wait for it. customer spent a record $110 billion online this year. that is up 18% last year. illinois experiencing an exodus of people due to high taxes. i think it's going to get worse over there. coming up, head of americans for tax reform. christmas carols sung in celebration on the senate floor by the democrats yesterday right after the senate passed a stopgap ending buildup will not have any money in it for building the wall. christmas cheer and carols on

the senate floor. okay we've got that one down. it's not all from the left. house democrats want to bring back state and local tax reductions. wow, that is news and were on it. soon we'll be joined by special guest. an exclusive interview with treasury secretary stephen mnuchin. let's get started. this is the third hour of "varney & company." ♪ i'm ken jacobus, i'm the owner of good start packaging. we distribute environmentally-friendly packaging for restaurants. and we've grown substantially. so i switched to the spark cash card from capital one. i earn unlimited 2% cash back on everything i buy. and last year, i earned $36,000 in cash back. that's right, $36,000. which i used to offer health insurance to my employees. my unlimited 2% cash back is more than just a perk, it's our healthcare.

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stuart: jam pack two will take time to bring up to speed on mortgage rates. got the news about 45 minutes to an hour ago. the 30 year fixed rate loan now a four-point 60%. down a bit from last week. illinois dealing with a mass exodus because of high taxes. every four-point six minutes, one resident leaves this day. americans for tax reform grover norquist joins us now. i think it gets worse because in january the democrats take over for illinois and they want to raise taxes again. when did they say enough is enough? they're hemorrhaging people. >> it has happened before. california did 1978. massachusetts did 1978. we may be for just the reasons

you point out at a point where states like illinois, california , new york, new jersey revolt. there is a slow revolt people leaving. that's a quiet revolt. they're just escaping. in 2016, four-point $7 billion of annual income left. not just people appeared a certain number of people got up and left. illinois in the united states. but the income net that went away was four-point 7 billion. that was one year 2016. now that salt is no longer state and local taxes is no longer deductible from every tax increase on higher income people in chicago they pay all of it. alabama doesn't pay any of it. they pay all of it. that is going to really hurt. they'll have to bring the taxes down. stuart: and the revolt gets worse in the fourth quarter of next year, specifically april 15 when all the reasonably high

income people realize that they're going to be paying even more to the government. but look, there is a move by house democrats to bring back the state and local tax seduction. look, i'm personally in favor of it because i'm getting something rotten in new jersey but i guess you don't like it, do you? >> the best thing we can do for residents of new jersey is to advise you want to lead and to vote in a different governor in different legislators and you will have more allies in january than they did last year. a lot of silly rich people said we are going to vote on all these extraneous odd weird issues and they voted for some democrat and they forgot democrats raise your taxes. whatever else he thought they were going to do that will raise your taxes and we made at the state level governors and state legislators, mayors event he will bring taxes down on higher income people before they leave. stuart: what you think of it?

april 15th of next year, 1% from the people make $400,000 or more they live in new jersey, new york, illinois, connecticut, california. those people will not be getting a tax refund like they used to. they'll be paid more to the federal government and i think that might have an impact on the deficit. it would actually shrink the deficit a little bit. what's the chance of that? >> adapter does two things. revenue is increasing because the economy's been growing and more people are working. we've had too much spending going on. that is going to become even more difficult to control with democrats running the senate. it was tough enough and we had money we had to spend on the pentagon and the democrats said we have to have an equal amount of money spent on on things if you spend money on defense. that was an expensive decision. i understand the decision but it was expensive. democrats are not going to want to get rid of defense spending and increase the other stuff. that's the fight for the next

two years. stuart: in its oblique prospect. grover, thank you for coming on board again. we appreciate you. >> okay, moved to florida. stuart: i can't. i've got a show with my name on it that is in new york. here's where we checked different markets for you. the price of oil this morning at $46 down again reply 7%. how about the national average for gas? 236. down again and by the way in missouri the average was above 93 i think it is now. there is progress. bitcoin, where is that this morning? 4022. gold right around $12.50 been there for some time. it has reached today. didn't dress them in -- dandridge simmons. you may know her from the show,

real housewives of dallas. did you also know that she runs to companies? she says she's having records fails for those two companies this year because of the strong trump economy. she's on the show shortly. kevin mcallister, you know him. he's the guy at home alone. the actor is mccauley culkin of course. he is surprising his iconic role from the classic home alone in a new ad for google assistant. will show it to you. very soon we are joined by a special guest, exclusive interview coming your way with the treasury secretary, stephen mnuchin. ♪

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♪ [laughter] liz: i think they're torturing you. stuart: baby it's cold outside. now why are we playing not? the song at the top 10 on the single sales for the first time ever. the controversy over the lyrics has apparently led to a big surge in sales and radio airplay as well. we were part of that. we played the dean martin version earlier this week. good song. mccauley culkin re-creating scenes from the movie home alone. it is all to promote google products. watch this. ♪ >> google, aftershave to my shopping list. >> google, romantically initiate

later. -- remind me to wash these sheep later. >> google, turn down the temperature two degrees. stuart: you saw little bit of it, it makes it easier for mccauley culkin's character or two years smart home devices from google of course. it is the google assistant that helps them put items on a shopping list. this is a serious story. to drone sightings near london's gatwick airport have triggered massive disruption. the airport has been shut down all through last night and it is still not open. this affects 100,000 passengers right before christmas. the busiest single runway airport is still not open. cops are searching for the drug operator and bringing in troops to find this person. stuart: wondered whether they have to track down his operating

these two drones. every time they think they've got a line on it, they disappear. as you say, 18 hours and counting this airport is shut, ruining people's holiday travel plan. until 3:00 p.m. eastern been optimistic. there have been a crisis meeting in london right now to decide how we're going to get this thing. and did the military could come in and help police. it's not terror related to let me say that. it could be a 14-year-old kid in a shed somewhere. they have no idea. stuart: this could happen anywhere. ashley: how big were the drones? they were not little. they were big. >> two of them over the runway. stuart: a developing story, major disruption, got it. breaking news coming from the white house. press secretary sarah sanders says the president will meet with republican house members that in discussing the funding

bill. she says at this moment the president does not want to go further without border security in the bill. he may shut down the government. he's talking to republicans about that. lawmakers are very critical of president trumps plan to pull troops out of syria. coming up four-star general, retired general jack keane. he calls this the withdrawal from syria a strategic mistake. sure they were going to be joined by special gas, an exclusive interview at the treasury secretary, stephen mnuchin. the dow was down 212. we will ask the secretary about volatility. ♪

stuart: down we go. look at this. we've got almost all of the dow 30 and the red or the dow jones average is down 272 points. barely above the 23,000 level. 3500 points away from the all-time high. that is a selloff. president trump defending his decision to withdraw troops from syria. he treated about it. here it is. getting out of syria was no surprise. i've been campaigning on it for years and six months ago when he very publicly wanted to do it i agreed to stay longer. russia, iran, syria and others are the local enemy of isis. we are doing their work. time to come home and rebuild. joining us now, general jack keane. general, you're not a fan of this decision. explain why, please. >> sure, thank you, stuart. i think you recognize and our

viewers i've agreed with most of all trumps foreign policy and national security decisions and i have great respect for his very capable national security team. but this is a serious strategic mistake in my view and i hope he reconsiders that given the feedback he is receiving and i'm afraid if he does not, he'll come to recognize that this has been a mistake. stuart: why is it wrong? >> what has happened is first of all to suggest that isis has been defeated is not accurate. we have destroyed their territorial caliphate. that is a fact. the remnants of isis are still in southeastern syria despite a battle that was just one last week after two to three months of fierce fighting. it is not idle speculation, stuart that isis has the

capacity to first rebuild and then to reemerge and retake territory. why is that? our intelligence services are telling us that if their forecasts. and if that's a fact, the president will have a decision after we have withdrawn prematurely come back in and do something about that? it would likely be considerably less political support for the decision at that time. secondly, and very critically, iran now good solid syria. and as such, this becomes their strategic anchor in the middle east. they will have successfully established their number one strategic goal, which is a shia crescent from iran to iraq through syria into lebanon in the mediterranean. major, major strategic victory for the iranians from which they will encroach on the sovereignty of its era -- excuse me, israel from syria. these are major consequences

that will occur as a result of this decision. stuart: let's see if the president decides to change his mind and keep our troops there bearing in mind the extraordinary opposition to this move to get them out, including you, general keane. i've got one more for you. homeland security secretary kirstjen nielsen says migrants entering illegally may be returned to mexico for the duration of their immigration hearing. you come here illegally hoping to file for asylum to have to wait in mexico. you can't wait here. what do you make of that, general? >> i think this is really a brilliant breakthrough in something that was very much in demand here. it's created an innovative solution and could not be done without mexico's cooperation. the fact that the asylum seekers will wait in mexico while their cases been adjudicated by a judicial system, which in many

cases does indeed take months. we've got to applaud mexico for accepting this. secondly of course the benefit mexico because this decision, i believe will go a long way to stop the caravans from coming. they'll recognize they're not getting into the united states. that 80%, 90% of the people after the judiciary adjudicates their case are turned back anyway because they are not legitimate asylum seekers. they have people seeking an opportunity, largely economic in the united states. and that will benefit mexico because of these people sitting on their turf and i most certainly thwart these caravans from coming by the thousands. great decision, great work by homeland security secretary and the mexican authorities. stuart: steer you wrong, mexico right. general jack keane, four-star

retired general, thank you for being with us. >> makers is, stuart. stuart: merry christmas to you. that's a fact. all right, look at the bottom of the screen you'll see the dow down 260. democrats 60. democrats in congress celebrated the senate passing the stopgap funding bill. they sang christmas carols on the senate floor. you have to listen very carefully. you can't quite hear it at christmas carols are being fun and celebration in the background they are as the vote was taken on the spending bill. freedom caucus leader congressman mark meadows has some strong words for the president about the government and the wall. roll it. >> mr. president, we're going to back you up. if you veto this bill, will be there. more importantly, the american people will be there. they'll be there to support you. let's build a wall and make sure we do our job in congress. stuart: mark meadows essay and shut the government down, get the money for the wall and build the wall. fox news contributor fred

barnes. the way i look at it, anyway you slice it, this is a huge loss and an embarrassment for the republican party and of what the president down. what say you? >> they let the president down, but the president is following a strategy that was never going to work. one, the democrats are not going to allow him a wall in the spending bill. for them, blocking it is a badge of honor. that's the reason they're singing christmas carols. he's not going to get the wall into. he has turned what is a useless ring ostensibly come another word shutting down the government, into a policy that is just not going to work. they will not produce what he wants. it will not persuade democrats to give him the wall and it's a mistake -- and he'll back down. he'll have to back down. the problem is don't make threats that you're not going to follow through on.

obviously the beginning. stuart: the president is meeting house republicans at noon today and i guess the question comes up, what are we going to do? am i going to shut down the government? do you think you should? and if you did, would he get the money for his wall? >> i think no he shouldn't and know he won't get the money for the wall. let me emphasize her democrats this may be crazy, but they sang blocking the president on the wall is the most important thing they can do right now. stuart: okay, i'm sorry to cut this short because it is a very busy news day. thanks very much. merry christmas indeed. exclusive interview with treasury secretary stephen mnuchin coming your way after this. ♪

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♪ ♪ ♪ ♪ ♪ this holiday season, families near you need your help. visit redcross.org now to donate. stuart: look at this for the dow jones industrial average talk about volatility. i believe this is the low of the day down 275 points. if you combine that with yesterday's loss of 350, doing the math, over 600 points down and we are coming down the more. i don't think there's a single catalyst for this move here. transfer we are off 3300 points since october 3rd were going to raise rates.

china hacking story and more. stuart: why raise rates at the market telling you there's something wrong here. they raise rates anyway and now we are down 285. barely above 23,000. 3000 points below where we were in early october. treasury secretary mnuchin after this. to knowing when and where there's an issue. beyond network complexity. to a zero-touch, one-box world. optimizing performance and budget. beyond having questions. to getting answers. "activecore, how's my network?" "all sites are green." all of which helps you do more than your customers thought possible. comcast business. beyond fast.

stuart: special guest in place, and treasury secretary stephen mnuchin. thank you for coming out today in a very busy day. thank you for being here. >> graybeard it's great to be with you. stuart: volatility, talk about that from the get-go. i've got a fair part of this volatility is part of this computer trading algorithms. are you with me on this? >> khayyam completely. i think that with the advent of computerized trading, which has such a big part of the market now combined with the vocal role where you can't have market make her capital. you just have much bigger moves and directions. the market has overreacted to the fed's comments nec program trading taking over. stuart: is there anything you can do about it, mr. secretary? >> it is something we are going to look out. i don't want to prejudge any

decision, but this is one of the things will look at. stuart: did the fed do the right thing yesterday, one interest rate hike now, maybe to next year. >> well, let me say as treasury secretary i think it wouldn't be appropriate for me to comment if they did the right thing or if they didn't. let me just comment what i think they did do. the market was clearly expecting them to have a rate hike that was priced into the bond market and into the fed funds market. i think that the market was disappointed in the chairman's comments, but i would say if you look at the specifics, you can't just look at the headline, which was rate hikes you do have to look at the 17 dots on the.plots. each one of the governors and the people on the committee put their views -- if you look at this, the high-end of the range came down significantly and there is still a pretty wide dispersion. there's clearly people in the committee who think they don't need to raise rates much here.

and i think coming in now, if i put this in perspective. we have 5% and 6% interest rates. the fed has said they're close to done. they said their data dependent. the market has overreacted in u.s. equities are tremendous value. stuart: the fed predicted to .3% economic growth for the year 2019. they lowered their projection a little. how does that square with your projection for next year? >> well, i think as you know coming into this year, the projections in the blue-chip were substantially below ours. we commented we thought we'd be at 3% or higher this year. people were skeptical about that. the fed's projections were lower. we believe we will deliver this year at 3% or higher. i'm still up to mistake that next year we can do 3% as well. but i would focus on the fed's projection on inflation, which is the more important issue for the market that the fed lowered their expectations for inflation, which is a good

thing. we've seen inflation come down. we've seen the oil markets come down. i think you're looking at a very attractive investment market for the next year. stuart: i'm kind of reading between the lines and it seems like you're sick testing further rate increases next year will not be necessary. >> well, i think the fed is data dependent. i'm not going to speculate what they're going to do and what they're not going to do. if you look at the center of the dot plots, says two more rate hikes. but there's a pretty big dispersion there anything chairman powell made it perfectly clear yesterday that he's going to be data dependent. if we have low inflation, continue to have low inflation, given where we are a think you can see a different situation. stuart: do think the market reaction was overblown to the fed's move yesterday? the market reaction is completely overblown. if you look at the u.s. growth

versus europe versus the rest of the world, the u.s. is still going to grow significantly higher. you look at a slowdown in china and the emerging market, we continue to see when i speak to businesses i still see tremendous investment dollars coming into the u.s. people investing into the u.s. and i also think you see a bunch of rebalancing. on markets have rallied significantly. look at where the tenure is think you'll see rebalancing out of bonds into equities at these levels. >> the market is down over 300 points. when you and i started talking we were down 270 on the dow industrials. now we are down 310, 311. you said the market's reaction to the fed is overblown. seems like maybe you are pushing it further down. >> well, i don't think that the case. the markets will be the markets. i'm just giving you my perspective on this.

one other reissue the market seems very focused that i would comment on is the issue of the fed downsizing of the portfolio. i would just comment although this is clearly the fed's decision, we are in close contact with the fed on our issue ends and what they're doing. again, this isn't downsizing. they are just reinvesting a lower rate. i would just comment, you know, a lot of people were critical as were we on the size of the fed balance sheet. the good thing about them downsizing now as it gives them capacity if they need to do something later in the year or next year. i think we are comfortable with the supply and don't see that really as big of an issue as the market aims to be focused on. stuart: earlier this morning rod rosenstein, justice department that have been publicly indicted two chinese nationals for spying in stealing our commercial data. he actually named them and he

said we know who was sitting at the keyboard stealing our data. if you couple that development with the third canadian detained yesterday, does this complicate and make more difficult a deal with china on trade? >> i don't think so, not at all. we have been clear from day one that fiber is an issue. we've had discussions with them. this was discussed when we were there. i think you know this isn't about buying soybeans in buying energy although they clearly will buy a lot more. this is about protecting u.s. technology. so the doj action is separate from the trade discussions just as the huawei discussion is separate. as the administration, we are clearly very focused on making sure that we protect american technology and this'll be a separate dialog has something important to resolve. stuart: i think the chinese,

china links two or the three. they are not separating it out at all. they regard the canadians as hostages. i don't know what they're saying about the indictment of the spies, that they are putting it all together here. >> i'm not going to comment on the situation with the canadians , but i will comment in our trade discussions and as you know we've been having ongoing trade discussions by phone over the last few weeks. we are moving forward with those discussions in trying to reach an agreement that was the agreement between the two presidents, which covers a whole range of issues. we talked about very significant structural issues. we have not discussed to the specific issue with them, the cyberhas definitely been on the list. i'm cautiously optimistic will continue to work through these issues. stuart: can i sum it up like this? you see next year as low inflation, maybe 3% growth and maybe the fed will not be raising rates next year at all.

can i summarize our discussion like that, mr. secretary? >> i think that's right. again, i would emphasize u.s. growth a lot stronger than the rest of the world. u.s. business that give it a continue to see pick up as a result of the tax act. we think we'll continue to see a lot of capital investments. the fed said yesterday they see strong economic science. tranter mr. secretary, steve mnuchin, treasury secretary can we do appreciate it very much. >> great to be with you. ashley: interesting. liz: he's sending a signal to china right now. because china has refused to acknowledge the ip stack. when ashley and i were covering it before, 20 major industries in the united states have been hacked along with the u.s. navy has been hacked. nasa's jet propulsion, laboratory sophisticated technology stolen. so he's not just signaling to china. despite what happened it was a

global push back from a dozen countries as well against china on this bill. stuart: putting a lot of pressure on china -- when we started the interview the dow was down 270. now we are down 350. is there something the treasury secretary said -- ashley: he wouldn't be drawn into the fed. ashley: he was drawn into the algorithms. he agrees 100%. the volcker rule is hitting the market and that is algorithmic trading. i do know what we're going to do about it, but it is a fact or in really do have volatility. liz: the fact these guys can call locate and get it inside is an issue. the baskets of highly liquid epf broad-based stock star plummeting down a hockey stick action. conservative action across the board. it is an issue don't to do with the cab.

stuart: when i see these computers, they read a headline and they sell and soon you've got a downward spiral. so you've got an extreme move. now we are down 379, 382. 385. we have dropped below 23,000. we are heading south at this time. but i would never predict where this market ends today. good luck. we are down 399. we will be back with more very different subject for you, after this. . i earn unlimited 2% cash back on everything i buy. and last year, i earned $36,000 in cash back. which i used to offer health insurance to my employees. what's in your wallet? our because of smoking.ital. but we still had to have a cigarette. had to. but then, we were like.

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stuart: this markets all over the place. moments ago we were down 415 points i think it was. i was below the day. now we are down 375. we're just all over the place.

there were news developments in the background here. first our come we just interviewed the treasury secretary stephen mnuchin and he says that the market's reaction to the federal reserve raising interest rates was overblown. ashley: that's exactly what he said. i can't think of anything that would make these markets react the way they did. i've got to be honest. weak u.n. on one thing he said. stuart: the market reaction is overblown. that's far from him saying i algorithmic trading in the computer trading is a big factor. apart from that, i don't know what else he said. ashley: was trying to push back on the future forecasters to .3%. we are now on october 2017 levels. with 53400 points. i would say pushing on the $2.5 trillion in market value since the federal reserve said october 3rd we will start hiking rates. stuart: we also reported earlier

today the indictment of two chinese nationals for spying, commercial spying on american companies. mr. rod rosenstein went up, head of the justice department went up in front of the podium and said we know who they are. we know who was sitting in front of the keyboards. we know who's typing into the keyboards stealing our secrets. he names them. he indicted them. it was a very top-level indictment. i asked the treasury secretary about that and he said there is no language between those indictments in the china trade talks. he said they were separate. the chinese, however do not regard these things that separate. liz: and they cannot because the u.k., japan, strode joined in saying this has been a sustained massive hacking operation going on since at least 2006 stealing not just company secrets but also the u.s. and other governments technology. stuart: hold on a second. recent book,, the computers read the headlines.

do you see what just happened? down 415 points how many minutes ago. three minutes ago. now we are down 280. come back 130 points. this is the world we live in. this is the environment. stuart: it's quite possible they read the headline and reacted positively. >> you still optimistic about a trade deal with china. once they get into davos, wilbur ross will be there. i'm wondering what the dealmaking will be on the part of the president going to davos. >> were on the phone continuing this talks which is a positive even though the market still down 300 points. stuart: we are volatile. can you show us some of the big name technology companies are example? show me some stocks because that's what people want to check up on now. everybody's checking into their account in figuring out what they're going to do with their 401(k) next year. what if we got on the screen? facebook a 132.

not a big loss there. amazon is down 3%. forty-six dollars back to $1400 per share. apple below 160 or 159. alphabet rarely about $1000 a share and microsoft was about to drop below $100. >> this is when traders cut their teeth. you believe you're catching a falling bust our global growth would continue and we now see a rare moment when these stocks, pretty well valued stocks around garage sale prices. apple is so cheap it trades like a consumer discretionary. stuart: it does. look at the financials. right now the big names, morgan stanley, goldman, citigroup all down. wells fargo of 30 cents, up 45. >> they were supposed to be the sector take us up to the next

level. stuart: didn't work out that way. ashley: boeing down 2%. that weighs heavily. that is china trade play. stuart: they're all still lower. whether they move further down after our interview, that i do not know. but boeing is down 2%. caterpillar is down a fraction. 3m is down. united technologies down 2%. liz: i was being facetious before. stuart: we're still below 23,000. liz: the argument is, apple trades like a consumer staple stock that you need. consumer discretionary it is even cheaper at that level. very nuanced there. stuart: look at this. nasdaq composite home of technology stocks. it is down 1 is .7%. that is whopping big decline. 6500 is where it is. ashley: is oil down 4% again at 46.20? that is another big drag.

stuart: oil, 46.20. so that will take the oil companies down. ashley: yep. stuart: down as you said down nearly two bucks. that is a very big move. that indicates to me that we'll not see a end to declining gas prices anytime soon. ashley: that is global economy story, oil. another indication demand it? there. we know they're swimming in it but demand isn't there. stuart: look what is happening to the oil companies. exxon down 2%. conocophillips down 2%. chevron down 2%. bp down half a percent. royal such shell is up a fraction. big oil taking it on the chin. ashley: dragging down the markets with everything else. stuart: yes as we speak we're down 390 on the dow. looking at the yield on 10-year treasury. there i think it is down about

2.75. something like that. interest rates down. stocks way down. oil, way down. gold up a fraction. what a day. neil, it's yours. neil: thank you very much. i was listening to this mnuchin interview. does anyone in this administration takes blame for anything. mnuchin comments on high frequency trading when the trading buy prompts buying and market moves up. that is it incredible. a lot of that on the back and forth over who to blame for the selloff. there are likely culprits, including federal reserve as it indicated yesterday will continue to hike rakes, albeit one less rate hike than original lit thought. that is an easy one to dump on. confusion whether there will be a government shut down on friday could be another issue. narrowing between the 2-year and