come baring deals could agree with that. >> or donald trump. george h.w. bush and mitchell intent of making that a one term president and he went become on his promise not to raise taxes no new taxes and that happened. right now charles payne is in for stuart take it away. >> good morning everyone i'm charles payne stuart is going to be back from a great vacation on monday but today we have a ton of stories for you. many of them, obviously, you know, about we started with apple. earnings warning, in fact, first time in more than 15 years company slashing its revenue forecast citing weaker than expected iphone sales in china among other things, and that news weighing on stocks across board major average is sharply lower but high per from the lows earlier this morning. i can't wait to tell you about that and another wild day in the stock market. also, in other news it is a 13th for government shutdown president trump will network congressional leaders yesterday

no luck on earning out a deal and according to people in the room senator schumer urge nancy pelosi to interrupt dhs secretary neil son from the get-go and pelosi says there's no way president trump will get any money for his wall with another busy day in politics busier day for your money don't worry we have you covered "varney & company" starts right now. >> big corporate news for you, drug makers -- really doing very well this morning because it is acquiring -- a combination of cash and a stock. the transactions valued at 74 billion dollars ash, liz this one of the biggest dealses in pharmaceutical area but it won't be the last in my opinion. >> i think you're right. go ahead. it is a mega deal. the worry, though, is that -- the advice from wall streeters were seeing coming in right now

is to the share hold per now that this is a top because that stock popped 31% we know myers subpoena under, you know, pressure right now. what's beginning on is they have a patent cliff it faces and regulatory hurdles obstacles in clinical trial. >> shareholders they get one plus 50 bucks per share. which is good to liz's point nailses weighing in take the money and run. i always say take the money and run because dealses unravel now at a discount to l vast value of the ultimate is that these traditional pharmaceutical companies have very tense pipelines you wonder why health care wases number one performer last year it was the biotech names which have more robust names of stuff in pipeline who have money but not necessarily had had a run of disappointing results. absolutely. dow futures that by the way helped turn this market around a

little bit from the worst of the morning. ofng the worst in the morning came from that warning from apple on its iphone weakness in china joinings us now market watcher jamie apple's warning in your opinion does it say more about apple -- china's economy, or mismanagement or both? >> i think it says everything about china. we've been seeing this in the pipeline and up and down supply chain for the past three months. i think that the -- the complete, you know, i think tim cook is basically blame miss on china and i think this pretends by things to come for other companies. there's so many u.s. companies whose earnings nominated in china we see a lot of companies are going to preannounce earnings misses of this. it is a china specific story and all about tariffs. so if you're president trump this may be your moment this time to get this trade deal done because you start to see the chinese economy, they've talked about it being on rocks but it

is actually in worse sharp than people think so now is the time for president trump to actually get this trade deal accomplished. if he doesn't it is going to come back to haunt us too. >> so you're saying we should -- fold on trade on getting better trade having them stop selling property stop subsidizing industries that we lose hundreds of thousands maybe millions of jobs because china economy is slowing and trump -- >> not to give on trade at all but i'm saying this is moment in time where trump has the advantage and you've been looking for this to happen for some time. : let me ask you, though, i'm only person who doesn't use a physical products my wife is not eager for next apple ieg phone don't you think there's a mismanagement of apple they've reported saying not to break out out iphone sales anymore qungt that a red flag and companies specific issues here? are we going to blame this on president trump? >> how do you survive charles being a google android user my goodness apple ecosystem is so

easy especially if you have a family. >> i get a paper check i still have without wills i'm old school. >> look at that -- without wheels so here's the problem. when you go to apple store now there are too many choices for iphones. that's really the problem. and it is really easy to buy down. you have a couple of choices you wanted the best model you have to pay up for it now you can get equivalent model for three or 400 less that sort of an odd thing for a toll allow to happen and i think they need to get that fixed quickly when i buy phones i buy cheaper ones now because they're just as good but 300 or 400 less expensive to pay. i think they have issues that go far beyond china if i'm tim cook i'm worried i think i stop buying focusing on just buy backs maybe getting into hot areas. i want to ask you also about the market december, obviously, the worst december since 2013. president trump calling it a flitch. glitch suggesting that maybe it will change once we get trade

deals resolved let's take a listen to what he had to say yesterday. >> from the economic standpoint with the talk of the world. and we have a little glitch in the stock market last month but it's stl up i guess around 30% from the time i got elected and it's -- going to go up once we settle trade issues. >> all right so there you have it. perhaps we'll settle these trade issues -- certainly it seems to your point jamie that china would have china would be more eager to settle this now than even america. >> yeah, i think so. so my -- the problem with the economy now or problem with the whole trade situation is that the economy can stand either trade or interest rate are increases but is it can't stand them at the same time. so when you have those two competing factors, that's what causes quote unquote market glitches where one of them has to give it look like federal reserve will play ball in the first half this have year. you know are capital out today

talking about the need for the fed to go on pause for a little while if that whats, that will actually, you know, setting markets quite a bit. because i think market parpts really know that you can't raise interest rates are as you have a tariff regime in place that's changing the nature and dynamic of the earnings picture for the company. so i think that fed understands that it is getting good data to support it to make that choice. but what would really be is if we can get them taken care of because it is going to weigh on earnings a we see them come through in first quarter this is first time in a while. last had tile in the year with a incredible earnings but i understand charles. eventually they will. eventually they will. eventually earnings will slow down and blame it on trade deal listen ping wall street has us completely wrong last year earnings 2 trillion dollar quarters, become to back to back. that's phenomenal. anyway jamie we have to go i have to go. great stuff. i might get luggage with wheels

and then work my way to a l phone. thank you buddy. [laughter] >> stay on the economy here because three things have brought us into brink this morning. three things we have that mega deal we talked about earlier cap and then adp report ash lip you have the details. >> remarkable december payrolls hiring up 271,000 that by the way charles the biggest increase in nearly two years blew away the estimate very strong number indeed because when we have big jobs rot tomorrow as well as estimates in the area of 184,000 with 155,000 in november. the question becomes, though, on this data point if they blowout number what is does that do to psychology with with investors regard to the fed? >> i think feds shouldn't try to destroy the economy because they're getting jobs focus on wages if you want but not jobs themselves isn't there a mandate maximum employment? >> yes. meanwhile house majority leader nancy pelosi won't budge on wall

funding roll that tape. >> are you willing to come up to give him some of this money for the wall because apparent that's the sticking point. >> tally at the border security nothing for the wall that means -- >> that is back and forth, no. how many times can we say no? >> joining us now tom reid republican from new york. so looks like it is a nonstarter government shut down helicopters and there's no end game in sight is there -- sir? >> there needs to be. i think there can be but plo e sou will dig in and say no money. for a wall, that's not tenable you need border security that includes a wall and structures and certain areas of the border. >> gotten down to game of some -- you know washington post called president trump a liar. because he said that -- barack obama has a wall around it, in fact, when he has a barrier 3 feet of concrete and other 7 street of fencing, i

mean, so the bottom line is feels like it has gotten down to game of semantic and we all agree there should be some physical barriers at their southern border. pnches you're exactly right. we are stuck on a word as opposed to poxings on look you have had had two children die. you have a law enforcement officer killed in the line of duty by illegal immigrant there is a need to fix the border and do it with border security and even is hung up on this border wall terminology because they're playing extreme politic that has to end and we need to start working together to make these investments to protect americans to allow good people to come to america to enjoy american dream. >> so far the market is up 3.7% since this government shut down began. it is up and six of the last a shutdowns last time it was down it was 1990 so there's not until real stock market pressure or overall pressure but political pressure, obviously, will begin to mount are both parties willing to play this game until they see who will cry uncle or

on potential relations front? >> i hope that parties realize who suffers when you get into this. extreme political maneuvering are american people and they eventually come to table to find a compromise and done it in democrat, with republicans working together you can do a deal that deals with border security taking care of legal population that's here. reforming some of our immigration law when is it comes to agricultural and skilled unskilled workers there's a deal to be put together here. let's come in the room, set aside partisan politics to get it done. >> representative reid thank you very much. we with appreciate your time this morning. >> great to be with you charles. >> check on futures here because ofnl we've been down since last night but we were worse yesterday remember yesterday we had a 400 point reverse are l another great test for the market this time stakes are even high per and then roku hooks boxes into tv you watch netflix other streaming video out with a big announcement to make it a

lot easier for you to dump your cable company and talk to the ceo in the 11 a.m. hour today, and then senator lindsey graham has a warning for president trump. he says if trump backs away from his demands for a wall it could be the end of this presidency. in china, they said landed a spacecraft on dark side of the moon. did the first country to ever pull that off, question is why? we've got the full details coming right up. ♪ l it's true. so all... evening long. ooh, so close. yes, but also all... night through its entirety. come on, all... the time from sunset to sunrise. right. but you can trade... from, from... from darkness to light. ♪ you're not gonna say it are you?

general many tore sales last year down 1.6% year over year that stock own fair amount of pressure early this morning not necessarily news but another stark revelation i want to get back to apple with just a story of the morning joining us now jordan chang announcement about weakness in china how surprised are you? >> the only thing i'm surprised about about comarls is that tim cook is trying to say that he was surprised. everyone knew this was coming. if you look at it for instance there are two reason ares why china is flowing in most people's estimate one of them is so-called trade war. well, you know, that's section 301 investigation start ised in august of 2017 everyone knew it was coming also chinese my is slowing in the middle of 2017 the world bank came out with a chart that showed that china in 2016 grew 1.1%. that is actually consistent with a single most reliable indicator of chinese economic activity. which is energy con sudges which

according to officials 1.4% tim cook had to know this this was most important market and he doesn't know what's going on. he's either fibbing or oblivious i know which. >> i think he's play media with so much to get things out there that becomes trump tariff story instead of a china mismanagement story or in this case also china listen louis vuitton four months ago warned luxury items falling off cliff. chinese consumer pulled back also government has also tried to deliberately in some ways -- slow that down as down. >> since mar of 2013 chinese government has gone after a l they do this periodically they did it this year at the end of the year. so -- tim cook has to know that. also, apple products are too far at the top end when you got huawei for instance coming in with phones with almost the same features, at a fraction of the cost, of course, people buy

huawei especially when government is encouraging them to do that. you know, with apple has been this was coming on very long time and i'm surprised it actually took this long. >> i was in europe a week or two ago i saw more huawei phone users than a it will to your point you know, even in this country bells and whistles aren't so distinctive that you i a thousand dollars for a phone anymore. but -- china's economy it is slowing down. it has been slowing down for some time. how does that change a the dynamics of this trade negotiation. >> well it certainly china in weak position you have a university professor couple of week withs ago created a sensation across china by say that economy was growing no more than 1.67% probably contracting and we have purchasing manager that came out three or four days ago official and unofficial show that manufactured in december actually fell off a cliff. so you know, president trump is holding high cards and chinese need to come it a deal with with

them if not, because only thing that is going to save chinese economy is trade confidence boosting trade deal with u.s. smg lighthizer said yesterday real quick one thing for you to increase tariffs. do you think, though, administration has such a strong position that they don't need to say those things publicly anymore it goes and have meeting and get deal done? >> maybe. i think problem is that xi jinping is invested in taking feck from the u.s. and made in china 2015 plan, so he -- we need to put mores cost on whether those are tariffs or import bands we need to do something. >> i don't disagree request that i think verbally it changes -- the moon landing aparticipantly china saying that they've got a historic first. they've landed on other side of the moon. right the part that -- what is this say? that, you know, that they have this recover on the far side of the moon? >> well it says that china wants to colonize the moon. we're to see moon base beijing in not too disangt future for mineral but they want it or for

their military and they want to look down on our high earth satellite ones that are 22,000 miles above the surface of the earth. well, when you're at the moon you look down on those things and those you know if the china take those out we're with in a world of hurt so we don't have military left that's why china wants to be there. >> so maybe space force isn't so farfetched afterall pl >> something is doing in pentagon because they've been underperforming on space this is critical to chinese, you know, made it or very leer to go after our satellite in first seconds of the war. we've got to do something and we haven't been. >> gordon always great having you here appreciate it. thanks. >> check to futures equity futures purngd pressure all morning but off worse case of the overnight situation nevertheless we're going to open under fair amount of pressure and then netflix removing feature of its app that could cost a pl hundreds of millions of dollars explain to you what's going on there, next. building a better bank

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now to amazon urging hill to get into the gas station business what's that? >> tom ford over there a big amazon is bull saying that it would avail amazon of all different productline it is in the gas station. meaning whole foods, gas station, to stores cashierless stores. up stores amazon lockers, basically it's not a ridiculous idea because profitable franchises are 7-eleven so he's suggesting this amazon is not saying whether or not they'll do it. but costco makes it off it too. >> sometimes people pump gas and go in the store i'm not sure if i want to do that but we'll see.

also netflix -- they are taking some action they're nixing the option to sign up for service through apple's app store now this is a serious across the bout. >> disturbing because you use it on your apple phone join or resubscribe to netflix and you do it through itunes you have your payment information in there piece of cake not anymore. netflix says you have to go through their website to resign up for your service with netflix the estimated loss in fees to a physical because of this, 256 million in revenue last year alone. >> does it make it more likely apple will make a bid for netflix possibly they pay a pretty penny for it but you know i think biggest story is here if people start taking away fees they pay to itunes and do if themselves. >> they better do more than just buy back their own stock make some crazy massive ac stations. people are waiting. listen to me tim cook chipotle

add aing diet friendly item to menue-trying to take advantage our new year resolution. >> the diet that's what their trying to do launching new line of lifestyle bowls. i'm looking at the ingredient it looks like it's a brilliant rebranding initiative. because they're same stuff you normally get at a chip polings whole 30 salad bowl the paleo salad bowl chicken and steak in it if you want a tight and if that's your resolution chipotle ceo is saying hey come to us we'll have you a diet bowl. >> you have a bunch of fund but they have same stocks in them. by the way we should give them props six best performing stock last year chip total he's done an amazing job since being there also this market has done amazing job since christmas climbing for reverse for the dow

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all right we're less than a minute away from ohing bell we've got a wilted day for you. another one that been eventful particularly since christmas last nighted a closing bell apple tim cook lowered it their guidance, with it's really a disaster 84 billion, he on their high end said 93 billion looking for 91.5 billion and significant and hasn't happened for a couple of decades mitigating that three things this morning. first, we saw a mega merger deal announce in drug bye tech industry and robert and the president said hey if he could vote we would say stop hiking

rates are for a couple of quarters plus let's take a look at quantitative it might be a disaster and then adp jobs report 27 ,000 jobs 100 ,000 more than anticipated we have a crazy session opening bell going off right now and we are off. actually have a couple in the green exxonmobil who knows maybe -- maybe amazon will buy them emac. [laughter] >> obviously, no one surprised that apple is the anchor there holding down and all of the china related companies because china's economy is slowing it was slowing long before the trade war which may have exasperated but we see stocks down looks at the s&p 500, of course the broader index that wall street focuses on, three quarters of a percent. down 17 points and then there's nasdaq which had ironically you know led us up for years let us

down hasn't been in leadership the last couple of weeks with and it is off more than a percent here thissing so let's take a look at apple because, of course, this has the stock of the day. i think that's about the lows since last night down 13% -- 8% rather 13 points. big tech overall big tech and momentum names sort of a mixed bag there google alphabet higher, amazon only lower. microsoft interesting enough, pulling back here a little bit that could be some profit taking i think people get nervous. hey general motors cells down 1.6% compared to 2017 and yield on the tenure treasury right now are let's take a looked at the tenure 2.65 starting to come up a little bit here made a little bit of a move after a adp report. let's talk about all of this stuff joining us now david dietz stock market with us and start with a physical big warning all right scott. what in your mind and interpretation is this about

apple is it about about china? could it be about both? >> it's both. and that's a tough part here charles is not leak if you fix one problem all of a sudden apple's problems go away and stock tboaz back up. i mean, one thing we talked about in the show for years and years really is how apple was going to with competition and roll out multiproduct lines like a service division and watch for example and i think by and large how about a cash position they have on file which is you know couple of hundred billion dollars give or take a few billion here and there they could have used by the way to buy some things and you know maybe not tesla maybe not twitter. maybe not netflix but you know other company it is that could have helped them stay in lead they did not do. so the reality is this. you know, comien is yes a problem. because of the fact that question started seeing data come out of china and seen stock market in china do terrible which was preticketter how the economic situation is there. but apple itself has a problem as a company i think tim cook has i think thises to fix here if they wants it to resolve

itself. >> a problem for apple it is not just china but you know, tim cook saying oh our services revenue is growing like gang busters the reason are the investors are hitting ground floor button on stock there is because number one it doesn't break out different component of a service revenue and we have netflix saying you know what, if you're subscriber to netflix you don't have to go to apple itunes store to buy netflix so companies are say we're going to get apple itunes store and other services and not pay apple the fees for doing so. so you know, i think he has a structure business model problem there's no category killer, like iphone coming up you know, of the ball on, you know, the apple theory taking on amazon and more. and marl -- more very terrible. crack ares in apple halo. absolutely charles so fund mental problem for apple is that they are a hardware maker that's

where they get 70% of their revenue in history of hardware makers fought request success and then people move on to next thing. i can remember my motierrola now iphone not using iphone in five to ten years from now and question is how do they replace that? >> china too there's been a lack of carrier subsidy and replacement cycle longer and longer why replace your phone when the new one doesn't have that many or features. upgrades to your battery is getting cheaper and cheaper because you know what might have been something about their whole battery in the first place. why pay a thousand dollars. why i a thousand dollars for a new iphone when you get a new battery for your old iphone? >> because it is interesting at one with point most valuable company in all of europe blackberry most valuable in canada and emac made oppressing points yesterday

during our show. that no one really caught see she wanted out loud about apple's cheap valuation you know every time you know so many analysts say they like it because it is cheap and the the ratio is low but sometimes isn't it low because it should be low? well absolutely. and of course, about you also look at price to sales that is close three above s&p 500 so good news is they have 125 billion dollar in cash bad news is what do they do with that if they buy back stocks before criticizing for no longer being a growth company and buy another company look what happened to crystal myers. down 3 bucks a missioned deal i think if all cash deal i would be okay. if i'm tim cook i'm not afraid of being criticized for trying to buy my way with with all of that cash. what cothey do with cash? buy back? ibh bought back for year and lose money apple lost nine billion on their buybacks last year they fired people and they lost a position with them. shouldn't they be focused on

their business and china and 20 billion i buy my way to the top that's what they do in sports. >> i bet they do it that in sports and it works chicago bears for example right behind me so that's the thing. you got to figure that yeah i've heard of them too unfortunately vikings fan i hear about they will all of the time. like you be they've blown time they can't get back no now the time is not gone for good but they did waste a lot of time not doing anything. i think that's a great point i talk to text all a of the time and siri call people but forget about her not doing other thing because she can't understand me after we've had had this relationship for eight years. >> buy a lech alexa here's a thing that audience should understand right now considering analyst actions this morning, your average target is still on this stock is 198 on monday it was 215 dollars. so wall street still hanging in there to a degree.

>> the case is you have a 2% dividend deal but 5% per year does sell 7% that is pretty good versus 2.65 they need to have apple prime somehow develop nor services bundle them with itune subscription and icloud to get a hundred dollars. >> to install base and truly having apple halo with selling more. let me ask you about other big news today robert saying that the feds hold off on raising rates for a couple quarters more important was this taking 50 billion out the economy every month that they should reassess that. >> i think that's the right move question for investors, of course, is all of this monetary policy lag so question is whether -- interest rate hikes from last year they won't stop depressing the economy for next six -- nine months and that's the concern. of course, will that be enough to offset weakness of china which is second largest economy? >> scott qhar your thoughts? >> there's a lag time here and

that's a tough thing but like what happened today with adp payroll report now that number looks like it's what 270 and we don't have goth number tomorrow yet but gosh. if that data stays warm, let's say on the the stoves here you know couple of hundred thousand with some qaij growth 0.2, 0.4% that will give them to go back to football analogy charles about that will give them a lead block to not reduce are balance sheet but rate hike path because data rt spues at least a tightening. >> you know i think market could accept that. i think that market is having trouble with idea are of being on automatic doing this experiment of taking 50 billion in accommodation in addition to rapidly raising rates. i think that market is fine if it is data dependent and 271,000 jobs and 3.2 wage hikes you know, if you want to go 25 basis points you have a lot more room oppose 20d saying we're automatic. >> one and done for 2019 because

that's -- >> market is say -- and futures are saying, none. like -- by now. >> so there's a discrepancy there. >> here's thing about adf report remember employment is a lagging indicator. and so you know, that does not mean that we're not headed towards weaker times, of course, other thing we need to look at is what is wage growth whether that will bleed into high per inflation. shouldn't be deit railing economy because people are getting jobs if that's their mandate then i beg congress up and now figure this thing out. overall scott you know i know you like gold he's doing pretty well what are you making overall this market? >> this market is still psychologically charles has a lot of problems. now i think that good news is we're getting to a valuation level gosh guyses somewhat fair here. i do think that if you get 172 dollars let's say that's a estimate by the way give or take a fenny of earnings this year and 19, about you put a good multiple on it that's fair again a 14 or 15 we're about where we

should be. so i do believe those psychology is going to play a big part in the way the market behaves in i can so a draw down, of course. stock you like tell that. >> apply material and go everything you ever getting great dividend in the secular tail wind. >> give you a chance to get that on record i love when guests give us names we know not emerging stock on the dark side of the moon. [laughter] all right hey, scott see you you're fantastic as usual thank you very much. appreciate it. all right quick check of the big board lows of the session right now 362 on the the down siled here if the dow jones industrial average and a warning for president trump from senator lindsey graham. senator graham says if president trump backs away from the wall he could forget it. it will be the end of his presidency. you'll hear it, next.

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checking big board dow off 314 points near the lows of the session. the early part of the session nfl moon while announcing they have selected caesar entertainment as first ever official casino sponsor of the nfl. and watch out netflix and amazon prime roku larging subscription i want to go to new york stocks exchange suzanne lee has details m if ivetle hopely camera will zoom out in time let's talk about roku if you're a competitor namely amazon is doing it well making tons money in the process. you copy that molds we're talking about the channels business at a.m. l dison where basically the offer of video service a channel so you pay on monthly yearly basis roku has a bigger market share than apple does and fires of it and amazon

so roku is getting into that game of offering their video streaming premium services and also with cbs core showtime channel to get lions gate star and noggin from viacom and you pay on monthly basis amazon from estimates they generate 1.7 billion in 2018. a double amount that they made in 2017 so yeah that's a smart model to copy i would say back to you. >> all right suzanne thank you very much. coming up later in the show i'll have a chance to the roku ceo anthonywood about with this news and other developments meanwhile a strong message from lindsey graham on the border wall. roll tape. >> if he gives in now, that's the end of 2019 in materials of himming himming with being effective president that's the end of his presidency. joinings us now former white house press secretary sean spicer -- ofng we know the wall was the central part of president trump's campaign.

his had base wanted, and i don't think he'll give up on it will he, sean? >> no he won't give up. good morning happy new year, charles. i think you're right. this is a central part of his campaign it was -- really what he campaigned on more than anything else that people know him for. his had strong stance on immigration but i think there's also a political reality. we with need 60 votes in the senate. picked up in couple and now 53 and inapt controls the house. this isn't a dig day or toreship so president has to get best deal he can no question when had it comes to base and american peep at large that they know this is a huge priority for president and fought hard for it. but to senator graham point i think they need a result for it and you're seeing hill dig in as deep as he is. >> so -- part of this has become a game semantic perhaps a compromise which i was guess will happen at some point.

that now the term border security, maybe the slats maybe fencing whatever it is but we're still talking about the ultimate deal has to include a border of physical barrier on our southern border, right? absolutely. i think that the president has been right so far to shift the language away from the talk about a wall. this is -- this shouldn't be about a wall per se. what the president has been talking about and what president is concerned is about border security. it is about human trafficking it's about the flow of illegal drugs other southern border. and that i think if we can shift language a little, and talk about those shared priorities, the democrats toangt want to give into a wall. you use word game i think you're right this has become a game. 54 senators voted for this. for you know under barack obama so for them this is politics they don't want to give into donald trump. and so -- nancy pelosi keeps saying we need zero for a wall and maybe we have to change language at to get to that priority but what the president needs to go into,

the next reelection is saying that i made border security i need protecting our country my number one priority, and here's how i've been successful at it. but -- you know there's beginning to be some nuancing more than anything else because right now democrats won't use the word qawl. and i think the president needs to -- >> for one with second because we have a breaking tweet if you will. it is from president trump on the wall, and i want to share with the audience the shutdown only because of the 2020 presidential election. the democrats know they can't win based on all a of the achievement of trover so they're going all out on wall and a border security and presidential harassment for them strictly politics. your thoughts, sean. >> he's right. i mean, i think that's the thing if you put anybody else's name on this besides trump, it would go through. it went through under obama there was no-brainer we lost control of the narrative 54 senators including schumer including all of the other guys

who are now opposed to it voted for it. twice in 2028, and 2013, and so the idea that anything less than politics is laughable and we've got to make sure that people understand it but president is right if his name wasn't on it and first year instead of after a midterm we wouldn't be discussing this and it would fly through. but democrats need to show that they're standing up to trump. and so ting that the middle of calling it something else and talking about border security is only way out of this. >> hopefully in d.c. they get a away from this in some point and governor and legislate for american public sean great seeing you sir. >> let's check on dow 30, we're near the lows of the session. for stocks higher led by apple no surprise your biggest lose per whroong other names exposure to china's economy and then there's facebook reportedly blocking users who are using the term, illegal immigration when posting about a suspected.

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all right check out ford sales down 8.8% year over year but street looking for bigger decline and not down now there's good news for report company to pick up america best selling pickup 42 years running we know that 5150 suspending account but it is a reason bothering some people. >> facebook apparently us suspended account of blue lives matter group. they're very propolice officer and there's an officer shot to death in california. his name was sting a corporal police officer who came to this country with his family immigranted and facebook account showed his fir then the fir of

the alleged suspect who is an illegal immigrant according to authorities and they pointed this out saying legal immigrant vetted proper orally bill a police officer killed by illegal immigrant here caused other about pros as well. facebook apparently according to blue lives matter, suspended account saying that calling him illegal immigrant was violation of hate speech rules. the fern that posted this -- got to facebook and said what the heck are you doing? this is free speech. they came back said we apologize you're right. but have still is maintained the suspension on the account and given no reason. so -- not sitting well. >> what's been acceptable term? right really? >> hey. let's stay on facebook and talk about chief their chief there mark zuckerberg catching heat for his year in message joining us now theresa payton former white house chief information officer. theresa, this message universally sort of condemn tone

deaf and a little bit too self-congratulatory it was incredibly tone deaf and you see that kind of the people that support facebook even said it was tone deaf. here's the thing, when we found out that there were russian interpret trolls and other groups who were perpetrating misinformation an manipulation campaign not just on facebook but other social media companies, i saided a time they needed to change their business model. they have not changed the business model and that segment you just talked about where a page got blocked by mod ray or tores we've learned recently that moderator most is outsourced not enough good software and there's not a really good process to come back to say wait ping you've locked wrong group in wrong page so they need to sort of own up to what that i going to do next and how models going to change. >> how in your opinion should

the model what adjustments should they be making? >> i mean, if i were on the board of facebook, or advising mr. zuckerberg i would say first of all, metrics be very transparent. you talk about all of these changes you made, how are they hing or not helping? i would up the game on mod ray or tores, don't outsource it hire really good employees skin in the game, make sure you've got automated software helping with moderation are, have a really good escalation process when you make mistakes, and then next thing is look at changing that business model get rid of the political ads if people post something that's new, have a way to moderate that cure rate that and make sure it truerly is news and be transparent when you're taking my data and you're selling. >> it is interesting because those moderators i met with jack dorsey told him you know respect to mod ray force maybe hire some people and a birmingham, alabama not just sphrifng. sphrifng san francisco so the

same group of mod ray forces all think the sail all see the same evil things, and things that aren't necessarily so. >> yeah. these moderaators show it is hard to see what should be blocked and not blocked many of them said they're paid by what they block and don't block so they have to make these split second decisions or they don't get paid and they said there's lots of power point and spread sheets really hard for them to follow. j like a ticket that people give us parking tickets in new york city. theresa thank you very much. great insight i hope someone at facebook is watching we'll see you again real soon. meanwhile president trump tweeting about china united states treasury taken in billionses from tariffs we're charging china in other countries that have not treated u.s. fairly. in the meantime we are doing well in various trade negotiations, apparently going

on at some point this had to be done. more varney after this. . . .

charles: 10:00 a.m. on the east coast. 7:00 a.m. out west. we're in second half hour of new trading year. dow is down 379 points. i think i know the reason why. remember we had really bad manufacturing data in china but we also had a lot of bad regional manufacturing data. the official ism number being released, emac? liz: expected to come in at 57.9. it's a swing and a miss. as automakers reporting sales for december coming in pretty okay. but this is not a good read right now in the u.s. manufacturing sector. charles: we do have some better news with respect to mortgage rates, right, ashley?

ashley: mortgage rates, freddie mac, the latest reading on that 30-year fixed coming in 4.51%. wayne that long ago it was pushing 5%. down from 4.55% last week. definitely the trend is falling rates. we've seen decelerating home prices as well. combination of these two may help the moment market as we know which is struggling for some time. charles: for folks theorized bad news could be good news, not in this case. this big miss on ism taking markets to the low of the session. the dow was off almost 400 points. liz: biggest drop in 10 years. charles: it has been telegraphed. it is not great. we need to have good economic data. let's look at, well we have the dow up there, you can see down, a moment ago down 390 points. there is bristol-myers squibb. big news before the bell. will acquire celgene cashing and stock. transaction valued at

$74 billion. you can see both stocks moving in opposite directions. the big tech names that we check every single day. it was a mixed bag a moment ago. we saw a couple coming on including facebook. now all of them have shifted to the downside. microsoft is the second biggest loser. apple is the biggest drag, the biggest drag on the dow, 18-month loy. the company cutting holiday sales forecast because of slowing iphone sales in china. i want to stay on apple. ivan, you're an apple analyst and you're saying that this is more of a china story in your mind than an apple story? >> it is because of the situation in china. but i think tim cook, he just hit the reset button pretty hard. sometimes your phone freezes you have to reboot. charles: when you say hit the reset button hard, what do you mean? >> he brought down expectations significantly. there has been concern -- charles: did he miss an opportunity to do that? did they get a little too cute

and they reported and guided, was he defensive then? could he have said it then? this morning almost every supplier has had bad news and warnings? >> in all fairness to him a lot of is supply issues were from a big change in the supply because of number of new models they brought out in the fall of last year. the other issue, he did say yesterday that he didn't really foresee this slowness. it started in november and then accelerated into december and they still even haven't gotten their retail sales numbers for december yet. in all fairness he may not have had the insight to change it. charles: when louis vuitton four or five months ago warned, because apple iphone is a luxury item i think, luxury buyer in china was slowing down. we heard it from them. we heard it from companies like tiffany. we heard this from a lot of other luxury retailers in china long before last night. >> the iphone is an

aspirational item and somewhat after necessity. charles: number five in market share. why is it so necessary if you have huawei and all these other names out there? >> well, because, smartphones are such an integral part of personal life. charles: why do you need an apple iphone? >> well, if you begin on the apple ecosystem and you have a lot of apple apps you tend to continue to buy an apple phone. it is heart to change the platform. that is the one benefit apple has. charles: they have got, we call it, some people call it a cult but have they relied on it too long? you know, what have they done, if you're not a cult member, and you are using a android phone, i have an android phone but mine is seven years old, mine is not a good example. i hear people love the android phones. my wife, my son, my daughter, love apple. but not clamoring for the new apple product because the one they have is pretty good. >> newer phones have significant

performance over the prior ones, the 10 x, they are good phones. i personally have android. my kids have apple. charles: you're an apple analyst with an droid phone. does that say everything we need to know right now? >> i also follow google. charles: you think it is more about china. i think it is more about tim cook making mistakes. china's economy didn't slow in december. it has been slowing a long time. i think tim cook overlooked it or is being somewhat disingenuous with shareholders still with apple, a majority of analysts have a buy on it. average target is 198. that is relatively the high where are you right now? >> i have a strong buy. this is a buying opportunity. when good companies stub their toe, usually when you buy them. the company has almost $47 a share in excess cash. i look at excess cash, not total cash. that is cash they can use to buy back stock, pay dividends and invest in acquisition. the stock also has almost a 24%

return on capital and almost 3% dividend yield. charles: i appreciate you coming in. we will have you back to talk about this still a strong buy? >> yes. charles: good, thank you. now to the government shutdown, today democrats take control of the house and nancy pelosi is showing no signs she will give president trump funding for the border wall. take a listen. >> are you willing to come up and give him some of this money for the wall. >> no. >> apparently that is the sticking point? >> no. we're talking aboutrd bother security. >> nothing for the wall? but that means nonstarter? >> back and forth, no. how more times can we say no? charles: joining us now, congresswoman debbie dingell, democrat from michigan. congresswoman, thanks for coming on. democrats, will they, at some strike some sort of a deal? seems like nancy pelosi has drawn a line in the sand that really makes it impossible from here, because president trump

made a campaign promise. he sincerely believes we need some sort of physical barrier at the border? >> this is where i think we need to be. by the way the senate voted on this before we left in december. there is a bill that would fun six of the departments through the end of this fiscal year. so they would continue to operate. they would be open. we would extend homeland security until february 8th and then in regular order, let's discuss how we're going to keep that border safe. i don't believe in drawing lines in the sand. i don't, i think compromise isn't a dirty word, right now i'm seeing too many government employees who aren't republicans or democrats, they're public servants, coming to washington yesterday. tsa worked all holiday. they were all talking to me. they're starting to get worried, are they getting paid. michigan's u.s. attorney from detroit, his employees are doing the right thing. some will get worried how they will pay their mortgage. take those people out of the

middle, put us in regular order, talk about how we will keep our border safe. charles: without that outside pressure that you just described what would the urgency factor be to get any sort of deal done? >> well, i think that if we could, today we will pass this bill, that will fund the six departments, rest of the year and extend homeland security through february 8th. then you have got a february 8th deadline. we're not playing these, i don't even know the word to say what we're doing right now. this isn't, these are people's lives. we need to, this isn't leadership. we need to get the government reopened. and that is what we need to focus on. if you have a february 8th, deadline, not that far aware. go into regular order, figure out what we got to do. charles: we have lived on a string of continuing resolutions for cowell decades right now. kicking the can down the road doesn't necessarily give us a hard deadline or greater sense of urgency. congresswoman, editorial in the "wall street journal" says some

democrats their bowl is simply the destruction of president trump as we head into 2020. is that going to be the thing that guides the house right now under nancy pelosi, no deal, offering less for the wall now than it was a week ago? are we getting anything done like that? >> i'm going to say something right now. if that, i don't believe that is what democrats want. we had a big tent. we have a lot of people with a lot of thoughts, but we know, that if we are going to continue to win as we did and took the house back over, we have to deliver for the american people. we have responsibility for oversight but you know one of the reasons we, elected so many democrats is number of working men and women who are afraid they're going to lose health insurance over preexisting conditions. we need to fix roads and bridges and need to invest in infrastructure. if this congress doesn't deliver on that, we're going to see a 2020, i always said donald trump could get reelected. this congress and i have democratic colleagues, this is

not a monolithic congress. we have a big tent who know we have to deliver. charles: congresswoman, thank you very much. really appreciate your thoughts and commentary. >> thank you. charles: much more for you coming up on this thursday. last year was not a great year for america's chain restaurants. lower customer turnout. our next guest runs carl's jr.s and hardee's wrote a book about the economic boom under president trump. he is coming up next. also a theme on this program, people leaving high-taxed states for lower-taxed ones. we have the numbers to prove it. a week of bad economic news in china as the 90-day clock keeps ticking on potential trade deal. does the talks help end that? we're on it. you're watching the second hour of "varney & company." ♪

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licensed humana sales agent now to request this free guide. and learn about plans that could give you more benefits. call now. charles: checking the big board, we're at the lows of the session, really plunging since the ism report. we were down 320 when the number came out. we're down another 200 points plus. that was the steepest decline in manufacturing activity in 10 years. want to bring in andy puzder, the former cke strawn ceo. also author of "capitalist comeback, the trump boom and the left's plot to stop it." andy, i have to get your

thoughts. manufacturing still in contraction but at much slower pace. i think market reaction really defies the notion we should root for bad news to sway the fed. there is some fragility in this economy. >> one much your earlier guests referred to that the psychology in the markets is back. i think they're overreacting to things that are negative and they are underreacting to things that are positive. look, the manufacturing gru was a big drop in december. i read the release. it grew for the 116th month in a row. it is not like the world's coming to an end. things slowed down a little bit with respect to manufacturing. they could be up next month. people are overreacting to the bad, underreacting to the good. charles: that point you make is really something viewers at home should understand. i agree every bit of quote,

unquote good news is mitigated, immediately, were anything might be negative or disappoint something magnified immediately but this market reaction is stark. i do want to switch gears a little bit because your specialty chain restaurants, you know sales, foot traffic, 2018, they both were down. a lot of folks are saying this year doesn't look much better. what are your thoughts? >> i think there's a lot of competition progressry stores. grocery store sales are up. people are eating at home. something people running restaurants need to keep in mind. secondly people need to adjust to the new economy. much like in retail. sears is failing but walmart's doing great. kmart's failing but target is doing great. because walmart and target adjusted to the new economy. used to be if you ran a fast-food restaurant you had advantage of drive-through, a soccer mom coming home from a soccer game could stop, pick up food, drive home, it was very

convenient. maybe it is not as convenient. she can call uber eats, can choose from 40 different restaurants. it is delivered to your door. you don't have to sign for it. uber uses your credit card when you go with an uber driver. so the convenience element is changing. brands that pick up on that are going to be more successful than brands that don't. you see brands like chick-fil-a doing very well, in and out, shake shack, niche brands are not big larger brands associated with traditional restaurants service. charles: right. >> millenials react differently to that. there is a lot -- the world is changing and restaurants need to react like other industries. charles: we started the show talking about chipotle, trying to take advantage of the different crazes with different diets out there, to your point. mcdonald's continuously reinvented itself. it was the adp number, i want to ask you about that, since you point out this capitalistic boom

we're seeing and impact. we'll see what the government number is tomorrow. adp, 270,000 jobs, by the way 37,000 in construction, 33,000 in transportation. those are good jobs you don't need a college degree. professional business 66,000, it is across the board. it is pretty good. >> transportation and construction are particularly relevant because if the economy is growing that is where you see the jobs. you will see it in people building and see it people delivering goods. we're seeing continued economic growth. i would point out consumer spending was the best it has been since 2006, this last holiday season. consumer spending drives 2/3 of our gdp growth. the economy is doing very, very well. takes me back to the original point, about psychology of the markets. i don't know why the markets are so overreacting to the negative news that comes out. the economy is booming. people are doing very well. wages are up.

more people are working. we have seven million job openings. people are taking home more of what they earn because of the tax cuts. there is really, really nothing on the horizon that would indicate we're heading into a recession, or even much of a slowdown. i think we'll see continued accelerated growth coming this next year, despite what you're hearing in the news media. a lot is political. a lot is a party out there for whom a good economy is not good news and that party happening to control a lot of the news media. so they're having an impact. i think we are really having a very dynamic economy. it can and will continue. the american people should be patient. charles: i also think, andy, you can tell me your thoughts, president trump is upsetting the status quo. in other words a lot of very wealthy entities and people have made billions and billions of dollars off the way things are now. when they say cheap supply chain, they're talking about cheap labor. we can discuss why is that labor so much cheaper, is it even fair to the people who may be in some

sweatshops putting together these products but there are major forces out there that perhaps control trillions of dollars and have immense power that just don't want things to change? >> i think that is exactly right. the benefits of this economic recovery, unlike the entire obama era where the upper 10 or 15% of american earners, people with the most wealth benefited, in the trump boom, in this trump economy, it is blue-collar workers benefiting. it is working class americans. in fact for the first time in decades it is harder to find blue-collar employees than to find white-collar employees. we're seeing a change that. >> is baird out in the data last month. non-supervisory workers made faster wage increase than supervisors in four years. andy, thank you, we could go on forever but we have to wrap the segment. >> all right, thanks. charles: the market under tremendous amount of pressure again. we were holding steady down 300 if you consider holding steady,

but the bottom fell out on the iism number. 53.1. the street was looking for almost 58. next hour i talk with ceo of roku. the device lets you watch streaming video. they're announcing a streaming service. first on fox business. stay with fox business, i'm live at 2:00 p.m. eastern every single day. meanwhile, more "varney" next. shield℠ annuities from brighthouse financial

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charles: checking the markets here. you can see the dow losers led by apple. almost all the companies have a fair amount of exposure to china. want to bring in market watcher keith fitz-gerald joining us by phone. keith, your initial thoughts on this market because we know apple let us down but a whole

bunch of good news mitigated to the downside and this ism manufacturing number which really knocked the stuffing out of the market. any resolve that we're witnessing? we got keith by phone. sometimes this happens. we'll see if we get a better connection. ashley: is it an apple phone? [laughter]. liz: get the battery. charles: apple analyst, pushed back on everything i had to say on apple had an android phone. what do you make of this? i think interesting in a sense. think about this, the narrative we should be rooting for bad news tomorrow morning with the jobs report. ashley: i don't know about that. charles: assuage the fed, but we get the bad news from ism. not really bad news to andy puzder's point. ashley: not terrible. charles: 51.4 is respectable number. ashley: it is expansion, didn't meet expectations and the bottom falls out of market. liz: market is take hits down

500. ashley: market is looking for that i feel like. another excuse to go down. charles: is it because, we have to retest the lows no matter what takes us there? one day we'll retest, it will hold, everyone will feel happy or something more nefarious going on? liz: i do think it is programmatic, institutional selling that is classic -- charles: algorithms? liz: without a doubt. there is a lot of cash raising this time of the year anyway, december and january. the markets are falling out of bed and down the stairs? yes in dramatic fashion. do we see hockey stick action because of the robot trading? yes, we see that action. you know, i think, this whole talk of cyclical or secular bear markets, we expected this. we had a 10-year run-up in a bull that became an aging bull. it became rickety and arthritic for a reason. when you see global problems it is not just china.

it is japan. it is italy. it is sectors of europe, france. ashley: felony. charles: it become as banking issue, right? the debtload is huge. there is some leverage loan crack upthat is happening we don't know yet. that is where the derivatives -- charles: clo loans. i don't know enough about them. i keep hearing about them in the banking universe. thanks a lot, folks. tech stocks are among the biggest hits, big losers in the selloff. up next a facebook critic to talk about mark zuckerberg's year-end message where he says he is proud of the progress his company has made. stay with us. ♪

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charles: quick check of the big board. down off 529 points. let's check the big tech names, big momentum stocks. apple obviously your biggest loser followed by microsoft. not long ago a couple of those names turned green. meanwhile mark zuckerberg's end of year facebook message getting a lot of backlash. here is part of what he wrote. i'm proud of progress we made in 2018 and grateful. we systematically shift ad large portion of our company working to on preventing harm. i want to bring in vivek wadhwa. what are your thoughts on this? little too much patting himself on the back here? >> yeah, charles, if you look what happened in 2018, mark zuckerberg went from being perceived as a hero to being a villain. he literally has become a villain. employees are ashamed of working at facebook. in silicon valley where i am, facebook is no longer respected.

it is considered to be evil like philip morris cigarettes. it is equated to that now. worldwide it has been condemned for what it allowed in myanmar and burma. the united nations accused it of facilitating genocide. many, many people lost their lives because of facebook's products. so he is saying he is proud of that? something is seriously wrong here, my friend. something is seriously wrong here. charles: i think that worries a lot of people who believe they still have so much more work to do. if you don't see, if you can't be introspective enough to see the issues that you face and challenges that your customers face then it is not good news for the customer? >> no. he should be burying his head in shame. you know, charles, so far, there was a time when i was a big fan of mark zuckerberg. i really believed in him. now i come to the conclusion he has to go. he should take over as chief technology officer at facebook, focus on technology. someone es has to come in to run the company. someone like the ceo of pepsico.

she join ad company which is perceived to be a evil company for spreading sugar. she turned it around. she got it to focus on many good things and gave it a moral compass. that is what facebook needs, someone with a moral compass, who values, cares about people, not so full of himself keeps repeating same nonsense over and over again. we're tired of him saying i'm sorry we need to do better. we're proud of what we done. we're fed up of with facebook. enough of him stealing our data, taking advantage of us, and this has to stop. charles: i turned on him on his honeymoon, went to a restaurant and didn't leave a tip. last year i was intrigued by a book, winners take all. it was written by a silicon valley guy did a lot of work reporting, the whole idea of aura of silicon valley as nice gays dissipating a way.

people are taking a critical look, even robber barons villainized created a lot of jobs. a lot of folks are billionaires for things that don't necessarily create a lot of jobs. they should be careful, i think about the lost at lost lofty positions they're in. >> he has to think about the entire company. he has a defective product. parts of it need to be taken off the market. elizabeth holmes, went from being a hero, to being a villain. her product was taken off the market. facebook entire product doesn't need to be taken off market but partings of it, news feeds need to be stopped until they fix the problem. only thing that will fix facebook, the government, the lawmakers, i mean the courts coming down, descending on enforcing it to clean up its act. we knee drastic actions. that is what i learned after reading his statement.

charles: unfortunate it may have to come to that. i want to shift gears, no pun intended to tesla. a 2,000-dollar price cut. we know you love tesla. you drive a tesla. what do you make of the latest challenge? >> they are getting into a brand new industry, innovating like no one else has. they're breaking all the rules, making new rules. there will be ups and downs. it doesn't phase me. the difference between elon musk and mark zuckerberg. elon musk is worried about saving the planet. he is planning to retire on mars. literally building spaceships. building tunnels to make transportation easier. he is working on clean energy. he has a grand vision. along the way there will be bumps ups and downs but tesla defied all odds. it created a new industry. now we're talking about electric cars taking over our roads, self-driving electric cars will be all over the roads next five or 10 years thanks to what elon musk is possible. he proved you can build an

electric car industry. these cars are better than regular cars. there are good and bad. charles: thank you very much. always a pleasure having these conversations with you. we'll talk to you again real soon. >> thank you, my friend. charles: the junk bond market could be raising a real serious red flag about the health of the overall economy. want to bring in a bond market watcher. he is in studio with us. we're seeing the junk bond market really started to break down, etfs, assets under management coming out. what message, if any, do you think it is saying about the overall health of corporate america? >> well i think that it's suggesting some concerns as we've seen reflected in the stock market as well. there are concerns about slowdown of corporate earnings. of course with the bonds they just have to remain steady. they don't have to go up, to pay, the interest that they're already covering their interest. it is a little bit of a different story. i think it is also reflection of

some overoptimism that was around earlier in the year. we've seen backing off from that. charles: of course a lot of people hear junk bonds, they think of the crisis created a few years back from the junk bond industry. after that we had another crisis created from collateralized debt obligations. the wall street, in overreliance on sometimes the perfect or the new hot gimmick, if you will, for lack of a better term, are we there with either junk bonds or maybe clos or something? the banks have performed miserably. the big banks overall in 2018 were horrific and people are trying to get a handle whether we should look deeper what that means, not just for banks but for the economy? >> i think the banks are clearly in stronger financial position than they were going into the crisis in 2018. as a result of regulatory changes made after that time.

and, clos have grown a lot after, kind of coming under a cloud with other structured finance during that 2018, 2009 period. there has been a lot of growth, a lot of issuance shifted from the high-yield bond market to the leveraged loan market, raised some concerns. i don't think a problem on scale of mortgage-backed securities and credit default swaps we saw in terms of posing a threat to the overall financial system. charles: i should point out to the audience, we're at lows of the session, the dow off 610 points, when these terms become household words or you know, only after they have sparked disaster. so are you concerned at all about potential hidden risk to the banking sector, to corporate america or to the economy at large from any of these things, whether it is action in junk bonds or some of these other more exotic instruments? >> yeah, i think the concerns that are expressed out there are mostly about pretty conventional

financing, particularly investment grade corporate bonds, more so than below investment grade high-yield bonds. half of the investment grade corporate bond market is rated bbb, at bottom of that category as opposed to a third 10 years ago. so there are concerns expressed about greater leverage in corporate america. now that higher debtload is largely reflection of lower interest rates. charles: right. >> companies ability to meet their interest charges is not necessarily impaired but, as rates start to rise, they will have to adjust. there is -- charles: that has been interesting. the pressure on investment grade, although most of those investment grade bonds are like b, right, bbb or something like that? >> yeah. charles: since you brought up the fed real quick, before i let you go and interest rates, are you satisfied with what we're hearing from the fed, the dot plot? two more rate hikes, taking

50 billion out of the economy every single month in accommodation? versus wall street which is saying hey, you know what, you shouldn't and we don't think you will raise rates in 2019? >> i think a real reason to believe wall street's view of it, besides all the dot plots and ratings, inflation targets all the rest, in the end the fed has been responsible for triggering recessions pass-through policy errors. they're aware in the long run there is vulnerability losing independence. there is good reason for them. charles: bostick gave a speech in spain admitted as much but said they won't do it again. great talk. appreciate it. folks the dow jones industrial average, we're down 657 points at the lows of the session. meanwhile democrats officially taking control of the house today. it doesn't appear they will budge at all on funding for the border wall. we're on top of that. multiple warning signs when it comes to china's economy.

that 90 day trade clock started ticking this month. does it make beijing more likely to make a deal? we'll talk to the president who advises president on china on a lot of things. we'll be right back. ♪

charles: stock market, dow jones industrial average off 633 points. someone just made a comment on the 10-year. liz: low of 2.6%. this is again the safe haven play. this comes after the disappointing manufacturing number came in. china manufacturing. ashley: drop month to month was biggest drop in 10 years in that particular category, charles. it is having impact on the market. charles: you should understand, the market was stablizing after the apple news last night. the losses have doubled since that ism report.

wall street does not want to see bad news on the economy. of course we just got some bad news. it wasn't horrific news but it was bad enough to trigger the algos and anyone else who is bearish. a lot going on. a lot going on with your money. yields are down. more "varney" right after this.

charles: apple cutting quarterly sales estimates because after slowdown in china and president trump's trade war. bring in expert michael pillsbury. we see a continuation of bad economic news in china. tim cook is wrong. it doesn't start in november and december. it has been going on even before the trade battle. feels like the trade battle if it is exacerbating it maybe, but revealed to a lot of people who at the beginning said that china was going to win this because they had an unstoppable economy growing every year of 6 1/2 to

7%. >> there has been a lot of mistaken forecasts. we can agree on that, charles. there is not any accountability for these analysts who make these forecasts as far as i know. they're not boiled in oil or they don't have a hand chopped off so they get away with it, kind of very concerning to me because there has been so many false forecasts about the trade dispute. one reason i'm convinced the market has this volatility on china trade issues is people come on, say, oh, my god, this will be taken care of in a week which is certainly not true. then the blackrock forecast which am more aligned with, charles, they said it will be many years, it will be years and years before the trade dispute will be worked out. so somebody's right obviously. charles: one headline in the, that i saw almost immediately after the apple news, said trump's trade war with china may be harder to defend, now that collateral damage includes apple. i thought it was really

disinagainous headline to be quite frank with you. apple, from a repatriating cash overseas, probably saved 40 billions dollars from president trump's tax cuts. the idea we should not try to fix our trade relationships because the richest company in the world is having a hiccup? >> i suspect you're right. a lot of companies who run into problems are going to be saying well, it is president trump's trade war that caused the setback. i think you're right. that will not be true most of the time. another thing to keep in mind, this is an area where president trump has a lot of support in public from senator chuck schumer, from nancy pelosi, from the labor union-related economic policies. this is not something he is doing on his own of the everybody sort of knows now it is long overdue. it is a little bit like china going from a hero and a friendly country to a villain and the country taking advantage of us and one group in our country

still believes that is not true. they still believe china is our best friend and why can't president trump just surrender. but i think the president has a lot of support what he is doing. not like the battle over the wall on the border. this is something among the academic, community, think tank communities, big shift in view of china, even competition is not strong enough to describe what the chinese are doing. i think you agree with that, charles? charles: i do agree with you on that. >> you've been a leader on this. charles: let me mention this, blackrock and long-term solutions. >> right. charles: we need a series of short-term resolutions or some framework of a deal to borrow from president reagan we can trust by verify? yes. charles: don't we need something like that near term? >> yes president already outlined what he wants to do is have a comprehensive solution. he thinks president xi is already on board from the three-hour dinner to address all the issues. chinese have a phrase for it, it

means to offer the whole platter at one time. but there is also possibility of having working groups. having interim agreements, having things that can be verified. how much will they buy from us in new exports, for example in one year. how much will they make examples out of violations of intellectual property that have been sort of a slap on the wrist in china. maybe there will be major prosecutions and fines. these two approaches are not incompatable. interim agreements. but having a comprehensive approach with president xi. president trump's strategy seems to be working. the chinese are not attacking him anymore. they're not calling this whole thing a humiliation. they seem to be preparing something positive for next week. but it is not going to be, the end of the whole thing i think, do you? >> of course not. we need a series that suggests -- here is the problem, the folks that you say don't want to see this work, they always dismiss out of hand news

coming out of china is not positive news. they dismiss everything ceo's say. ceo's say they're doing well, tariffs haven't heard us. they come on to say ceo is essentially lying. there are very powerful forces out there that will dismiss every single move in this dispute. positive things that happened, they will, knee-jerk reaction, we don't believe it, it is not really true, it is not going to happen. >> i agree with you. sometimes they seem to have the motive making the president look bad. instead of president trump should be portrayed, as i think he should be portrayed, a hero. the first president taking this on. it is 20 years over due. any progress especially if our companies are treated better in china, president trump deserves a lot of credit if that happens. anti-trump people will not give him any credit. chuck schumer, nancy pelosi, they're on board for tariffs. that is good news. charles: i can also tell you what i'm seeing is really

interesting, something of a change, even among some classic economists about the role of an economy. >> yes. charles: adam smith world, all about getting cheap stuff to people and and sort of advantages of low costs and of course you know, you spread that out to supply chains. but now some people saying maybe people having jobs might actually be important from for economists. strange as it sounds that has not been the narrative. the general narrative is hey, let's get cheap stuff to people. we'll all live happily every after. >> maybe an economist get nobel prize in economics making a correct forecast about u.s.-china trade. i'm still optimistic, charles, the two great economies of the world can reach a better reciprocal understanding. i think that is possible. people say that it will all happen in a few days, they're leading us down the wrong path t will only result in stock market prices dropping when it doesn't

happen. charles: michael pillsbury. thank you so much. always great having conversations with you. >> keep up your good reporting. charles: happy new year by the way. check on the big board, dow jones industrial average is off 640 points, near the low of the session. completely collapsing since is the ism report. more "varney" after this.

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charles: check on the big board here. dow jones industrial average is off 613 points. all the major indices are under tremendous amount of pressure. the blue chips taking a big hit after the ism number. want to bring in gary kaltbaum. he is on the telephone with us. gary, your assessment on the market. reaction not only apple/china news, which it felt like it was

digesting that not too badly, down 300 points but the bottom fell out on the ism manufacturing report which still shows expansion. in fact we would have killed for 54.1% a few years ago but it did miss wall street's consensus. >> you know we're in trouble when you say 300 down points is not so bad. look, i just think what we are seeing is the culmination of why markets topped out a while back. they were telegraphing that all economic data points, statistics and numbers were going to surprise to the downside. interesting enough, we got the adp report today, and i'm thinking to myself, wow, the 10-year yield has got to spike to the upside. instead the 10-year yield is crashing, down a whole point, to 2.56 as i speak. i really do think the market is screaming still that major slowdowns around the globe, some areas are going to be in

recession. if not worse. and now you are seeing guidance for earnings coming down as a whole. guidance for gdp coming down. apple is not helping. china i believe is pretty much fallen off a cliff here, not just heading south. again, markets i think are pretty smart. you're seeing it in real time. charles: how does this impact something like the federal reserve, which a week ago said, hey, you know what? we think the economy will be strong enough to warrant slowing it down a couple times in 2019? do they find a way to articulate quickly to this market, they will reassess this? we heard from robert kaplan, dallas fed president, that he would do that but he is not a voting member of the fomc. >> with the 10-year yield at 2.56 it is 100% lock that there is no way they are raising rates anymore. and i think the next meeting is january 29th and 30th.

i would suspect. you can write this down. all the talk is going to be headed towards very dovish. you will hear some words that, coming data showed us a slowdown is at hand and we are now going to be very vigilant. that is the type of wording. i think the fed will have again the markets back as we move forward. i'm not so sure it is boeing to help right now as as bear markets go through as much time and price as they want to and leave no doubt, despite so many people saying we're in a correction in a bull market. this is bear market action and almost classic in nature. charles: gary kaltbaum. thank you for taking the time. folks, more "varney" right after this. i knew about the tremors.

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charles: while comment 11:00 a.m. on the east coast. abm out west paradigm charles pena for stuart varney appeared straight to the big board.

dow jones industrial average up 565 points. we've come back 100 points over the commercial break it's been a wild session particularly to the downside. i want to bring a brown person of the person group and steve forbes beard we all know steve forbes media editor in chief appeared as excessive volatility going on. what does it mean to you with respect to the message of the marketing and the economy appeared >> what it means is very simple and that is the concern about trade that tipping apple. because people are not going to invest until they know what the rules are appeared to march 1st deadline is looming. there's nice talk were going to get a deal that people are now at a point that soothing talk doesn't work. they want to see and use to say show us to be feared what are the details? charles: what are your thoughts? >> i agree with steve beard show me the money. china is having a big impact not only because wanted means

long-term because of the trade between the countries but ceos around the country are uncertain about what the landscape looks in the future appeared on top of that the fed raising interest rates, brexit and of course canary in the coal mine. companies warning that haven't warned in 15 years. the previous person and not gary talking about the classic market. go in for being love to overoptimistic and complacent to panic. i think we're in for a very volatile year and at the end of the year will be up or down 5% but it's going to scare a heck of a lot of people. 2019 is here to position yourself for the future and i think we'll get some pretty good worldwide growth and this will set the landscape and framework for that. charles: that's good news because valuations are down to signify a 5% move, maybe those folks who do have the nerve,

emac, to do that. >> i still say and i'm going to say it again. we have a stark shadowy corner the market of splinter record 126 trillion. what happens is these leverage loans are used by the private equity crowd, but they have a long lockout. you have to sell to get liquidity your stocks and other liquid assets when those loans don't perform. 126 trillion of these funds sit around in the market worldwide. i think their stock pressure to the downside because of the lockout. because these are a liquid zombie loans given to zombie companies around the world. so that is something we have to watch for a reason. why there is a down draft knowing that somewhere out there these loans are blowing out. charles: are you concerned about other things out there because corporate earnings have been

phenomenal. it's higher than in previous years. the first year of a 3% gdp. despite all the concern out there, the actual economic data 2018 was phenomenal. >> the economy has done really well the last two years for the first time in a generation. what are you going to do for me tomorrow? so it's the uncertainty. if we wave the magic wand and got rid of all the trade uncertainties, everything was cleared away coming into the market go up 20% and also look at europe, these other countries. they would start to imitate us on deregulation. charles: you believe europe would imitate america. >> they did it in the 1980s. when reagan put in massive tax cuts, 50 countries including once rigid leftist countries like sweden with big tax cuts of their own.

success begets success. we've had a generation where this country hasn't performed. we start performing and they still criticize us that they'll start to imitate us. charles: in the meantime come in 10 years at 258. at one point we were at 265, maybe even higher. what are your thoughts? some people including myself think of as the necessary time to fight back against the unfair trade relationship. once it's resolved, the senate will completely be resolved we know. there will be a period where will have to go through, sign something and then have to follow through and there will be a lot of line on it. if we get the former resolution, what does it mean for the economy and the market? >> first of all he agree with you. it's about time we start to claw back some of the benefit still in the short run it's painful, creates opportunity and volatility, but the longer-term sets us up for success. i don't want to be overly

dramatic but the fact is we've never been in this position. we've never had this year interest rate negative sovereign debt on interest and i think whoever made the comment about the leverage loans, corporate debt is very high. we definitely are going to feel some pain and you'll see some blow up, but that will set the stage for what i think is a healthy thing going on today. people get scared. the market will relocate well from those that are impatient to those that are patient. i'd like to say how the plan but don't have a plan. if your wing and a coming guessing what's around tommy really don't understand businesses that you are coming you'll get eaten alive in this market. if you have a systematic plan understand the risk you're taking. this is an exciting great time but you need to understand where your investing and you can just buy it and forget about it. we have disruptors that will disrupt great companies. amazon, target, netflix, disney.

get used to it. charles: and someday someone will disrupt amazon to your point. liz: he's making a very important point that the federal reserve is now disrupting the debt market with raising rates. i know we see the tenure on the 2.6 -- 2.58. so when they did raise rates, i'm telling you, you've got to watch the leverage market. wait, wait. let me finish the point. because what's happening is when these leverage loan crowd made a liquidity, they start selling their stocks continued to cash so they sell stocks and that causes a down draft in the market and it has nothing to do with business fundamentals of some of these great to frank's point. charles: the leverage to talk about. >> apple stocks, whatever they're selling. just like people in margin which is a record last year.

i do have one for you because we get a headline in from kevin hassett. he says every two weeks of the shutdown will cost one 10th of 1% to the gdp. in other words it's inconsequential economically. does it have an impact in some ways on the economy? >> i think he has it wrong. i think it adds points. [laughter] charles: well i will tell you this month, ron, we do know the last six shutdowns the stock market was actually higher and before today's session with the shutdown that was the three-point 7%. how much of an economic impact you think the shutdown will have on the economy? >> i'm with steve. i think it's a benefit. we shut the government down, most of us for a period of time it would be good and the stats are it doesn't matter. essential services still are provided in everybody gets paid and it's too bad that we have a

country where everything is so polarized today. but that is the world with event and its very little impact. charles: broaden out a little bit. if this is indeed the way it is for the next two years, should we share the idea of gridlock that nothing gets done in nancy pelosi and companies focus on impeachment rather than legislation and maybe getting things done. >> outcome i think gridlock is good. i can't remember who said it but thank god we don't get all the government we pay for. just imagine what our founding fathers would think. these are great people, great businesses. people like steve go out and run a business and we need more of those kinds of people. trumps not popular. he's a businessman doing the right thing with china. we need more about unless professional politicians. >> getting to ron's point on the government, if they focus on impeachment and the like, that's a good game. but you have to worry about is

they push for medicare from 65 down to 62 or 60. having public financing of campaigns which the democrats are salivating for another things will hurt the economy. the key thing is that the republican controlled the senate, gives support to the tram cabinet members who are in the process of deregulation. that doesn't get headlines but it's the equivalent of a massive tax cut to the economy. trump has done more in that area than all the previous presidents put together. that is substantial. go ahead without the doesn't get the headlines and let the democrats spin their wheels. charles: run first income is steve forbes coming you'll be with us for the entire hour. lots to talk about. it was great. first time i've ever talked with you you were fantastic. thank you very much. in other news, day 13 for the government shutdown. president trump out with leaders yesterday. no luck so far in ironing out a deal.

nancy pelosi doubling down. she says there's no way president trump is getting money for his fall. senator lindsey graham saying that the president backs away from his demand to fund the wallet could be the end of the presidency for him. after the utah senator mitt romney taking aim at president trump, but disney's rnc rana mcdaniel as with the president. first are going to talk about lighthizer and they come back. they make the streaming boxes. there are with a very big announcement that is going to make it a lot easier for you to dump your cable company. we've got a lot to talk about what the ceo next and of course we are watching your money. dow jones industrial average off 558 points. we'll be right back.

charles: i want to talk about apple, what they said about china and steve, you mentioned the trade and uncertainty of trade. what does this say about china specifically because tim cook said the slowdown began in november, december. this evidence as their economies been slowing down a lot longer than not. the stock market has been really coming down since 2015. or doesn't say anything about apple is well because i'm not sure they haven't made a lot of business mistakes.

charles: two things are not. apple itself hasn't been the innovator's ahab in the past. they come out with new models come a nice little tweets, but nothing to justify giver to the old one, get the new one so there's got to be innovative again. they haven't done that for a while. concerning china, president xi has gone backwards. he's gone against the privately owned companies. he's been favoring state owned enterprise between our inefficient. so that's the problem. china's gone backwards on the reforms which is hurting the economy. apple is lost its mojo for innovation. charles: so that creates and interesting obstacle in the sense that the state capitalism was able to reduce their economy to a degree. they came from nowhere to become the second-largest economy in the world. charles: especially in the 90s, they put in substantial free-market reforms and they've been stalled since then and they need a new brown.

xi has gone in the opposite direction. they knew what it was doing economically, free enterprise are not even know it was government cause. the private sector got the blame on countries like china said maybe the old way wasn't so bad. charles: can i ask steve a quick question. senator elizabeth warren says capitalism is the reason the become resurgent and is now trying to dominate the world. she's blaming capitalism for that. charles: capitalism ultimately means freedom in china is going to discover that if it wants to grow in the future their middle class will have to have more power. charles: a lot of internal pressure from their companies that have real rules of the road that were asking for also. now to this. roku will begin offering channels to customers for subscription fee as it begins to offer to customers. anthony wood, founder and ceo of

roku. congratulations. if you can for people who are familiar with the product exactly how will this work. >> yeah, so roku as a platform for streaming tv. we sell roku tvs or partners sell roku to these. we sell streaming players. if you go back a year ago, we launched something called the roku channel. when they launch of a hundred thousand free movies and tv shows or consumers could watch on our platform for free. since we launched it over a year ago we added more and more movies and tv shows to have over 10,000 free movies and tv shows. now we've added light streams like news, abc news for example. what we announced yesterday was we are adding premium subscriptions to the roku channel, which means now in one place, if you want a customer can sign up for channels like showtime or stars and get all of

that content in one convenient place with one bill. it makes it easier for consumers to decide what they want to watch. charles: sorted they all occur situation that it feels like consumers are starting to demand instead of 500 channels were i may not watch 490 of them, now i get to pay what i want. but i don't have to use a cable come me anymore, right? >> yeah, that's right. roku has 24 million active accounts. that is the scalable large cable company but we have a much higher growth rate over 40% year-over-year from an account. people moved to streaming. they stream for a couple reasons. one is that they munched better experience. you can pay for what you want to pay for although the bundle hasn't completely broke it is starting to fray. with premium subscriptions that the example of her 25 different premium subscriptions that you don't have to -- there's no base

package like there is an cable subscription. the base packages for you and make them pay for the ones they want to watch. consumers moved to streaming also because they save a lot of money. it costs less. charles: were starting to see the serious tension between those two control the pipes rather than streaming or cable and those who create the content. what does this mean not just for your business but ultimately for the consumer? >> well, i think there is a lot of change happening in streaming right now. obviously disrupting a lot of existing businesses. his gritty new businesses like netflix an internet only streaming services and new distribution channels. and it's causing a lot of existing businesses to rethink their strategy going forward and you see that show up in things like mergers and acquisitions. overall, for the consumer

there's more choice than for companies like roku, we are the leading streaming platform in the united states. charles: anthony, congratulations. another major milestone for your company and we appreciate you sharing it with fox business first. >> thank you. charles: let's check on oil. unchanged it has found some support here in the last couple days. meanwhile the national average for a gallon of regular gas $2.24. and then there is a bitcoin, which had a miserable 2018. don't have it up there yet. we won't get it right now. and then there is gold which is at a real good run here in the last couple sectors reaching a six-month high. look at that board for you as well. $6.90. that old flight starting to reemerge. of course the market battle off

532 points. 100 plus points worse than this. it's been a crazy fashion. we'll be right out with more markets on "varney & company."

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charles: irate folks, 490-point. off well over 700 points about 30 minutes ago. we were down 300 points when manufacturing data disappointed in open a trapdoor for the market. bouncing all over the place. a few buyers emerge in the last 20 minutes. we'll see if more will emerge. let's ask shah gillani. we have them on the phone right

now. the metrics are all quote, unquote cheap right now. the question is a market breaking down like this, how much further can it go because there's really no rulebook on it stopping at any point. >> you're absolutely correct. i don't think this'll be one of those days and if we do would be more than dramatic to say the least. psychology has turned so negative. that just adds fuel to the fire. the thing that worries me right now in terms of the selloff is a lot of investors who voted up in 2018 are now underwater. i think if they start to sell, they turn active and we can see this look like a day at the beach. that's the thing that worries me the most. you're right in terms of valuation. when this thing settles out and there'll be tremendous

opportunity. charles: shah gilani, it garnered all of the money and the problem was of course they came in about the same stocks and they went higher. their mandate was to buy the same stocks and now were dealing the flip side of that equation. it becomes a vicious cycle, doesn't it? >> is worse than not. a couple of jpmorgan analyst do not sober at $724 trillion in passive investing funds and assets. those inflows based on momentum if they reverse we see the same momentum now and where the markets could globally go. we could see that. we haven't seen it yet in the u.s., but as i said, based on the 2018 numbers in terms of etf's, $300 billion most of

those -- some of that money starts to come out because they are seeing losses on the event now. that could be a problem. on top of that in 2017 something like 400 -- give you the exact number. 476 billion. so that money starts to get a little bit underwater. we might see some more selling bear. charles: shah gilani, thank you every appreciate that. you might remember at one point dennis gartman said the dow could hit 30,000 then it turned irish. i think it's still bearish. dennis gartman is with us. he is next.

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>> breaking news. the state department issued a travel warning for china urging citizens to exercise caution due to arbitrary enforcement of laws. let's check on the big word dow jones industrial average off 572-point. virtually all the names are down. her eyes and wal-mart holding out. apple your biggest loser there. i want to bring in dennis gartman, the gartman letter editor and ceo. i know you were bearish at one point last year. are you still bearish on the market? >> absolutely. i don't think there's any question we are still going lower. it's not fun being bearish. i used to say they don't eat. bowles do. but this is dell a bull market. the fed is reducing the adjusted monetary base to be drawn down on a weekly basis down from

4.3 trillion. we are supposed to believe that this is on a fixed rate and will continue to decline and if that's true there is less money in the system to supply a strong economy and a strong stock market. stocks have a long way to go on the downside. it's not fun but that's the harsh reality. charles: robert kaplan and president the dallas fed essentially agreeing with you with the idea of automatically taking billions of dollars out of the economy every single month sort of automatic pilot. by the same token they've made a mess of it all. $4.5 trillion on the balance sheet and at some point they do have to quote, unquote rounded off. it's always going to be a challenge, won't it? >> it'll be a challenge. the fact they took the monetary base or 800 billion to 4.4 trillion over the course of seven years eventually we have to roll that out. right now the factory doing that

is deleterious to stock prices or they should make a statement that they're not going to allow any more maturities to roll off that occur in the adjusted race will be replaced. that would do much to help the economy. i would do a great deal to help the stock market. right now the fed does not seem like it's amenable to that operation. right now it seems like it's on control for the next several months and if that's true i'm sorry but stocks are still heading lower. charles: steve forbes is still with us. this goes back to your special about money and the soundness of money and implication of these central banks with respect to money. >> yes, when you have stable money, economies do well. unstable money economies don't do so well. investing is the key to economic growth. if you don't know what you're going to get back two years, five years, 10 years down the road, you get more commodities and currencies instead of truly investments. charles: what happens at the

central bank that started this much and some would say in order to quote, unquote save the economy and then they say were going to do the exact opposite. if they had agreed 4.5 trillion to save the economy, if you get rid of 455 trillion would hurt the economy. >> what they did in effect was put it in deep freeze. combination of excessive regulation and paying interest on those reserves. the small and new businesses were start for credit. the old soviet union the joke was health care is free but you can't get any. that's what happened to the credit markets. what they should be doing now is fine, let it run down because the banks have excess reserves. removing regulations at the trump administration wants to do. stop paying interest on those reserves and you freed up a lot

of money. >> dennis, and i know if you drop an apple iphone on your foot of all her. i'll tell you what, it's hurting a lot of investors. they're blaming it on china and it's a big drag on missing your not a big tech guy. what does this say to you overall? we just had a conversation about the passive investing and how dangerous it's been. most of that was focused on a half a dozen names, mostly taken momentum names. >> you have some different circumstances prevailing in apple gap into the downside is the technicians with dave. apple made a very, very bad decision bringing out a $1000 iphone. i'm sorry i'm going to interject a very sophisticated economic term. they reached the pew point, the level at which no one is going to buy an iphone. i think the administration apple has made an egregious mistake.

is apple cheap? yes. i'm afraid it may get cheaper over the course of the next several months. any rallies that occur, so many people out then trapped in the stock. it may take another year or two to make the bottom stop going down, go sideways and bore everybody and that's what it'll take. charles: thank you very much. transfer $1000 iphone at the same time they are offering a cheap battery replacement. just get the battery. charles: great stuff as usual. i want to get back to the breaking news. the state department issuing a travel warning for china urging citizens to exercise caution due to arbitrary enforcement of laws. the state department says citizens of chinese heritage may be subject to additional scrutiny and harassment in china. i want to bring in match lap, american conservative union chairman. is this a sign that is all part

of this negotiation? china playing hardball with respect to this trade negotiation. >> yeah, absolutely. the communist government in china is getting the message, which is different types of leaders. look at the most serious problems and try to solve them and then they try to mitigate things. he looked at the problem with china for a generation. he wants to fundamentally change this relationship with china and he thinks the only way to change it is to take away the benefit they get from the status quo when he's doing now. he's tightening the economic news in china is trying to respond in the way that most leaderships to understand, which is they will take away the fundamental freedoms of american. i don't like to see this, but i know it's going to get worse before it gets better, but it is going to get better. charles: the fallouts on the

huawei case and detention of the north korean border. it's an issue of also was china from the state department doing exit bands. in other words, u.s. citizen including dual citizenship you have a tough time possibly leaving because china may want to ask you questions. >> the other thing on the huawei piece is this is basically a government owned entity i know they consider it an offshoot that gets into the guts of your technological backbone and they essentially steal your intellectual property. they work with the communist government to make sure they can learn as much information called spying as they possibly can. i think it's good they are getting tough with huawei. there ought to be boundaries. guess what, if an executive in one of these entities is seen to be breaking these rules, i'm glad were going to throw the

book out. >> i want to clarify to canadian citizens in china. >> this is what we should've done at the beginning. instead of putting tariffs on, which is a sales tax hurt their business, hurts consumers, and we should've gone after specific companies, specific individuals that have violated the law. you throw it out of the system so they can transact internationally. they are done. you take the cte company that we nearly shut down a few ego because they're not letting them buy certain parts. if you had done at the beginning you could have gotten the message to beijing. >> the stakes are extraordinarily high. >> you see if we work with our european allies on this one of the same complaints and you start picking up specific individuals, specific companies at those sanctions, that it's hard because that is personal. that's not abstract.

charles: >> has such admiration for steve forbes. i'm scared to say what i will say because i respect everything he says. i do think temporarily there were times in the bilateral relationship you have to >> the broadside across the face amount of these terrorists do. i'm not a terrorist guy. i hope that they simply get their message. they send the message and allow us to recalibrate. as far as european allies, the only thing i disagree with steve is that they really suck with these decisions. charles: i'm afraid i don't think they would've been as tough as president trump. having meetings on how to fight china. ate yours might've gone by. >> we never exercised it before bringing them on board. >> i hope you're right because we may need them to help us on something in the future. in the meantime maybe they'll

pay up on those nato fees. steve is staying with us. we'll tell you why if we all say hello we miss her. now mitt romney responding saying he wishes from me would be a team player that is, rnc chair ronna mcdaniels signed with president trump. she says this is exactly what the democrats want. they want fighting within the republican party. we are going to talk to the rnc next. also, talking to someone who knows about high frequency trading. the algorithms that triggered when the dow went down from 300 points to 360 points, and is there anything we can do to turn them off? "varney & company" will be right back.

charles: check out the doubt. only down 380 points. it's when you say a 300-point reversal. ashley and emac. ashley: this is where we begin the day. the manufacturing still an expansion, but a big drop. but it comes back a little bit. >> exactly. another positive story crossing

the wire. record dividend payments for 2018. that's what the dow jones the dow jones s&p is staying with a 58 billion. we continue to try just bad news. >> if we do it again today it will be remarkable. "varney" will be right back.

charles: already, check the big word here this is exactly where

we were when the number came out. the dow jones industrial average of 350 points. brian welsh -- i hope i don't pronounce -- this pronounce the name of your firm. can be. a.i. products, artificial intelligence products are missing things driving this market all around. the computers at this market to the computer trading. help our audience out because most believe it's unfair for the average investor route they are and see if they can change their life. >> yes, so what algorithms these things will amplify the productivity of the people treating them. goldman sachs means that 600 traders on the floor. now they have to. they can do a lot more than what they could previously. you need to ask yourself whether or not this market with these algorithms are actually reflecting underlying economic fundamentals. if they are, we are in a good

spot. it's not than it actually is as opportunities for folks to get an weather is dislocation. >> i don't think that the dispute, but what people are wondering is the ability for these machines, for these robots and algorithms to understand the nuances. in other words, we are down 300 points. 54.1 ain't bad. >> charles, you're absolutely right. they don't understand context of anything so they fire and keywords as someone programmed and they start selling based on seeing that it then these things do not understand context and meaning. human beings do need to step in to turn them off. charles: october 19, 1987 there is a commission, the greedy record over 300 pages and

essentially it blamed computer programs back then and what they were calling portfolio insurance. you feel so odd this many years later still talking about this as an issue. we are not big fans of government relations, but are you one of these folks who says eventually this thing will kill us all for that maybe there should be some intervention. >> no, i think the other day when he was talking about algorithms and volatility in the market and a check to see that he was operating properly. as long as the market is operating properly, it is going to correct itself and i'm not a fan of regulation either. when these things overshooting bakeware librium, that does give opportunities to investors to get in a good entry point. charles: steve forbes is here shaking his head. >> agreement. thank you very much. appreciate it.

>> thank you, charles. have a good one. charles: rnc chairwoman siding with president trump after her uncle, mitt romney published an article. i will bring in kaleigh macennany. the timing seemed interesting to say hey i'm back and this is what is first and foremost on my mind. >> right of first and foremost on his mind and never public in mind should be how can we work in a time of divided government. republicans must stand together. we must support the trump agenda and show that the democrats are the one doing the obstruction not wanting to work focusing on frivolous arguments are not working for the american people. i think i heard mitt romney say moments ago that he does want to work with the president. maybe that is in response to the overture as an intron made yester when come on be a team player. get the truth together and get out there and fight for the

american people. perhaps that was consolatory lets work across the aisle at this point with democrats and republicans be one solid unit. charles: is kayleigh mcenany, is there a need for not necessarily opposition, but a counter to president trump within the republican party as something of a governor if he will of the president and if that's the case, should it be mitt romney? >> absolutely not. nothing can or to the president in the party. it's always striking to me we hear about this never trump resistance when in fact this president has the highest on party approval rating we've ever seen in our party with one exception and that was during 9/11. one more votes than ronald reagan in the nomination. he had the most republican votes in the history of our party. so why should he have a counter when in fact they have never been more consolidated than they are run president trump.

charles: always great seeing you. happy new year my friend. democrats officially take over the house in the next hour. and then of course we'll probably see if they're really truly willing to make some sort of a deal on this border wall. we are going to discuss that next. unlike most other cold medicines... ...zicam is clinically proven to shorten colds. i am a zifan for zicam. oral or nasal.

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charles: now to the government shutdown in its second week president trump tweeting about it. here's what he had to say. the shutdown is only because of the 2020 presidential election. they can't win based on all of the achievements of trout. so they are going all-out on the desperately needed wall and border security and presidential for them strictly policy. i want to bring in georgia congressman. congressman, do you think after democrats will seize some

honest-to-goodness negotiations towards not just the shutdown, but towards this wall? >> i sure hope so. where we are right now is an unbelievable position to where all of those saying they're against funding for the wall has either voted in the recent past or have come out publicly in support of comprehensive border security. physical barriers are part of a three leg is still you need for border security. physical barriers, technologies to help detect those coming across before they get to the border. the walls are barrier slowed them down to a third element which is the border patrol to get there. in a counter those that are coming across. you have to have all three. what we hear now is we just need to allergy. well, the technology doesn't stop anyone. it takes all three together. what we see now is political

posture. charles: data security 101. first and foremost you want to deter your biggest component of it. it's interesting to your point that democrats have actually voted to allocate tens of billions of dollars to this in the past. for the secret be semantics. order security, not the wall. is that the only way we'll come to some compromise and ultimately what would that look like? >> i think the democrats have boxed themselves into a corner right now to where the far fringe leftists controlling what they're doing. they can't find a way out because they said over and over again were not going to give one dime, but we will spend the money on border security. they're to a point right now they have boxed themselves in the corner and i support the president. i was at a white house meeting tuesday mr. president, stand firm. this is a national security issue. not an immigration issue. the people are behind you in that that is what i'm hearing back home.

people even recognize the government shut down. that'll change over the next few weeks, but i think he's got a stand strong. charles: it's got less than a minute but since you brought up immigration, could this be a chance for a grand bargain? ring everything back to the table. bring daca back. could this be an opportunity to get rid of the loopholes and make the issue something we don't have to deal with again. >> the optimistic side of me said yes, but this is déjà vu all over again. we were there a year ago at that same position and we offered all of that to the democrats and they reject today. that was during the schumer shutdown we experienced a year ago. i hope maybe with a change in leadership in the house that maybe they will feel the pressure from folks back home. this is time to get something done but it has to be something that benefits all americans.

charles: congressman, thank you very much. we appreciate you taking the time. dow jones industrial average of 373 points. we were down 677. we've made a remarkable reversal. it's going to be a crazy day. more "varney" after this. . .

s

charles: folks, that is dow jones industrial, two-day chart. we climbed off of 400 point reversal yesterday. i'm not sure we're going to do it today. although i have to tell you, steve, what i'm excited about is the resolve i'm seeing. some people say it is not a big deal. stocks universally everyone agrees is cheap. we don't know where the bottom is. >> that's right. why you shouldn't try to pick it. if you have the cash, the time, go into it. everyone criticizes trump and the wall for the stock market. give trump his wall and chuck schumer, his cross hudson tunnel. charles: you like that deal?

>> purely disinterested. charles: i agree with you almost every time i have to leave here at 5:00. steve forbes, fantastic. the crew was great. neil, market struggling but off the lows of the day. neil: all right, my friend. by the way i love your passion around the ism number, just quick update. it is an ism number. [laughter]. all right. might have been a fluke. you got to have to chill here,. charles: you got it. neil: one things we love about you. the passion runs through. don't get me started on that ism number. welcome, everybody, i am neil cavuto after my buddy charles payne. we have a lot of concerns about the market, apple, fears of a slowdown, manufacturing the sector recording its biggest drop in 10 years back to two-year lows and all of this as the new congress is gaveling to order. it will be a democratic house right now. in the next couple of hours,