>> announcer: this is "nightly business report" withfe bill grifth and sue late fade. stocks tried for the first three-day n streak this month but couldn't hang on. is t bounce over? markets or economy. stocks seem to be seeing something different about the sonom what many of the fundamentals. so which is right? and saved by the bell. sears gets a life line at the deadline today. what's next the iconic retailer? all that and more ton on "nightly business report" for this f the 28th. and dwoeoo bid you a evening, everybody and welcome for in friday. sue has the night off. well it looked for a time s tod licks made it three straight days of gains for the first time this month but it't dihappen.

remember yesterday a final hour push sent stocksigr. today, it was exactly the opposite that happened. but the realityto was thats were all over the place. the dow up more than 240 pois at the high water mark and ended lower while hitting breakl even seveimes throughout the session. here is what looked like at the end. the dow down 76 points still above 23,000. the nasdaq heldfi on for a -point gain and the s&p down just 3. y this ll the volatil woke, this turned out to be the first up week for the indexes this month. with the dow and s&p gaining nearly 3%, the nasdaqlimbed by 4. but bob pisani tells us now the market has key issues coming up. >> reporter: after the medal month that was december most investors are eager to put the month behind them and moveo january and the new year. what are the key issues the markets are grappling w the first few weeks of 2019? here is what i think are the five biggest. first money flows.

investors traditionally put money to work in the first weeks ever january. but will they do that aer the worst december since 1931? second, what will corporate earnings lookike? investors still expect earnings growth of about 8% in 201 but after cautious comments from fedex and micron opinion the markets adequate acting like zero growth inll 2019. he analysts take town numbers or the stock market go up. >> third any c progress onna trade and tariff talks? lll we see face-to-face meeting was level negotiators in january? china indicated that we will. fourth, we'll get the minutes from the fed meeting on january 9th. do the federal reserve officials send more passive signals, particularly on unwinding the balance sheet? finally, there is tru political risk. will the calmer white house ee mernl? or the chaos continue? the resignation of the defense secretary jamestown mattis in particular removedhat many viewed as a stabilizing force and all the markets want is it stab from everybody. from the fed, from china, and

from thehite house. for "nightly business report" i'm bob missfy at the new york stock exchange. >> this week's gains pulled the averages fther away from bear market territory. when while that term bear market a technical term many investors put weight on it, especially in terms of a forecaster. we asked steve liesman to look at the essential greenlts of a bear market. how good a job does a bear market or 20% decline in stocks in predicting recession? the answer, it's terrie at predicting but fallout bad at telling us if the economy is it in recession right now. first a technical note by the barest of margin it's not bear market. the s&p 500 only closed down 19.78%. from the september toth high. not the full 20% that unofficially officially denotes a bear market but close to ask the question. just how smart is the ample bear? here is data cnbc analyzed from

bee spoke investments in the post war era there have been 13 declines of 20% from the prior high. the good news five times it candidate result in recession in the next 24 months. the bad news,he eight times economy was already in or on the verge of recession. a coue of examples, in 1987 a big stock decline but no recession. in 2001 a recession was three weeks away from that 20% decline. no recession in '02. and in '08 and '09 when the stock market fell 20%, the stock econom in recession. a bit more bad news from the 20% ak stocks fall additional 8% on average during bearing bear rcmarket. the increase one year later, 14%. the meanest of all the bears we cod find, from 2007 to 2008 there was a 52 opinion hers decline. the nicest of all bears, 1956 to 1957, when stocks fell just 21%. right now we are about 15% below the september 20th high.

so moving away from bear market tey. that's good news if we go back there markets have try not if if pennsylvania recession is predicted but if it's telling us we're already in one. for nightly business report, i'm steve liesman. ande did hav some mixed economic data out today as a matter of fact with numberst showing tusiness conditions in the chicago area remain strong but pending home sales around the country fell in november. and one of the head scratch aring themes recently has been the dfrgens diefrgens between e economy andeports are saying. but the former head of the nasdaq thinks the answer is simple. >> when i look at the market today where i see a disconnect i se that next year corporate prochlts are are estimated to grow 5, 7, 8%. we think general gdp grows two to three%. that's not recessionary environment. i think the market has been somewhatisconnected from the

fundamentals. if i was an investor i would fos on the what the fundamental tell me and not pay so much attention to volatility in a market in a given well let's talk about it right now. we have with us an imminent ney manager with us tonight and eminent onomist,hris ailman the chief investment officer with the teachers retirement system and the the choef economist at. r chris starting with you. it's turning out to be the worst december f the u.s. stock market since 1931. for you what is this market tell us about the economy, if anything? well,s steve liesman said it's not good at predicting recessions. but i think it's por tending the first half of '19 will be a slower growth economy than we had in the latter half of 2018. an i think the market's a little bit overdone in terms of being very nervous about what the federal reserve said a

couple weeks ago. >> all right. joe, do you see slower growth in 2019 relative to what we have seen so far this year? >> i do. 2.2% growth next year as we move to the long-term trend of 1.8%. the financial volatility you have seen the past three months should be considered a proxy for slower cash fls linked to trade tensions around the world out of the white house. that's not going away. and in fact we think it's likely to be intenfied by mid-year. so the market i think is a little bit ahead of the anonomy. you should expect that economy to meet that market by the middle of 2019. >> so you think the economy will slow down to confirm what the stock market seems saying? i don't want to put words in your mouth but is th you're saying right now. >> that's about right. the long-term trend growth of th united states is 1.8%. some of what you see is clear i concern thesi market pnt can't sustain the 3% pace of

growth which most eco completely disagree with. that's more of a political sentiment than rational economic analysis. i see a fundamentally strong economy slowing back to trend and then we can worry about recession risks in 2020 should there be a policy out of the white house or the federal reserve, or just a general macroeconomic slowdown linked to trade tensions. >> chris, i know you manage a huge portfol, try and keep high altitude and not worry too much about short-term headwinds but we have had a lot with the trade active between u.s. and china. a slowdown in technology demand. oil priceseoing lower. hose things that concern you and get to you think about how you manage the money in the portfolio? >> absolutely, bill. it gets me to grab the roll aids every day. it's the risks that abound in the marketplace but we have seen markets rally and climb with the ricks. volatility is here to stay. bt that we saw in the last part

of december the volatility of november and october. and you're right, you've got to keep your eye on the long-term and manage your assetllocation that you're not overweight stocks. actuallye drops to come back in and add to our portfolio, because we think we want t w stayhin that range and stay exposed to the u.s. economy. >> at this -- was growthrd >> yes. at this point the federal reserve is expected to raise 2019.twice in for you, chris, is that a good thing or a bad thing when if comes to equities? >> you know, if the federal reserve is raising res it's because the economy is strong. but n think rig what i'd rather see out of the fed is for them to be morent data depen wait and see, not just predict what they're going to do well out into the future. >> joe, how many rate increases do you see next year? >> well we see the fed ontiause at least june of 2019. and if the economic growth, hiring continues to beov roughl

where it's -- above trend we expect two rate hikes one in juner one in september -- december for 50 basis points totals. >> thank you, both. a always enjoy talking with you. chris ail manual and joe with rsm. happy new year. yesterday weold but the tax loss selling strategies that might have contributed to some of theyear-end selling. tax loss selling occurs when you sell losing positions in order to offset capital gains from other investments during the year. and monday is the last day to do that. leslie picker has a few tips. >> there is one keyo rule tax loss selling. urd that is if you are disposing of one sy for tax purposes you cannot buy a substantially identical security within 30 days before or after the transaction. this is called the wash sale rule. but what happens if an investor still likes their losing he positions for long-term?

well, bob willen, a tax adviser to institutional investors shared some legal tricks to maintain exposure to certain securities. one way to this, h says, is through investment holding companies. for example, if an investor wants to sell alibabahi be, plumme%d about year to date he orhe can buy something called altaba a result of spin i don't have that is a holding company for alibaba shares. another of his ideas, stock lsed mergers. investors have bek locking losses in disney shares and buying up the 21st century fox. the two signed a deal to merge so the shares will be combined anyway. lastly, any etfs. of an i vestor willlate the wash sale rule if he or shea bias different e tracking the same index. but what he or she can do is buy some of the underlying holdings within therk index to get exposure. but willen says one should not buy all of them going above say

450 stocks in the s&p 500 could cause an investor to lose t deduction. for nightly business report, leslie picker. this was billed as do or die day for sears today. anyone interested in buying the struggling retailer out of bankruptcy had to have submi addy 4:00 p.m. eastern time. if no bids came in sears faced theossibility of liquidation. lauren hirsch, the consumer and retail reporter for cnbcelom. >> i canyou the sources told me at the very last minute somebody submit add bid. it's possible that sears can avoidliquidation. but there is uncertainty to come. >> do we know the bidde >> esl. we know that esl. >> that's theedge fund runly edward lampert who has been the chairman of the company a was ceo for sears. >> and a big investor in sears as through esl he invested in sears throughout the struggles as a public company s and itms he will continue to invest in

sears even in bankruptcy. >> now, this is a life line.ot but they'reut of the woods yet, are they. >> absolutely not. great question. igone of the really issues that lampert faces is the unsecured creditorsdave s they don't want a credit bid. what a credit bid is basically lampert says he has some debt rped to him by sears and he is willing to f the debt and exchange for that he is counting that towards his bid. >> right. >> i haven't seen the terms of e current bid yet. but if he tries to do that the unsecured creditors have saiey ill not allow it. they don't like how eddy lampert ran sears. they have questions about some of the transactions that he did while ceo and they have said ther could be potential cause for litigation. >> does the bid have to be approved by the bankruptcy >>y yes has to be approved by the wruptsy kwort and sears advisers need to decide, hey, lampert's bid to kee sears alive is worth more than liquid eighters efforts to liquid eight

it. and that's not black and white. >> we don't know when they are coming out the bankruptcy. >> we ton't know ify are coming out. >> they have the life line. >> yes. >> but still have to keep treading water at some point. >> exactly. >> lauren hirsch from cnbc.com thank you. >> thank you. coming up in week's market monitor thinks the economy is it not as bad as some fear. three names he thinks you should have in 2019. electric car makerla t named two new board members today. one of them is oracle cofounder larry ellison, the other is wahl green's head of global resources kathleen wilson thompson. the it sales a september deal with regulators stemming from

the elon musk tweet about traeg thtesla private. shares rose to 33.87. from tesla to president sump's tarippear trade war to rising interest rates, all of them factors that affected the automobile industry this year. and in year that is projected to be a good one for the u.s. auto makers overall. but what about next year? joining usight now michelle krebs is skuch analyst with auto trader good to seee you miche thanks for joining us tonight. >> thanks for having me. >> how could you c 2018, first of all, good year, bad year, mid-level. >> it was surprisingly good year. it surpassed forecasts, including ours, looking like it may come in just a little bit aheadt of l year in fact. >> but ford is changing strategy. it's eliminati a lot of vehicles and focus on trucks. general motors is closing factories. what about for 2019. >> well t for 2019 wenk the market will be down a bit.

still 'rhealthy. anticipating 16.8 million sales versus 17.2 this year. so still a rlly good year. but it's getting tougher. interest rates rising,he threat of tariffs. there are a lot of headwinds looming. >> and the loss of high profile personalities, the death of sergio at chrysler. ferrari. >> surprising news in 2018. the death of sergio, the. of carlos ghosn in japan. but i don't think they affected the companies. there was a smooth transition at fiat chrysle ssan will see they are still working through all of that. but those will be things wetc in 2019 for sure. >> do we see the rise of electric cars more thisext year do you think? ? >> we will be watching tesla.

they are the ones driving electric vehicle sales. they had a good year. they actually had a profitable quarter. that was one of the things we st undeated about last year. but can they continuehen there e more evs come to compete? and can they continue to earn a profit? those will be things we watch. >> who is the winner next year do you think, autowise. >> i think trucks and sport utilities will continue to be the cat's me ow. shots.ing the michelle krebs with auto trader. thanks for joining us. >> thank you. wells fargo settles with state ags. that's where we begin the market focused. the bank is paying as the 575tl million to s claims made by states that the bank created phoney accounts and other consumer abuses. two years ago wells agreed to pay 190 million to settle claims. the shares rose a quarter to

45.78. dell returned to the public markets today after nearly six years as a privateompany. the move follows the buyout of dell's tracking shas in software firm vm ware. jp morgana sai$60 price target on the stock. closed up 2%t on the fiy of trade to 45.43. first republic is going to join the s&p 500 index prior to the open of trade on january 2nd. the bank wil replace scana corp. in the process of being ainquired by demon onenergy. republic rose 5% and closed at 87.94. octor and gamble and ibm say that ken chenault is retiring from their boards. both exits effective february 13th. shares of p&g and ibm closed down less than 1% in today' trade. and new government data show spirit airlines was on time mor often than any other u.s. air

carrier in october. spits flights were on time about 81% of the time. that is in contrast to its general reputation of drawing more complaints from consumers than any other aosline. spirit 3/4 of a process% to.5 the fcc lawmakers an investigation into that nationwide outage at telecom company century link that knocked outal 911 voice in parts of the country. it started yesterday and affected my other services as well, including some verizon mobile data, even atm withdrawing where a are withdrawals. the fcc chairman called the outage unacceptable. shares of the company were up 2% -- up 2 cents to $15.27. time for a weekly market monitor who has stock picks he says you wanto own if you believe the economy will continue to grow in 2019. steve is the portfolio manager

at fed rated welcome back. >> happy new year. >> you start with abvi, add dividend play for you is that the reason you like this. we want neral theme is to buy things beaten up between september 20th and christmasev dividend stocks are kind of the opposite of that. they had gotten beaten up up until september 0th. as the market ralli and interest rates rose. there was expect aches fed was raising rates with four times a ye. the fed already dropped the rate hike expectation down from three to d two. bt they'll be able to hike at all in 2019 and the dividen players ar getting a bid because they are more defensive. so vi is a great example. a greeld yield at almost 5%. she agreement with pfizer which ensuring the key drug generates cash flow supporting the dividend and allow them to invest in new drugs. >> the second pick is amazon. this is a good example of market versus economy. d christmasthe rec this year but the stock down 34%

since the high inu september. like it baups of the decline or what's going on here. >>yeah, we think there are many a number of names priced for recession without aon reces coming. so what you have here is the consumer is quite strong. we see thatt not jid amazon have the best orders but we have the best holiday shopping seaso in six years. aws does well which is the cloud business. initiatives around pri is doing well as well as private label and alexa. have a name overly beat up. it's a cyclical name but we think i rebounds from the levels and you have seen that the last couple days. >> finally a small semi conductor company diodes. we have heard from other had money managers who like these because they feel they've been beaten down too much justyo lik feel about amazon. why don't you pick the bigger guys? why the small cap in the semi conductor >>diodes checks a lot of boxes. number one small caps have gotten beaten up when rates

rose. because 50% of th fund something variable interest rates versus large caps online only aund 10. as rates fall and we with went from 3.25 on the 10-yeato below 2. 5 that's relief. number two small caps uer performed 7% relative to the s&p. there is catch up. highoreign sales exposure, the dollar weakening helping and also related to trade with cna where it sells a lot of goods. any progress there helps as well it's all ofhe themes put together in one stock. >> steve with fed rated again thanks for joining us. have a good new year. >> you too. >> the unused gift that can be a burden to retailers. coming up.

here a lack at what to watch next weak. busy week a who will kay shortened week. markets closed on tuesday. but on thursday we get a look at sales numbers from the big auto t'makers. then all about the labor market. thursday we get the weekly unemployment claims and friday it's the big december jobs t'port. and t what we are watching for next week. could be some more volatility fs a matter ot. the holiday shopping rush has passed. but many consumers are armed with those gift cards that allow them toash in on the perforate christmas deals. with you not everyone uses their cards right away or at all. and as frank hollands tells u that has a bottom line impact on retailers. >> give cards, the plastic and e versions were t most popular gifts of the 2018 holiday season.ct >> illy enjoy them more because then you can pick out exactly what you want. i find it's easier to give them. and they're just r fun to

receive as well. >> millions of americans see the gift card as a convenient alternative to picking presents. according to wallet hubca gift s from amazon, visa, and art, american express itunes were the predicted top picks this season. >> we like the amaecnse we do a lot of our shopping online. >> i received a gift card for itunes i don't use on itunes but it's good to have music anyway. >> i received a visa gift card. and also a starbucks gift card. >> but even when peoe get one from their favor favorite store brand they don't use them right away. it's estimated at least a billion dollars of gift cards go unused every holiday season. according to the national retail federation, 42% of people say they waitntil aood sale to use the cards. 20% say they use them quickly. another 20% say they save them for a rainy day. >> i usually wait a long time. sometimes i forget about it. >> i try to do them within a month or two becausein i that when i -- when i don't i lose

them and tmisplacing them ie to use them as soon as possible. >> i do have a collection of gift cards. that sometimes is theso problem. ow if i get a gift card i try to use it as soon as possible. soy don't forget it or lose to a. >> people not using the gift cards is actually a bigger issue for your favorite store than you might think. retailers can't count it as revenue until you buy something. for nightly business report, frankyl holland. where does that unused money go you might wonder? we wondered. there isn't a universal answer it turns out. different companies handle it differently. many use a specified time. usually between two and five years before they convert the unused gift card funds to revenue. and then if that's not enough some states have unclaimedty prop laws that send some of coffersy to state's aren't you glad you asked. before we go a final look at the day on wamz capping a volatile week. down 76 points on the industrial

average. still above 23,000. the nasdaq held on for a 5 point gain and the s&p 500 off 3ts po after all the volatility we saw this week it turned out to be the first up week for the indexesn month. the s&p and the dow gained nearly 3%. the nasdaq climbed by 4. what a week. that i "nightly business report" for tonight. i'm bill griffeth. thank youor watching, everybody. have a great weekend. see you on monday.

>> this is "bbc world news america." funding of this presentation is made possible by the freeman foundation, and kovler foundation, pursuing lutions for america' neglected needs. and now, "bbc world news." lucy: hello, this is "bbc world news." i am lucy grey. donald trump threatens to close the u.s.-mexico border unless congress h fun wall. his spokeswoman says he wants to cu