Transcripts For CNBC Closing Bell 20160909

Seeing signs of deflation and why the fed should not be hiking rates right now despite what was said today. Well get the case in a little bit. Lets start with the selloff. Bob pisani is tracking the action here on the floor of the new york stock exchange. Bob . Finally volatility. About sometime. Six weeks, a slow market overall. Last time the dow moved 1 , july 8th. Were due for volatility. Were reminded, hey, the markets arent positioned for a possibility of a september rate hike. What will you do . Sell Interest Rate sensitive stocks. Utilities market leaders all year. What else do you do . Might play a steepening yield curve and why financials might be improving. You can bet Insurance Companies of met life and prudential have happy. They had a miserable time in this environment. You bid up the dollar. That puts pressures on commodities and why they have been weak today. Thats why you see stocks like y rio tinto down. What else do you do . You buy volatility. So everybody who wants to play the vix, for example, thats a big move up here today. Nobody was anticipating that to move up 30 or more today. Havent seen that in a very, very long time. Who wins here . Professional traders desperate for volatility very happy about this. Whats the problem, guys . If the fed does nothing in september, all of this gets reversed and we are back and certainly on a much more heightened awareness about the markets for the next couple of weeks. Back the you. Its p ees peculiar of the environment after this data. Rosengren is hawkish, cowboy, guys, this is alive thing with the weak data. I find it hard to jive in my head but they want everyone to believe we could do it in september. We were talked and i mentioned this last hour, low vix suggests compplacency and that theres skittish and heading to the exits of a hint of it happening and only 30 pistons chance to raise rates, bob. The data, if theyre data dependent, ism, expectation and services on the weak note. Knowing yellen, youd think she would hold back but they want us to believe, guys, Pay Attention here. Yeah. 30 rise in the vix. Yep. Gets your attention. September 21 is the meeting, right . Coming up in about 12 days. Thank you. Believe it or not, some stocks managing to gain ground today. Dominic chu has the Silver Lining plays. Dom . Check out whats happening with the big Insurance Companies like he said. Metlife, prudential, lincoln national, hartford in positive territory on the possibility of rising Interest Rates. Remember, seen helping the Insurers Fund future obligations. The chance of rising rates could help profitability at regional banks. A reason to see m t and zions bank trying to hold on to gains here. Some are on the flat line for the day and retailers also overperforming. If you look at the shares of dollar general, dollar free, kohls, jcpenney, theyre trying to hold on to some of the gains in mid afternoon trading. Another this ing to highlight here. The trading tifts been on heavier than average volume. Looking at the s p 500 spdr, etf, its trading well in excess of normal. Trades about 89, 90 million shares. No surprise here. Much more traffic in the utilities spdr the slu. Bill, kelly, you guys were asking the chatting with bob about the idea of why one fed speaker could do it. Because this fed speaker hasnt done it. We come to hear them from dudley or even a stan fisher. You know, a lackard. Torosengren is a shock in the market. If they do hike rates any time this year, if they do, you cant say that they telegraph it along the way. Right, guys . Apparently today we can say that. Thank you. You got it. Lets get to the closing bell exchange. Glen mead, Kenny Polcari and Rick Santelli from chicago. Kenny, you sensed a move to the downside. What do you think . Oneday wonder or beginning of a trend . Im not so sure the beginning of a trend but the market exhausted. Trying and trying. It needed something, a reason to kind of have some profit taking. Rosengren typically a dove. Went to the hawkish side and gave it what it needed. Then you start pulling in every piece of commentary that anyone makes about why rates no ed to go up and then you have this market. Look. We are down 2 today. Not necessarily very pleasant but only 2 off the alltime highs and not start, you know, nailing the kofb shut yet. Down 5 , 8 , thats a different conversation. I think more of a daily wonder right now. I think next week i dont think they raise rates in september and then stabilizes and moves higher and december is earliest bet. I dont see how they do it in front of the election. Jason, what do you think about rates globally here . You know, i think this is this situation with the fed, this is a little bit of noise we are getting along the way, you know, the base case here is were still expansion. The expansions moving a speed okay enough that they can hike rates. You have a tight labor market or one relatively tight and not that many job openings for applicant and you have inflation ticking up. Its enough. Its enough to justify a fed rate hike and saying december should be on the table and probably be their move. Why this is big news for the market, i sometimes get confused how its taken as such noise. On the whole here, we got Interest Rates on the globe down to abysmally low levels. They needed to come up. I think thats what this 2 is about. And the background story of an ongoing expansion is till in place and will eventually support the stocks. Rick, 167 on the 10. We just showed that. Do you think theres much conviction building in the market for a rate increase this month . Well, i think that if youve been in a line in a Grocery Store and a kid wants a piece of candy and the parents say no, they throw a tantrum. This is their kind of, you know, tantrum like in front of the t. A. R. P. Vote. They expect the fed to see it and go, oh my god, we cant possibly raise rates. I believe i agree with what jason said. We cant tell whats going on in the brain of central bankers. They can do things counter intuitive. They have done things that are very counter intuitive. When i think about everybody trying to raise rosengren, it was really mario draghi that started this yesterday. We talked about it. Looking at the 24hour charts of how the boons traded, the shots traded, the guilds traded, the treasuries traded, first of all, you will notice theyre exactly the same. Our 7, 10s are up 7. Boons are up 7. You look at the notion that we talk about globalization in terms of manufacturing, banking. What we fail to realize is globalization of central bankers and manipulators is coming to bite us all and i cant tell you if stocks go up or down or withstand any kind of normalization whether it should come or shouldnt come. What i can tell you is every investor is highly aware of the central bankers on the markets they trade. And its not defined by country. It is defined by sector and i think that the sectors are rebelling a bit. I wouldnt look for especially on the fixed income side of sovereigns, they have pushed it out of a range. It will have its own reaction no matter what central bankers do. Meanwhile, the transports, kenny, down more than 200 points. They actually were rebounding nicely the last couple of sessions. Thats looking like a head face. But how are we to determine what the transports are telling us here if theyre just extra volatile relative to the market . When they were up 110th or something, everyone saying how is this happening . Today, in fact, the transports are giving it back and then all some falling in line with the Broader Market and i think its much more trading call. They just guys that bought stock and saw the runup and taking the money off the table in light of the broader weakness. I dont think it extends from here and the market stabilizes and no rate hike in september and then move higher as bob pisani already said to us. Thank you, guys. Appreciate it very much. Thank you. We have a news alert on mylan. One of the stocks of this week. Meg tirrell with details. A stock this week and this month, bill. Mylan with a letter in response to senator grassleys inquiry. The letter linked to in grassleys response saying an incomplete response and a tidbit by cnbc. Com giving some information about mylans estimates about what the impact of the generic epipen will be. They say we anticipate more than 85 of prescriptions will shift to the generic and save potentially more than a billion dollars. Mylan confirmed the first time this guidance about what the shift will be to the generic is out there, kelly and bill. Its a pretty big number, meg. From mylans point of view, as much as theyre going to placate the outrage and not making as much money as the original epipen. That is the question. They say its based on an assumption of the utilization rate and the 85 comes from. The billion dollar in savings im trying to understand a little bit better. You know, they also dig in in this response to grassley. A question you have been asking this week, kelly, why not just lower the list price of epipen . They said they think with the generic theyll save patients more money. We heard Brent Sanders telling us yesterday he thinks they could just go ahead and lower it. But thats one rival speaking to another i guess. Thank you. Thank you. Thanks, meg. We have about 45 minutes left to go in the market. Keeping an eye on the dow down 315. S p close to the session lows. Nasdaq looks like the do, down 109. Okay. You know, if you look for safety, gold, thats down today but we have stock pickers for safety plays coming up in a moment here. Wells fargo is news on the fact it fired more than 5,000 employees for opening more than 2 million fake accounts. Details on the incredible story coming up. Youre watching cnbc, first in business worldwide. Across new york state, from long island to buffalo, from rochester to the hudson valley, from albany to utica, Creative Business incentives, infrastructure investment, university partnerships, and the lowest taxes in decades are creating a stronger economy and the right environment in new york state for business to thrive. Let us help grow your companys tomorrow today at business. Ny. Gov are you or your spouse saved enough for retirement . 62 or older . A governmentbacked reverse mortgage enables you to turn the equity youve built into the retirement you deserve. With over 20 years in the mortgage business, lendingtree allows you to compare free reverse mortgage offers with no obligation. Just go to lendingtree. Com or call now to get started. Live in your home and get the steady income you need. Enjoy your family. Your home. Your life. Lendingtree when banks compete, you win. Experience the thrill of the lexus is f sport. Because the ultimate expression of power, is control. This is the pursuit of perfection. A selloff day to finish the week off some sxwrjitters of a possibility of a rate hike. Rosengren of boston. Dow down 304. S p down 43 points. Was down 45. And the nasdaq which earlier this week was at an alltime high. It had a huge pop on storage issues and energy up 7 this week coming into today. Its still up, i think, jackie. How are we looking . Well, today was a down day. A loss of nearly 4 . The pressure points as you mentioned certainly the drag in equities is a reason and crude had its own issues. Profit taking after the move yesterday, a knee jerk reaction to the inventory number. Traders tells me theyre wondering if the demand picture is picking up or a oneoff event. We wont have the answer until we see how the inventories continue to come out. Meantime, rig count numbers out this week. The highest number of rigs that we have seen since february. They were up once again and a stronger dollar today, as well. Coming to the markets and the fed, a hawkish fed not good nor crude oil prices. In terms of the week that was for oil, we were down today and up more than 3 for the week. Support of 45. Traders saying its volatile. You can expect until we hear something from opec, until we hear some more information about the data as i mentioned, that crude is going to just sort of trade like this. And its this up one day and down the next day kind of moves, kelly and bill pi. Yeah. Sure is. Jackie, thank you for now. Now to a big story we flagged late yesterday involves wells fargo. More than 2 million fake bank accounts, 5,300 employees fired and 185 million in civil penalties. Will fred frost here with the details on the story still breaking. Right. It is a major black eye for wells fargo given theyre predominantly a retail bank with a clean image priding itself on the treatment of customers. It is a significant embarrassment. More than 5,000 employees fired over the issue. Huge number despite over 5 years. Its out of a total of 265,000 employees. The fine of 185 million is large for the authority that dished it out. The cfpb and represents a significant win for them. It also highlights again the zero tolerance stance of regulators on. The fine roughly 70 times what was lost and returned to client accounts, a figure of 25 per account. However, wells has not had to admit any wrongdoing and the fine is not that large relative to their market cap or to their earnings. Nor, in fact, relative to many of the fed and s. E. C. Fines overall. When you consider the share price declined only 3 today, this is much more of a highprofile embarrassment and a significant stock price mover. Talking about 5,000 employees involved this, those are hardly considered rogues in this case. Theres a trend here. Absolutely right. The number of employees is real standout shock for me and one sense you could say its actually the company being done wrong by the employees, perhaps. Now clearly, the oversight needs to be better and something that was being said earlier on. Theyre investigating as we understand it other areas and also have asked that wells fargo to set aside a further chunk that might have to go out to employees later. This is important to know. Of the 185 million fine, only 5 back to clients and set aseed for possible more and the fine will not shore up from this level. It might tick up and that figure 185 million compared to the since 2010, wells paid 11 billion in penalties. And they have gotten off easy. Considered consider by others. Theyre going to be in the spotlight and how deep the culture runs. Thank you. Sure. Monday barclays ceo will be here to discuss the state of the financial system. Thats monday at 10 00 a. M. Eastern. In the meantime, back to this friday with 40 minutes left in the trading session. Down 307 points with the s p down 42. If youre worried about the selloff, fear not. Well get safety plays of two stock pickers next. Kroger cutting Sales Forecast due to falling food prices. Larry kudlow said this is a reason not to raise Interest Rates right now. Hell make his case coming up. Guyhey nicole, happening here . This is my new alert system for whenever anything happens in the market. Kids a natural. But thinkorswim already lets you create custom alerts for all the things that are important to you. Shhh. Alerts on anything at all . Not only that, you can act on that opportunity with just one tap right from the alert. Wow, i guess we dont need the kid anymore. Custom alerts on thinkorswim. Only at Td Ameritrade. A rare more than 1 selloff today. Say rare because its been since july 8th of a move like this. A decline of 305 on the dow. S p down 42 just off the lows of the session and the nasdaq down 106 points here. Everyone comes back to the trading desks after the holiday. This is what happens. Theyre back now. Oh boy. Socalled low voluntary tillty stocks are more volatile than the major averages. Mike, whens up with that . Kelly, low volatility was something that described how these stocks behaved before the current period and before low volatility investing was so popular. Look at splv, the lowest volatility stocks in the s p 500. Down about 2. 4 today. Much more than the broad market and basically shows you how much the stock market is acting like the bond markets and bondlike stocks and these are dividend plays that people have thought were going to protect them a little bit and whens more rare, bill, than 1 down day in the stock market is stocks when bond prices are also down more than 1 . According to bespoke, the ninth day of the bull market where both of these things down 1 and stocks and bonds falling together. Not something people anticipate. This is something thats probably a gut check for this strategy. A lot of people talking about how the socalled safety stocks overvalued, basically too popular. I buy into that. I dont think it was a bubble and many have been saying, if we get dovish fed talk maybe this was all just kind of a fleeting scare and reminder of buying stocks with a 3 yield and its not really the case in all market environments. Crazy. And yeah. Well have more on this. Ill let you go for now. Theres plenty to talk about. Im shoe youll get to it at 4 00 eastern time. Wondering where you should go to find safety in the market, bring in a couple of stock pickers. George garox with us and chris retsler. You said something during the commercial break i love. We talked about how this is an unloved bull market. You said it was a loved selloff. What do you mean . As a port foal low manager, i look for opportunities to put money to work. You find them with a selloff like this . Exactly. We have been inching forward and really its been because volatilitys low. Global Interest Rates pushing down the yield curves and now an opposite effect. I dont think its that sustained because theres really no other alternative for them. So whether they raise rates here, i think its really global rates moving around and thats going to provide opportunity for longterm investors. George, where does that leave gold . I think gold is more than interesting now. Actually, eventdriven rallies usually dont last like we had one after the jobs report on friday. We were up 20 points and now back down. Maybe 8 or 9. We are down i would say less than maybe a little bit more than. 5 on the day and up about 25 for the year. Now, gold does have its ups and downs all year. We all know that. But over the long period of time, if you lived in greece, venezuela, if you lived in many countries where youve had negative rates or impairment of currency, you wanted to be in something liquid, portable, convertible with no political allegiance and thats gold. And kept your purchasing power. So the etfs were gaining funds but recently we were under asset allocated by a lot of funds. Open interest on coal mentix, at 3, 4 weeks now and now 600,000. All right. People are starting to see gold again. Maybe theyre sniffing around the metal again. Yes. More than a few managers have come through here recently saying small caps or mid caps even a safety play right now. Because of that international Interest Rate play. Do you agree with that . We do. We think small caps are great value area and dislocate where theyre misunderstood and thats the opportunity. The volumes offering you an opportunity when people dont want to own them. You see volume. As a value investor, you step in and buy. We like in technology where we focus most of our time. Enterprise spend will probably come back. I mentioned mike Ron Computers and set up well for the second half and then hybrid storage. As data grows, you have to store and manage your data and Companies Like pure storage and nimble coming through with good quarters we think offer a lot of value for longterm investors. Also applied materials, gilead. Single name opportunities certainly. Larger cap, though. Thank you for joining us, chris, george. Appreciate it, guys v. A great weekend. Thank you. Next time, platinum. Okay. Its a date, george. See you then. Kind of industrial. Time now for a cnbc news update with sue herera. Hi, guys. Gop Vice President ial candidate mike pence received his First National intelligence briefing at the Indiana National guard headquarters in indianapolis. Afterwards, he spoke to reporters. I hope the American People looking on at this process know that donald trump and i will be ready day one if we have the privilege of serving the people of the United States as president and Vice President. North korea announcing to the world earlier today that it conducted a Nuclear Warhead explosion test to counter what it called u. S. Hostility. In a written statement, president obama condemned the test saying the u. S. Will never accept that country as a nuclear state. Nissan recalling more than 120,000 vehicles in the u. S. Because brake fluid could leak and cause fires. Recall covers 2015 to 2017 suvs and 2016 to 2017 maximas. Nissan says several vehicles have caught fire. The caribbean is running short of a product, the coconut. As demand for products increases, storms, droughts and disease wiped out entire farms. In fact, caribbean plantations have shrunk by 17 since 1994. Its all the coconut water, stuff like that. All right. Thats it. Back to you. S. President obama had one on the trip to southeast asia, too, there. Listen. Very few people are citing this as a reason for the selloff but the latest nuclear test in north korea, i believe the biggest tremor yet. Doesnt help. We should be aware of whats happening. I think so. I dont think it helps. Sue, thank you. Youre welcome. See you next hour. Last half hour of trade here, holding steady. Ill be interested to see what the market on close orders looks like. Art was saying the bias to the sell off. Well see if that softens with the dow down 300. A leading trader tells us what he is watching. This sunday is the 15th anniversary of the 9 11 attacks. Be sure to watch a special presentation of cnbcs documentary ground zero rising at 10 00 p. M. Eastern. Well be right back. About 25 minutes left in the trading session here. A selloff day. The dow down 310. We talked about how widespread the selloff is today. A sector of homebuilders lower with Interest Rates higher. Toll brothers, kb homes, d. R. Horton, and the sector down on the trade, kelly. Thank you. Tim, what are you watching into the close here . Wells into the close, i mean, we are watching the breadth of the market universally to the downsidement its almost a 20 to 1 down volume day. Wow. When did we have a day i have to think that it was probably one of the major selloffs in the last year or so. I dont know if it was as far back as last august. Maybe it was in early winter. February, yep. February. But im sure that there will be a lot of comments on that after the close. Is that a sign of more selling still to come . What does that indicate to you . Well, it just indicates that we have been in a very tight range for a month and a half. And the old saying is, the longer youre in a very tight range, when you break out, either way, it is violent. We have a violent day today. Its we have to see if we get any carry through next week. A lot of that will probably hinge on comments over the weekend and possibly any comments from fed governor on monday. Shes one of several who are going to be speaking monday so definitely keyed up for that. Coiled spring is starting to move today. The vix up 4. Have a great weekend, tim. Thank you. You, too. Bill . Two days ago the nasdaq at a an alltime high. Susan lee at the Nasdaq Market site. Susan . Profit taking because we did experience nine weeks of relief here at the nasdaq. Worst day since brexit. June 27th and really broad based selling. Looking at four stocks higher so far on the nasdaq 100 managing a minimal gains. Most of the tech sectors down financials, and tech, holding up better with sector declines. The worst off is probably metals right now. Utilities and energy. Volume is back this week. Tuesday, wednesday and thursday we have seen more volume, more volume of trades than we have seen for the entire month so you know that traders are back to the desk after the summer holidays. In terms of points declines, apple so far is possibly responsibly for most of that. Back to you. All right. Susan, thank you. Another day yeah. Between yesterdays selloff and today, a tough couple of sessions here for apple. Weighing on the dow. As Rick Santelli rightly poi pointed out, started with the ecb meeting yesterday. Right . Markets are so funny whether theyre efficient or not. They move quickly and takes a day to get upset about the ecb. Theyre upset and the dow is down 331 right now. S p down 41. Session low pretty much. We have 23 minutes to go here and see if we retest the lows. Well talk to stock pickers where you find opportunity on a day like this. U. S. On track this year to post the longest stretch of declining food prices in more than 50 years. Its deflation instigation and well examine what it means for the overall economy and what the fed might do about that coming up. Welcome back. Dow down 325 points. S p down 45 points. Thats a 2 decline. The nasdaq down 111 with 20 minutes left in the session here today. Kroger is one joining the list of chains cutting the profit forecast amid sliding food prices. You may recall super value and sprouts lowered guidance this week. Kroger is nations largest chain by sales and cut fullyear guidance warning that food price deflation could drag into next year. Shares are managing to fight into positive territory. Declining food prices are good for consumers but what does the fed make of deflation if thats whats in . What impact could it have on rising Interest Rates . Joining us is larry kudlow, welcome. Also with us, jeffrey cleveland, chief economist at payden and rigal. Larry, this is really interesting. The guest previous segment or two saying the labor force is tightening, conditions for growth are there. Is this deflation problem unique to the supermarket or no . No. I think theres been deflation everywhere in the last few years and by the way, more people working with slightly higher wages does not cause inflation. Inflation is caused by a devaluation of the dollar, too much money chasing too few goods. We dont have that now. Look. Commodity indexes, last three or four years, down 30 . Food off 35. Industrials off 30 . Nominal gdp is another good indicator growing less than 3 over the last 4 quarters and the dollars rallied in recent years. All im saying is this. I think that the fed is tighter than most folks think. I watch the market price indicators and i think what the head of the boston fed today said, a tightening coming, i think it shook up the market. Jeff, is this deflation . What do you think is going on . Bill, this is not deflation. You cant carve out one small piece of the Consumer Spending pie which is food at home which is about 7 and ignore Everything Else thats going up. So when i look at i see inflation everywhere. Overall. Cpi up 2 , 2. 5 . Rents in Downtown Los Angeles where im coming to you live up 10 . Medical prices are up. So, you cant just pick food prices down and point to that as a deflation. Deflation or inflation is a broad array of prices. My minority is a different one. Im looking at indexes, a broad array of prices and i just quoted you. Go back a couple of years, we had a little pop in commodity indexes this year but theyre off 30 , 35 since the peaks 2011 or thereabouts and the dollars gone up 20 . Those are mild, mild deflationary signals. Nominal gdp 2. 4 . Finally, consumer deflator which the fed uses is up 0. 8 in the last 12 months so i know everybody wants to say the fed is too loose and should tighten. I like to see them normalize rates, too, but not now. Theres a whiff of deflation out there. A whiff. Thats okay. But there is that. I dont see the case for higher inflation and higher rates right now. Jeff . I think if youre a central banker, there are two ways to look at deflation, kelly. You have good deflation which we see in a lot of different areas. Food is an example of that. Technology is an example of that. Prices falling is a good thing for consumers. What central bankers care about is bad deflation. Where the money supply is collapsing. Where the banks system is frozen up. That was the story in 2008. Thats old news and not what we have now. Central bankers shouldnt be worried about that but looking at the core pce, almost 2 and the fact that the Unemployment Rate is below 5 . Theyre very close to their policy targets. They shouldnt still be at zero on the federal funds rate. Doesnt make sense. Larry, we have price deflation in the stock market today. We are at the lows right now as a matter of fact for all the major averages. How much does it play into fed policy these days . Do you think theyre that sensitive to the stock market and the moves . Lets look at the trend line. Certainly they follow it. I think one of the fed governors is speaking monday. Monday. Or tuesday. Monday. I think you will see her have a calming influence because she doesnt want the fed to raise rates for a lot of reasons. Again, i want to make this point. Rising wages at a snails pace and lower unemployment and depends on what you use, the u6 underemployment index is close to 10 . They dont cause inflation. Thats too much money chasing too few goods. We have too few goods then . No. I think theres a scarcity. What im saying is with the dollar rising and Commodity Prices indexes falling, that tells me the fed is actually tighter in relation to the rest of the economy than we think. Thats all. And i would wait. I would absolutely wait until we get tax cuts next year and get the economy moving again. Jeff, theres a wrinkle of what rosengren said, as well, talking about how low rates doing damage to some pensions and Insurance Companies and higher rates might be a benefit and not saying theyre good because the economys Strong Enough to warrant them but we need higher rates for different structural reasons and maybe thats why nobodys all that cheered by a prospect of a rate lift here. Everyone worried that that was a sign that the economy was falling apart. Now we have the opposite occurring, we have bond yields up a little bit and everyone is still worried that the economy not good shape. I cant keep it straight. Whens the story here . I think what happened here was bond yields are low for a long time. They got complacent and then excited about the great stagnationtype story and seeing thats not the case. We have a pretty good labor market. We have an alltime record low on the layoffs. Layoffs as a share of the labor force at the lowest level they have been. Inflation is not deflation. Its about 2 . And the fed should be hiking. I think thats the story here. Thats where we disagree. I do not think more people working is inflationary. Thats the old phillips curve, but the fed looks at that. I dont think thats correct. I look at market prices. Okay . And the market prices are telling me commodities and the Exchange Rate theres rather man deflation than inflation. The fed should hold off. Cut taxes before they start raising rates. I have to go. I want to plug your book, larry. Thank you. We can read much more about this, in fact. Yes. Okay. We have got that. Larrys new book is called jfk and the reagan revolution. Bad timing of competing book parties last night. Im sorry about that. Im sorry about this. No, no, no. Not your fault. Jeff, thank you for joining us. Thank you, bill. 900 million to sell the market on close orders and i think we are seeing that right now. Yeah. Thanks to art cashin just walking by trying to collect things into the close. Little less than 12 minutes to go. S p down 47. Dow down 342. Hawkish rumbling of the fed. Donald trump gaining in the polls. Could be contributing. According to the next guest. More on the break after this. Mapping the oceans. Where we explore. Protecting biodiversity. Everywhere we work. Defeating malaria. Improving energy efficiency. Developing more clean burning natural gas. My job . My job at exxonmobil . Turning algae into biofuels. Reducing Energy Poverty in the developing world. Making cars go further with less. Fueling the global economy. And you thought we just made the gas. Energy lives here. Hey hows it going, hotcakes . Hotcakes. This place has hotcakes. So why arent they selling like hotcakes . With comcast Business Internet and wifi pro, they could be. Just add a customized message to your wifi pro splash page and youll reach your customers where their eyes are already on their devices. Order up. Its more than just wifi, it can help grow your business. You dont see that every day. Introducing wifi pro, wifi that helps grow your business. Comcast business. Built for business. Selloff softening just a tad. Down 340 points right now taking you into the close of trade here with michael block. We always enjoy your pithy comments on the market in the morning. What do you make of the afternoon trade right now . Afternoon trade is complacent for so long and setting up for a break like this. We have on tenuous levels of early august and now postbrexit and another leg down from here. 1. 5 to 2 in u. S. Stocks and just the mood out there, everyone today i talked to is focused on fantasy football. Please. I dont believe this. No ones concerned about this. You think its complacency . Yeah. No ones really alarmed here. We are seeing a big movement and should be freaking people out and will, a little bit, you have bonds and stocks going down dragging each other down. We have seen this over and over again in the past several years. Risk parody trade and managers long both classes and thinking the other balances each other out and when they both go down you have a problem. The level is the level that art mentioning today earlier we dropped through about the 2150s. Fell right to this level. This is the level. Critical to hold it here then . Critical. This is a level we were talking about all afternoon. That and fantasy football. And this is really what it comes down to. Can we hoild this . If not 2107 postbrexit and then earlier in the year and whether everything gs. When you think about it, is this armageddon necessarily . No. This is a selloff. This is movement. Were so used to not moving and now all excited and it is exciting. My feet are moving. Rearranging deck chairs if you would. Covering things i think are overdone and thinking about new shorts here. Thats what the game is right now. By the way, we were just talking about this but on mad money jim cramer was talking about how chris i can the socalled safety plays have been. What happens if the very places people have gone to try to find a calmest parts of the market are now some of the most exposed or volatile . Is that happening here . Yen mills and eothers . Yeah. General mills. Its safe stock. What can happen . This is what could happen. It has no growth. Like i thought it was a bond. Now youre worried about growth. How about that . Happening to the names i think it starts happening and what goes on. Question is where does it end . I think we are in for a slow grind and safe to own things. Are you saying that people should rotate out of the names . Growth parts of the market on a day like this . You have a chance to own these things and i want to wait. And a lot going on covering shorts, waiting, seeing what happens. Stay right there. We have to get to seema mody. Seema . An index down 3 on the day, uncertainty around when the fed will raise rates. The price of oil and the selloff in global bonds that investors say is primarily driving investors out of emerging markets down 3 on the day. But still up about 16 year to date. Of course, one reason investors have said the valuations in emerging markets is justifiable is ultra late environment and given the rise of yields in germany and back in positive territory and france and spain and now a larger discussion around whether the rally can continue and not just emerging markets stocks but bonds, as well. Bank of america saying this morning that debt funds just pulled in the biggest tenweek inflows ever. Back to you. Thank you very much. Heading to the close, bob pisani joined michael block and me for the countdownment lets just review very quickly some of the markets and how they traded this week. The dow all said and done, you know, it looked the first three days of this week, fourday week. Looks like the rest of the summertime. Last six weeks until this morning. Until today with the selloff and for the week down almost 2 here. The 10year yield, other direction. It had been lower. Now moving higher. This was the point that michael was making earlier. A rare occurrence and stocks and bond prices were going lower today and not exactly rushing from one to the other. They were going to cash for the most part. Correlations are never static. Thats it. Oil, what it did, selling today and the impact thats had on this week as we getdy for the that opec meeting in the not too distant future this month. For the week, though, still up 3 . Pretty good gain even with the selloff today. The big gain in oil yesterday, we saw those inventory numbers come down dramatically and a payback and remember dollar strength, too, commodity names, as well. What was the big winner . Volatility itself. The vix which had been hovering around 11, up 12. Today up 30plus percent. For the week, up 40 for the 4 trading days and almost to 17 here. Heres the interesting question. The fed saying theyre data dependent and rosengren today and yet the data isnt that good recently. Terrible. Okay. So why do they keep going with this . Rosengren so aggressive. My friend said maybe theyre not data dependent and want to hike rates even if the data isnt that great. Trying to do that, theyre ruining the credibility. Put away the textbooks and listen to whats out there and stop being afraid of what they dont know. Come on, guys. It is market dependent. Stability. You want to make an environment for growth and for growth employment and gdp, focus on making things run. You agree with the idea theyre not soda that focused and more focused on maintaining i think theyre doing that. Looking for excuses. A world they created. That something could be fiscal policy. We are not getting that until after the election. Once the dust settles. Good luck with that. But thats the way out. Certainly not rate cutting rates or the fed doing more qe. Thats not the way to do it. We have to see. They stick to the story. Do you think they should be raising rates now . No, i dont. If you want pure macro economics they should have raised them in 2011. Job growth paying out. Potential rollover incoming. They missed the cycle . They missed it. All the more proof its not data dependent. Has to do with markets. Thats it. So the fed is saying one thing and really doing another. They keep saying were data dependent. Youre saying we are bob, theyre politicians. Lo and behold. How about that . What do you do in the meantime . Trying to make money or keep your powder dry . The way to make money is in for a slow grind higher, new alltime highs recently and having episodes like last august, january to february this year, be ready for them. Have the powder dry. Get out. You said this is important, im sorry, bob. 2129 is where we are on the s p right now. Yep. You said 2133 the last stand here. Hanging by a thread. We raise a quarter point in september. Raises everybody. Can the market handle it . Will have a little his sy fit and then three and four weeks following that and then buy that again because then here we go again. All right. Got to go. Michael, good to see you. Thank you. Bob, thank you. Im sure theyll putting you in Warren Commission in a moment here as we finish well to the lows of the day down 380 points on the industrial average and at 2021 2129 on the s p. Much more to come on the second here of the closing bell with kelly evans and company. See you later, kel. Thank you, bill. Welcome to the closing bell, everybody. Im kelly evans. Stocks make taking a turn for the lower today. The dow losing 391 and counting. Thats a drop of more than 2 putting it below 18,100. S p dropping more than 53. The nasdaq dropping 133 points for the part to close around 5125. 2128 for the s p 500. We mentioned that it fell below key levels that guys on the floor here watching earlier today. Does the selloff signal a bear market ahead . A bear on the street with join us with his reaction and where he is seeing opportunities in a bit. On the panel today, mike santoli here along with contributor evan newmark. Welcome. Mark lashini joins us and guy ada adami. A full house and a what day. Mike, what was going on . The market went nowhere for two months. The lifting of Interest Rates globally, the premise disturbed that Central Banks will be there for us, call them bluff every single time and dont think theyll shut off the fuel and got questioned. Three times normal volume in the etf. Clearly people worried it changes the story and macro data isnt cooperating. I think you have to keep in mind youre less than 3 off an alltime high and a little bit of a gut check right away and once you have a volatility spikes, not one and done but i think that theres the chance some dovish talk of the fed next week you can kind of have a rethinking of the move. A worrisome development is an idea that any bond you buy you can sell to the European Central bank. Maybe you sell it to a central bank one day, too. Isnt it for the best trying to shake us out of the expectations . I have been wanting this to happen for a year and a half. Look. Heres the reality. At the end of last week, we said that the changes in the bond market probably come from either japan or the ecb. And basically, what this week signaled was that the bank of japan and the ecb both at the end of the road. You have 14 trillion worth of negative yielding bonds across the world. No, we dont. German down to but heres the whole thing. Yeah. Today, i think thats much more pivotal than what happens with the u. S. Also last week, we said it takes one or two fed speakers to Say Something and things change. Eric rosengren said something the market didnt like. And three more coming on monday. Guy, how do central bankers respond . Having clearly set us up for the move, do they cry wolf again or react with some more accommodative language . What do you think here . How do they respond . Kelly, you hit the nail on the head. The question i put back to everybody is, whens the job of the central bank . Is it their job to make markets go higher or create stable economies to grow . Clearly in my opinion and im strong ill get shut down on this, i think the only thing theyve focused on is making markets move to the upside and been their concern all along. As long as the markets go up, everybody feels good about things. They have taken their eye off the ball again in my opinion. They should not be focused on did market. The move shouldnt cross their bow in terms of decisions they will or will not make going forward. In my opinion. Has their somehow changes the opinion then, you know what . We have the among people in the seethes. The question id ask you, has the stock market been inscent with the other objectives . Whole time since the crisis about jobs market and the market up with that. Have they chosen the market over other objectives . Listen. I dont think they control they havent created one job in the history of the Federal Reserve. The fed does not create jobs. Companies choose to hire or fire people based on the economic condition. Not because the fed takes Interest Rates to zero. The job growth that we have seen over the last seven years people trumpeted it something fantastic. Given whats put forth, its anemic at best. If they try to tell you somehow they helped job growth, theyre lying to themselves or lying to us. In terms of the market, i get why the markets gone higher. Im not pretending by the way im a raging bull and nor did i say to sell the market the other day. What i have said all along is my biggest concern is central bank missteps we appear to be and say appear because i dont know yet but were appear to be on the precipice of. Mark, what are the risks . Do they lie more if we continue down the road of this idea of a Central Bank Backstop for every asset or pursue this avenue which appears to be tightening up monetary conditions . Well, i think ultimately the bigger risk is intervention gone awry and i think thats what we are seeing a little bit of. We have seen the impact of uber accommodative policies, particularly by the European Central bank and bank of japan and running out of the obvious even nonconventional ammunition of buying up bonds and as a consequence basically instructing the wonks to go back into the shop and retool to figure out how to reflat Economic Activity across the euro area and japan. I think the efficacy of interventions is being questioned at the moment. We saw that in the backup of japanese and german bond yields and coupled with obviously the fed speaker talk that is contradictory as to one day dovish and then hawkish and all the while seeing the data dependent and as guy said market dependent led to a tremendous amount of confusion and manifested in obviously outcome of today in the financial markets. As we look here, the dow closing down nearly 400 points. A drop of more than 2 . In fact, this week, the drop is having the dow having the fifth biggest drop of the year. Second worst week of the year. Third worst week of the year for the s p. Fifth worst of the week for the nasdaq. Mike . You heard the s p 500 closed down below what used to be the alltime highs before the breakout to new highs over the summer. It was around 2134. Youre below it and you have chart people say maybe thats a false breakout or a markets capped and in a range right here but whats interesting about this talk about the Central Banks catering to the markets, i think a blend of two things. They want markets, not to rebel against whatever they do and counter active and tighten on their own but the Economic Conditions to be a prerequisite for anything they do. I think the blend is hard to find and taking the punch bowl away, its not supposed to be pleasant and celebrate on day one. Santoli is a great defender of the Federal Reserve now for i have making rational decisions along the way. I understand. So many critics. I have a hard time with 4. 9 unemployment and less than 2 inflation and talking about how the fed botched up the economy. I didnt say that. Im saying what they have done is they have created a situation certainly among the bank of japan and the ecb at the end of the road. And theres no place left for them to go. And thats going to have a knockon effect because what were dealing with essentially is a global bond market. Not just the u. S. Bond market, the its the giant currency play right now what is going on in the marvegtkets. What do you back here in the u. S. Looking at stocks and react to all of this . It is all part of such a tangled ball of yarn. Great thing of whats happening is seeing the fallacy around its a stock pickers market and all this kind of stuff. These things are the assets right now are so highly core lated to anybody its anybodys guess what happens. Thats true today and not much of the summer. Its been true for seven or eight years since the central bank started to get involved. Hang on, everybody. Steve liesman asked the xwofr nor about the possibility of a rate hike this year. Remember this. I wouldnt foreclose that possibility. You know . And i think its important for all of us in going into each meeting to remain open to the possibility that momentum has changed, that expectations have changed and thus for us to change our own views. Steve joins us now for more on the news line. I hope youve been listening to the conversation we have been having but what do you think the fed is up to . Cant be a kons dense jamming out the speeches with the same theme with the countdown clock ticking before the next meeting. I think thats exactly it, kelly. Every fed guy wants to get guy or gal wants to get their word in before the blackout period beginning on tuesday. And i think the story is that, you know, yellen and then fisher and jackson hole of an idea of september rate hike on the table but the jobs number came in lukewarm and then the isms not particularly helpful. They were actually both on the weaker side. So the market getting the idea maybe there wasnt going to be a hike and i want to correct the tape here on rosengren. Eric rosengren of boston singing from the page here for a very long time now. Last couple of months at least. That his concern about Financial Stability from low rates. The news with eric is he did not change the tune after the ism. And i think the news with torulo you expect little more dovish and sort of lean toward the notion september side but he wasnt quite as definitive as you might have mike santolis got it right to brace yourself to be jerked the other way next week because you have brainard i know the connection is a little monday morning. Guy, what steve is saying, want to repeat, basically that what tarulo said is n a way is more significant relatively speaking. What about the point to go the other way hearing from the rest of the lineup monday . Of course it could. Absolutely could go the other way. Without question. I think mike spoke to that. I mean, listen. Every time that they have every time that somebodys come out with a hawkish tone within a week or so it gets ratcheted back the other way by somebody else so why is it different this time. Guy . Yeah. Im having trouble hearing you. Ill try to make it clearer here but i think one of the issues is that the fed which is data dependent, they have not been consistent because the datas not consistent. I think that, steve, listen. I think thats a great point. The datas not consistent. However, i dont think theres ever going to be if we were waiting for the perfect time for a central our central bank to raise rates, you never get it. I dont believe that period in time exists. Right . So at a certain point, you e you sort of got to jump. I think in my opinion all the benchmarks or seemingly all the benchmarks they set forth month if not years ago have been met. My point has been if theyre watching the market and todays price action in the stock market ratchets back any hawkish tone then we have the absolute wrong people in those jobs. Just my opinion. Steve, because were almost out of time, will you make something clear . Are you suggesting that actually were not witnessing everybody lining up to say, you know, the conditions are there for a september hike . Because if thats the case, then todays move seems less relevant than if its a precursor to that. I dont think theres a specific telegraphing going on right now. I think if anything whats going on is concerted effort for the fed to have the optionality to raise rates and i think that also theyre trying to desperately and perhaps listening to the conversation unsuccessfully to get away from very time specific guidance. And theyre trying to claw back this idea of data dependence based on the medium term outlook. Just to support that, by the way, the yields were going up at the long end of the curve. Twoyear note is contained. Not the market saying, wow, september will happen. Its a general selloff in yield products. Mike, can i make another point . Real quick, steve, before we go. Yeah. Just quick, our cnbc rapid update, we have the Second Quarter now revised up to 1. 5 and the Third Quarter running at 3 so the economy after the wholesale inventory, some other data, it is not too shabby. We can make a lot of complaints about the economy. But the numbers have gotten better overall. Thats certainly kind of muddled picture overall. Thank you for calling us, steve. I think you are on the sl or something trying to deal with that. Steve liesman with an update responding to conditions of the market today. As we have mentioned, minnesota fed president Neel Kashkari will be on monday. Lets get to susan li with the nasdaq crushed today and the worst performer among the major averages. Susan . Totally hammered, you are right, kelly. We saw the losses Senior Citizen re axccelerate into the close. There was a reprieve. And a record high just a few days ago. But thats all gone. I guess people dont want to hold risk into the weekend. Biggest loser were utility stocks. Oil and energy as well with gas. In fact, financials and tech holding up well into the close and notably and notable because apple probably the biggest points drag on the nasdaq 100 taking down a responsible for 11 points down on the nasdaq 100 index. Also, by the way, apple suppliers are also a big drag, as well. Includes the big chipmakers. And the philadelphia semicon index probably seeing one of the worst days in a few months time. Back to you. All right. Susan, thank you. Mark, is there anything that you find attractive here in this selloff . People have been saying, you know, theres been no opportunity to buy. Yeah. Id be a little bit sensitive towards the bond surrogate sectors. Rates and utilities, telecom and Consumer Staples. I think this isnt going to do anything if the fed decides to raise rates to undermine Economic Activity which is i think powering forward at a 2 , 2. 5 rate. I like consumer facing industries, the housing sector in general. I continue to like health care, i think potentially bio tech attractive on a valuation basis and any selloff in beta for european equities. Brave man. Mark, thank you for joining us here. Sure. Thank you. Guy, thank you, sir, as well. Always a pleasure. Sorry i was all riled up. I dont know what got into me today. I apologize. I have a feeling it has to do with the selloff. Thank you, kelly. Thank you. Coming up, top of next hour, on fast sitting down with one of the biggest wall street bulls, tom lee, dying the dip all summer. Is he doing so today . Well find out at 5 00 p. M. Sue herera with samsung, what is happening . Samsung out basically Consumer Product Safety Commission with an announcement of Samsungs Galaxy note 7. They are saying basically that consumers and owners stop charging or using the Samsung Galaxy note 7. Lithium ion batteries pack power into a small package. The results can be serious. This is why the u. S. Consumer Product Safety Commission is urging all consumers who own a Samsung Galaxy note 7 to power them down and stop charging or using the phone. This warning is based on recent reports of fires and basically theyre working cooperatively with samsung to try and announce an official recall and to see whether replacements that samsung may be offering are safe for consumers. So if you own them, if you own the galaxy note7, power it down. Dont use it. Back to you. Wow. Unbelievable. We knew that there were irkss. Right. I cant recall the last time we heard something this broad and urgent. Yes. Theres reports of large fire. Faa saying please dont charge them on airlines. Dont put them your luggage, as well. But now the cpcs is saying power them down. Dont use them. A huge blow for samsung. Yeah. Just when it could perhaps capitalizing on the attention shift from apple. Thank you. Sure. Major averages with the biggest oneday drop since late june today. Up next, pair of stock pickers tell us where theyre seeing safety. Jeff gund lock saying its time to be defensive coming to bonds. What it means for the Broader Market still to come on the closing bell. Building a jet e. Weve been hearing so much about how youre a digital company, so you can see our confusion. Ge is an Industrial Company that actually builds worldchanging machines. Machines that can also communicate digitally. Like robots. Did you build that robot . Thats not a robot, thats my coworker earl. He builds jet engines with his human hands. What about that robot . That is a vending machine, ricky. John, give him a dollar. But your time is over. Had a good long run. 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David, what are you picking up here . Whats on the list . The markets been up on bad news is good news. Today the fed is talking about better news. Really good news is u. S. Is the best economy in the world. Consumers are strong. Consumer spendings up 3. 5 . We heard about gdp stronger. You want consumer Oriented Companies and you have apple here. Apple. Your iphones on average getting older. Whether you think this is the greatest iphone or not, next years a big, big one and apples one of the cheapest stocks in the stock market. Has been. What about comcast . Comcast for the first time in years has video subscriber growth. And so, internet strong. Videos strong. Consumers are spending money and maybe they wont go out to eat as much. Theyre keeping cable. What about allergan . Its a transformational story. It got rid of the legacy businesses in july and they were on tv and cnbc yesterday talking about the fact theyre not a price gauger. They have real growth. Biggest drug is botox. It is not paid by any government reimburseme reimbursement. Steve, what are your picks here . Like the energy sector. The markets have gotten pulled back today with the things with the fed. Can i just say . Agree with guy. You need to raise rates. It will never be perfect out there. All right. We get i know, i know. Im sorry. Well talk that to death. Whats on your Shopping List here . Energy sector. By the dip. Take advantage of the fact that people are pricing in. Oil going lower and cant go too much lower. Take advantage of that. Why cant it go too much lower . Right now theyre just breaking even profitability. You saw it was down in the 20s and 30s how quickly to bounce back up because at that price not only companies are losing money but countries lose money and pulls back on the production flow and cant do it anymore. We have the flexibility now with whats been going on in the u. S. To shut down wells at a quicker pace and open them back up at a quicker pace. Not 100 a barrel but finding a range and taking advantage of it. Look for the dips right now. Guys . Interesting not to hear anything about the banks at this point or financials, whether from a cheapness perspective or rate perspective. Banks are cheapest statistically. They are so Interest Rate sensitive. You have to make that call. So its not just short rates going up with a flattening spread. You need spreads to widen. Happened today. Not the fed raising short rates but long rates to go up a lot for banks to do really, really well but priced really effective effectively. Looking for income, financials more attractive than Consumer Staples or utilities. They have lagged. Evan . No, no. I dont believe in stock picking really. You pick sectors. I believe in sectors and i believe if you think the markets going to be higher, you have to be with the financials and probably energy sector. If they dont go higher, the overall market is not going higher. Steve, david, thank you for joining us. Some ideas here amid the selloff. How worried than wells fargo shareholder bs . Meanwhile, homebuilders crushed today on fears of rising Interest Rates. An impact on the market later on the closing bell. Its been cl being back so were constantly going over our data limit. Oh, well, now all of our new plans come with no data overages. Wow, no more overages . So that means. Go on. Say it. Well finally be in control. And were back. Introducing new at t plans with no data overage charges. They say the world does not revolve around you. But today, maybe it can. I am helping 1800flowers find the perfect gift out of trillions of combinations. And working with the new York Genome Center to find treatments as personal as dna. And i am helping sesame street make education unique to every child. Hello, my name is watson. Working together, we can outthink anything. Theres a lot of places you never want to see 7. 95. [ beep ] but youll be glad to see it here. Fidelity where smarter investors will always be. If only the signs were as obvious when you trade. Fidelitys active trader pro can help you find smarter entry and exit points and can help protect your potential profits. Fidelity where smarter investors will always be. Real is touching a ray. Amazing is moving like one. Real is making new friends. Amazing is getting this close. Real is an animal rescue. Amazing is over twentyseven thousand of them. Theres only one place where real and amazing live. Book a seaworld vacation package and eat free. Welcome back. Wells fargo fined 185 million for creating unauthorized bank and credit card accounts for millions of customers without their knowledge. Now a sell rating on the stock saying today the bank needs to do something dramatic to fix this. You can put the people in jail but, you know, i now have trepidation walking into the branch wondering whether im going to be served the way i want to be served. You know, i think wells fargo to right this thing has to do something dramatic for consumers. It has to show in some fashion that it believes in its customers, it wants its customers and its going to help its customers giving them something to offset what they have done here over the last who knows what number of years . Scott seipherts joins us now. Scott, it is pretty interesting it seems like a companywide problem. Well, you know, this is a reputational issue. Right . Financially, thankfully, more or less a rounding error for wells. Very small penalty in the grand scheme of things and takes sometime to fix the reputation and dick is right about that contention. Is time money here . I mean, do they have to do marketing . Also to by the way, where do you think this problem came from . Theres been some spem lags of the wachovia business picked up along the way. Is it clear to you where this all might have emulated from . Particular or fix or a companywide problem. I dont think i would call it a companywide problem. Even though, you know, headlines come out saying 5,000 people have been fired over the last several years, you know, bear in mind thats just a very, very small fraction of the 250,000 people they have working at the company and by no means pervasive and whats the root of it . Wells fargo had a very strong sales culture for the better part of a few decades so trying to hit aggressive goals you have some bad actors to push the limits further an enlooks like thats the case here. Let me ask you a question about this management issue. How do you have senior and upper level managers kind of okay the accounts, i mean, talking about hundreds of thousands if not millions of accounts . How do you have a culture, not talking about a branch or a set of branches but a pervasive problem in the institution. How do you have senior and top executives quote unquote okay this . How does it happen over a period of years . Yeah, excellent question and for some of the questions there are no answers. You know, id be absolutely shocked if this behavior before condoned at senior levels of the management team. Right . So i dont think its a cultural problem by any means and for a company as large as wells fargo, you know, this is a company that generates about 5 billion or more in earnings every quarter. This is probably larger than the gdp of a lot of companies so when you have a bureaucracy that large, unfortunately, some things slip through the cracks. Not condoning the behavior. Buying that, evan . As a managerial issue, its bizar bizarre. These things are huge organizations, lots of hierar y hierarchies and somewhere along the chain, takes years and 5,000 employees breaking the rules or whatever you call what they did to finally put an end to it, it seems much more persuasive than i expected. To the reputational benefit of wells fargo perhaps from the Warren Buffett long involvement or a good corporate citizen, it enjoyed a premium in the stock market for a long time. Yep. Whether thats because of better sales culture or because of better Risk Management or a business mix, i wonder what it means for the valuation of the stock at this point. Theres no way to spin it as a good thing. The magnitude of degradation. A couple of things to be concerned with. One, the actual damages to customers, if you read the cfpbs Consent Order and the banks statement, its a couple of Million Dollars and what they earn before this program is over and the damages are actually minuscule. Reputationally, though, excellent question, and takes a long time to address. They have the benefit of an excellent track record financially and at a time when the environment is tough enough to contend with, without these Company Specific issues, this is going to take a little time to restore a bit of the credibility. Thank you for joining us. All right. I think dick bove is pushing for a free toaster. Sounded like an irritated customer and walked into the branch. I think he wanted a free toaster. Maybe he is. How many accounts are open in my name . You dont remember when they gave away free toasters . No. You need to be more my age. Time now for a cnbc news update. Sue . Hi, kelly. I also remember the free toasters. Heres happening at this hour. The u. S. Army department will not allow construction of a pipeline in north dakota until it can review past decisions relating to the site following a federal judge allowing construction and denying a request of tribes to halt it. Energy transfer partners leading the Pipeline Group is declining comment. Facebook says it will allow postings of a 1972 photo of a naked screaming girl running from an attack in vietnam after a revolt against the company. Facebook originally deleted poersings by the Prime Minister saying it violated its rules on nudity. A volkswagen engineer pleased guilty to one count of conspiracy in the emissions cheating scandal. James robert liang agreed to coopera cooperate. And u. N. Goodwill ambassador jolie calling on the International Community to end the Syrian Civil War. She spoke at a Syrian Civil War in jordan while on a tour of projects across that country. That is a news update this hour. See you monday. Fed rate hike fears sparking a greatest selloff. What your next moves should be. This sunday, the 15th anniversary of the 9 11 attacks. Sunday night, dont miss the cnbc documentary ground zero rising about the new World Trade Center and sunday night at 10 00 p. M. Eastern. What if a company that didnt make cars made plastics that make them lighter . The lubricants that improved fuel economy. Even technology to make engines more efficient. What company does all this . Exxonmobil, thats who. Were working on all these things to make cars better and use less fuel. Helping you save money and reduce emissions. And you thought we just made the gas. Energy lives here. Welcome back. Huge selloff on wall street today with the dow dropping nearly 400 points on the bell. S p down more than 50. Transports down 250 points. Nasdaq down more than 100. You can see the declines of about 2. 5 to more than 3 for the russell 2000 right there. In a web cast, gundlach said its the beginning of something and youre supposed to be defensive. For more on what that means in terms of larger markets, bring in Michael Castner and kathleen gafney. Michael, is there a sense this is it . Rates are going to start moving higher. I think that answer is yes. When you look at bonds fundamental perspective, inflation at 1. 2 all yearlong and with the long bond youre not being compensated to hold long bonds. And, kathleen, the issue of gundlach is people have been cautious for quite sometime and bonds defie these predictions. They have. But were starting to see some signs globally, particularly yields in japan, 10year japanese bonds are yielding zero which is actually a sixmonth high. That type of move as we approach positive territory is sending shock waves around Government Bond markets. I have a question. Kathleen, maybe for you. What does the average investor expect from bonds today . Im not talking about Institutional Investors but people that own have you discussed with them what happens in a world in which the 10year goes from 1. 6 or 1. 7 to 3 and how much capital theyll lose in the process . Do you talk to your clients about that . That is a very difficult message to get out there but a very important one because bonds, fixed income has always been that safe haven, that anchor to win word and investors have been reaching for yield. Part of whats held down u. S. Treasuries is u. S. Treasuries relative to the rest of the world are the high yielder but it will be painful when yields start to move up. So you have to think about your fixed income very differently. Michael, talking about perhaps having seen the low in global Interest Rates, global yields, what happens to the premise that theres a scarcity of safe yield in the world and outstripping, you know, the demand outstripping the new supply. If thats still somewhat the case, even a lower level than before, whens the upper bound for rates right now . Where are we climbing to if we have seen the bottom . I think under normal circumstances, the fair value is 4 . I dont think we get there any time soon but 3 is realistic. We have seen 30year . Yeah. Yeah. We have seen a rate hike in the u. S. In the 3month libor i would say is relative. Corporate bonds are set on that. 30year mortgages are set on that and risen last two or three months. Yeah. Right now, the 30year at 2. 4 . But to your point, evan, stale bit of room to climb. Thing is, people its one of the things people are just waking up and people today who bought the tlt, the long end of the bond curve yesterday are down whatever they expected to get in yield over the course of the next year. Bill millie tells a great story of the last time around and people woke up one year and realized to lose money on the bonds. Dont worry. Michael, kathleen, thank you both for joining us. Thank you. Does todays selloff signal trouble for the street . A big bear joins us with how to invest in a down it is turn next. Interest rates meant more affordable mortgages. If the fed raises rates, will that push them out of their tight range . Hey nikki what are you doing here . You tell me, stephen. 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Get organized at voya. Com. Welcome back. The dow dropped nearly 400 points today. The fifth worst drop of the year. The guest says this market likes to throw a temper tantrum so the fed wont move. David, what do you think is going on here . Well, what i thinks going on is the fed realizing that theyre really out of bullets and not so much that the economy is so strong that theyre looking for a way to raise rates. They realize they need bullets back in the chamber so if the economy really goes into recession they have something to fire and realizing how sunk they are and they realize the speculators have them over a barrel and now rates have started to go up. Look at the jgb up from 4 basis points to 46 basis points on wednesday. David, what about the idea, though, that before the fed might want to take the next step in terms of a rate hike they want to see market Interest Rates go up, dont want to tighten into a world where basically its flattening of yield curves, talking about immediately making a big mistake . Maybe this market move is not necessarily hostile to what the fed wants to get done ultimately. Well, that can certainly be the case. However, markets dont like higher rates in the long bond or in the short bond. And theres been a lot of speculators leveraged long and they have made a ton of money. And, therefore, if rates go up much more, then they have to sell. They have losses. And if we have the long bond go up a lot which can truly happen. It can feed on itself then this stock market is going to go a lot lower. David, its evan new mark. Youre historically been over bearish really all the time. Would you mark your uber bearishness from when the world fell apart or have you been just bearish, you know, your whole career and is that just the way it rolls . Are you taking in new data and coming up with the bearishness or the same old story of 08 or 09 . I was fortuitous enough to sell at end of 08 and the market had had an extreme rally off that bottom in 08 and, you know, ill admit i didnt necessarily anticipate that the fed would go as far as they would. 93 months of zero Interest Rates. Now we are headed to negative Interest Rates around the world with 13 trillion of sovereign debt negative and we have had 3. 5 trillion of quantitative easing. However, it really hasnt worked and we saw this before in 03 to 07, before the market fell apart. So, the market did get lower. The market has rallied. I havent been short any stocks really since 10. And i believe im not short any stocks right now and heavily playing gold stocks because theyre the place to be in a negative Interest Rate, zero Interest Rate environment. Gold represents the currency and the fact people are selling gold because its possible that rates go up 25 or 50 basis points really represents a gift for investors. All right. A lot of people like that yellow metal these days which was down nearly a percent today. David, thank you for joining us. Glad to be with you. Homebuilders with a worst day in three years on worries of a rate hike. What a move could mean is next. Facebook cofounder is the latest billionaire to donate a bunch of cash to a political campaign. He is not alone. A look at hedge fund divided and how its executives spending millions on the chosen candidates campaigns is coming up. Welcome book. It was their worst day since 2013. Diana olick joins us with how a rate hike could impact housing. Hi, diana. Look, Mortgage Rates have been stuck move ng a very narrow range all summer. But they moved higher today and thats what hit the stocks. The fastest pace higher in two months. Some may see that in form of higher closing cost, but if the momentum continues next week, Matthew Graham predicts rate themselves will be an eighth of a percentage point higher. Are we still historically low . Yes. Still below 4 for an average on the 30year fix, but you have to throw some caveats in there. You have to have solid credit and sin in the game in the form of a dunn pail. Given some home prices are on fire. Gains have accelerated in july. Home buyers are working inside small margins to afford a home. For the builders, homes come at a price premium. So, rates moving higher will hurt. Builders can throw in the extras, but the base Sticker Price is still hire and qualifying the for a loan is harder at that higher rate. Not only were the homebuilders hit hard today, but anything that touches housing, home depot, mass, lowes, people spend on upgrades. Even if they stay, they use home equity lines to finance upgrade, but not as much if the rate are hire. A couple of things could happen. If rate rs to move higher, home prices fall. But last time, it only per pet jated the move higher. I think the banks have been pocketing the margin instead of passing it along as much who are Interest Rates. Interest rates have been reaching historic lows, but kind of the 30year has been kind of held up quite a bit because i dont think the banks have been really passing it along, so my own view is whether rates on the 30year is three and a half or 4 , doesnt really move the needle. If you talk about a 6 , you can talk about having a big impact. Within a 50 to 100 point range, i dont think it makes a difference. I wonder if that means theyre not competing that ferociously because not that much in way of new activity to happen. That maybe is the next move. What do you read on this, diana . I would say i wouldnt say that the banks are pocketing that extra money. Im saying theyre keeping rates slightly higher because theyre paying extra fees that are put in place because theyve got new rules on them, so theyre add ing in that extra just to safeguard themselves, now i will say that Mortgage Rates could stay low because the spread between them where the treasuries and rates are, is getting wider and theyre not able to keep up so much as they used to be able to, now, that said, if you start seeing rates go higher, youll see Mortgage Rates move and i think todays home buyer is sensitive to that rate because of those higher prices. Where theyre being squeezed and because of eligibility for Mortgage Loans today. Im eyeing the pick up truck in background. Nice, bright red. Pick up u trutruck . You want to buy a car . I think youd look good in that truck. I dont see you in a pick up. Maybe not me, but mike over here. Maybe like a red maserati. Thats way too new for me. I got one thats 30 years old. Diana, thank you. Have a great weekend. Diana olick about to speed off in that truck. Mizblnchs millionaires and billionaires are donating pile of crash to campaigns, but what happens when two executives are on opposite sides of the al . Thats next. 6000 points from my chase ink card i bought all the fruit. Veggies. And herbs needed to create a popup pickyourown juice bar in the middle of the city, so now everyone knows. We have some of the freshest juice in town. See what the power of points can do for your business. Learn more at chase. Com ink see what the power of points can do for your business. [phone buzzing] some things are simply impossible to ignore. The strikingly designed lexus nx turbo and hybrid. The suv that dares to go beyond utility. This is the pursuit of perfection. Remember here at ally, nothing stops us from doing right by our customers. Whos with me . Im in. Im in. Im in. Im in. One, two, wait, wait. Wait wheres tina . Doing the hand thing . Yep we are all in for our customers. Ally. Do it right. Theres a lot of places you never want to see 7. 95. [ beep ] but youll be glad to see it here. Fidelity where smarter investors will always be. If only the signs were as obvious when you trade. Fidelitys active trader pro can help you find smarter entry and exit points and can help protect your potential profits. Fidelity where smarter investors will always be. Two executives at wrenn nance are in a habit of giving to political campaigns. A look at the biggest hedge fund. Zpl this election cycle, campaign and pack and others coming out of its Long Island Office are too large to overlook. Since last year, people affiliated with fund have given at least 34 million according to the center for responsive politics and the donations come from both side of the divide. At top of the shop, Robert Mercer has become an important trump backer lately having given 19 million to the candidate along with other republican causes. I should note this just a few million of that is to truch spechkly. His partner, peter brown, however, has history donate iino democrats including Hillary Clinton when she was senator in new york and generally dislikes the idea of high profile give, say its bad for business. Then theres james simons, who along with his wife, has given more than 10 million to clinton and other causes this cycle alone. In an interview with david faber in june, simons argued that the dualing political stances dont affect the work. Bob has his opinions, peter has his and i have mine, but it doesnt having anything to do with work. Given that renaissances equity fund is up 15 year to date over four times the average hedge funds, it would seem to be a fair point. What a high profile split. Fascinating. Thank you. Kate kelly. Would you guys have a problem with that . Maybe its a good thing. Diversified. I go back to the old days, co ceo partners. I dont think so. I think especially a firm like that where theyre letting the programmers make you the money. Exactly. I think charlie monger and b Warren Buffett are politically diversion. Somewhat. I think they are. I dont know. Catch more by the way from the hedge fund heavy hitters, Global Investors and political player cnbc hosts our sixth annual delivering alpha conference this tuesday, september 13th. Should that just serve as our look ahead for the week . Ill be at the show. Were all fed watchers now. Look at the bond market. Thats going to be interesting. Stocks not so much. Thank you for joining us. Fs munz begins now. Fast money starts now. Live from the Nasdaq Market side overlooking new york citys time square. Traders on the desk tonight on fast, the worst day for stocks since the brexit. So, is wall streets biggest bold buying this dip . Plus, homebuilders having their worst day in three years. That could mean trouble for one of the hottest dow components and Scott Van Pelt in a brutal twitter war with rick greenfield and it has something to do with the fate of espn as disney shares are tumbling. First, we start off with the