Transcripts For CNBC Power Lunch 20150918

First, lets check in with mandy at the new york Stock Exchange. Hi there, tyler. Hello, everybody. We have a selloff here on the street. The dow is back in correction territory although we are off the very worst levels of the day. The dow is down by about 284 points. Now its down by 235. S p down by 24 and the nasdaq off by 48. I have bob pisani on the floor of the Stock Exchange to explain what is going on. I guess maybe for one day weve got a reprieve where we can stop obsessing what the fed is going to do and we can obsess what the fed said and what it means for things like earnings and revenue. For the moment i think what the fed was saying yesterday is still impacting the stock market. Lets look at the s p 500, were just off the lows for the day. 2 to 1 declining to advancing stocks. Volume is heavy because its a quadruple witching. Let me try to answer mandys question. Why are we down today . I see three clear reasons and you can assign whatever weight you want to any of these. First one, this is a quadruple witching expiration. Thats quarterly expiration of stock, index, and futures. We had interesting volume at the open. Its hard to sort that out but thats some kind of influence. Second, oil is down 4 . This is a proxy for Global Growth clearly impacting energy, materials, and industrial stocks today, and finally, the whole feds message on Global Growth, and it was pretty down beat here and i think thats really impacting markets participants expectation of where stocks should be. If you look at the stocks that would be impacted, ge and 3m and caterpillar, your usual names. Everything is down about 2 in this particular space. If you look at oil stocks with oil down today, the big names here, particularly in the exploration and production space, the ones most directly impacted, apache, continentals and anadarko, all down 3 to 4 . Finally, the 10year yield down putting pressure on the banks. Regional banks down about 3 . So a lot of reasons. Finally just on the emphasis on the feds focus, we were focused on the monthly jobs report and now all of a sudden were supposed to focus on Global Economic and financial developments and i think the Market Participants are having a hard time assessing what that phrase means. Yeah, and i think were going to have a discussion specifically on that topic with Steve Liesman and also ron insana later on in the show. Well get back to you as well. Thank you very much. Steve is already talking to himself over there about that very point. Well catch up with steve in a minute, but as bob said, oil is taking a hit right now. West texas crude down 1. 50, about 3. 2 . Brent crude down a little less in percentage terms, about 80 cents at 4828. Jackie deangelis is following it. This is typical of the action weve seen in the last three or four weeks. Certainly these big moves in either direction. Now, postfed we are tracking with equities today that uncertainty, the concerns about the Global Economy weighing oil down today, and that is taking over the fact that, yes, we have no rate hike and that actually could be bullish in some ways for crude because the dollar stays weaker. Were holding over 45 a barrel. Thats a key technical level but were on track for a weekly gain, almost 2 at this point. So well see what happens at the end of the day. Back to you. Jackie, thank you very much. To Brian Sullivan for a news alert. It goes to the oil story. Its that time again. Every week the Baker Hughes Rig counts and oil rigs were down eight. A number of rigs, not a lot, but eight coming off line. We lost ten last week. The market probably a little happen at least some of the drilling rigs are coming offline. If more were going up, that means production might be primed to go up in a couple months. The markets, if youre long oil, if you want the price to go up, you want production to come down. Eight Oil Rigs Drop week after week, ten from last week, and were down 957 from this time last year. Oil not a big move. Jackie just hit it, were at 45. 53, about a time move from where we were prior to it. The rig count not moving the market. I tried to sex that up as much as possible. You tried to do a Little Market movement there, but, well, you know, could still happen. Thanks a lot, brian. While oil is tanking, gold appears to be the goto commodity right now. Prices there hitting twoweek highs. Currently sitting at 1,137, n gaining by 20 bucks or 2 and well have the closing trades for gold at the bottom of the hour. Lets find out whats happening in tech. Courtney reg sentence followiag for us. The nasdaq is the best performing indices of the major three but still negative. Things have gotten better throughout the session. When we started trading this morning, only a handful of stock this is the nasdaq 100 were positive and now we have more than a handful ill say. But we take a look at the biggest mover and thats adobe. Shares up more than 1 . That may not sound super impressive but its the biggest positive mover on the nasdaq 100. The softwaremaker came out with earnings and revenue that beat forecasts. Then if you can take a look at shares of apple, we talk about it a lot. Its worth talking about because we know how big ts and what an outsized impact it can have. Down slightly. Its been trading in a narrow range despite the fact some ewers saying once they downloaded ios 9, it crashed their phone. Shares are just fine though. Thank you very much. Lets get a check on the bond market on the back of the fed decision. The 2year note, the yield down a little bit. 0. 686. Lets look at the 10 at 2. 15. There you see the 10year note, the price a little higher. Fed chair janet yellen saying the fed is on hold because of Global Economic developments singling out china, so how can chinas economic slowdown affect the u. S. , the economy, and the fed . What is the transition mechanism . Our senior economics reporter who was in washington yesterday so were you. I think theres a bunch of things the fed will be singling out in terms of the impact of china on the u. S. Were calling it the china syndrome. Youre young enough to remember the movie. This is chinas effect on the u. S. A couple critical, not all of them, but some, the dollar. We look at the Dollar Yuan Exchange Rate in the past couple months. Weve had an appreciation of the dollar up 3. 63 . Thats in the last year. A lot of that coming just in the last couple months right here. Thats a conduit by which china will affect the u. S. A stronger dollar makes our goods less competitive. You can see it when we look at the Inflation Numbers here which is the next place. China does export inflation because we buy so many of their consumer goods. We looked at imported goods, consumer prices. What you find, its been falling at a 1. 4 , 1. 5 annual rate. Last thing we want to look at is trade. At the send us stuff, we send them some stuff. U. S. Exports to china down 4 year on year. Three areas, the dollar, trade, and inflation. Whats unclear is what the total gdp or growth impact is. Weve seen it in just a couple tenths. Maybe 0. 2, maybe 0. 3 on gdp. The fed hes fear is if theres a bigger slowdown, the result could be worse. Markets have been paying attention to china for months. It was all about china. So it should not be any real surprise that the fed is also taking into account whats going on over there . I dont think so. Now we have to watch china. Guess what . The markets were already watching china and reacting minute by minute day by day to whats happening in the shanghai composite, the Economic Data reported by the Chinese Government and private economic forecasters, and all of that affected the market. Really the fed is just really playing catchup in one sense to where the market already was. Everything is interconnected. My bet, my bet right here today, december is where they go. Not a bad bet. All right, steve. Thank you very much. Mandy . Why dont we take a look at all the rate sensitive sectors. For example, utilities. While it has been on a down trend for some time, over the last few days its caught a bid and probably related to the fed hike. Dom chu is here to walk us through some of the sectors to watch ahead of the next decision. I cant believe were already talking about the next decision the day after yesterdays decision. You know what . I can believe it because now that its done and theres been perhaps even less clarity about whats going to happen in the future, everybody is trying to figure out whether october is going to be that date. So we have seen some relative outperformance in some of the stocks. First of all, take a look at this etf. Well do it through the lens of Exchange Traded funds. The xlu is the one that tracks the s p utilities index. You can see over the course of the past week, up by over 2 and were slowly losing some of those gains in trading today. However, a little bit better than the overall market but look at yeartodate, right . Yeartodatewise, you can see the down trend has been playing out for a while, although we want to see whether or not traders do look towards utilities again if there are prolonged prospects for lower Interest Rates. Take also a look at this well, utilities for one, but then the reits. This is the vanguard reit index. Its still positive on the day up by 4 over the past week. Still again, look at the yeartodate basis, still in a bit of a down trend. This is another battleground for where the rate trade will play out. Look at whats happening here as well with one other one. This is a bond etf. This is one that tracks the longer end of the yield curve. Perhaps no surprise as though bond prices go higher, this etf goes higher as well. Up a third of a percent over the week. Remember, again, on a year to day basis you can see here a bit more of that down trend as well. So certainly places to watch for, and then on the opposite side, take a close eye on the regional banks. They could be big trades on this Interest Rate play. Thank you very much. We know there will be no rate hike in september. Will it come in october . Or december . Thats my bet. Or next year . Well talk about when economists now think the fed will begin to raise those rates. As we head out, take a look now at some of the most widely held stocks. Jpmorgan down 2. 5 . Among them apple basically flat. Microsoft down 1. 5 . Youre watching cnbc, first in business worldwide. I was out for a bike ride. I didnt think id have a heart attack. But i did. Im mike, and im very much alive. Now my doctor recommends a bayer aspirin regimen to help prevent another heart attack. Be sure to talk to your doctor before you begin an aspirin regimen. Its from daddy. Sfx dads voice i love you baby girl. Duracell quantum lasts longer in 99 of devices so you can always be there. Welcome book to power lunch. Im phil lebeau with a big story developing in the Auto Industry at this hour. The Environmental Protection agency is accusing volkswagen of rigging almost a half million cars so they will pass clean air tests with Software Designed to make them look as though theyre not emitting as many emissions. The software is meant to circumvent clean air tests and that means that if volkswagen, as they are going through this investigation, it could eventually be fined a maximum of 18 billion. The impact of this is on 482,000 cars. The fine is up to 37,500 per vehicle. Multiply that and you get the 18 billion. Again, thats a potential fine. Here are the models impacts. 09 to 15, jetta, beetle, audi a 3 and the golf and the 2014 and 2015 vw passat. The company said vw is cooperating with the investigation. We are unable to comment further at this time. As you take a look at shares of volkswagen, keep in mind that ts up to volkswagen and the national Highway Traffic Safety Administration to ultimately do a recall, but the epa says today ts for it is forcing volkswagen to fix these vehicles. This is a big story with volkswagen being accused of sem p essentially putting in software to cheat clean air test approximates. Quite a serious accusation. The stock down nearly 4 . Aetna upgraded from buy to hold saying the Health Insurers business has been under valued by investors. Today it is down nearly 1 . Ak steel expecting a smaller than expected loss thanks to cost savings efforts and also lower raw material expenses. That stock plunging more than 50 this year. In trade today ts doit is down y 2 . Our next guest expected the fed to raise rates yesterday. Now he says december. Stuart hoffman is the chief economist with pnc. Why do you think the fed didnt move yesterday and do you quarterly with their decision in any meaningful way . Not in a meaningful way, although if they dont move by december i might start to worry about that. They told us why they didnt move. It was quite a change of heart from the fed meeting in july and the statements by the chair, between then and now. Clearly the Global Economic developments, the weakness in china, and this big drop in oil prices, you know, thats going to show we had a small dip in the cpi in august, but wait until the number comes out for september. Gasoline prices are down probably 10 this month and the cpi will be down 0. 3 . So the fed will be sitting on weaker inflation data. Thats not going to improve their confidence. We think it will happen in december because there will be better Economic Data and maybe some settled down in the international and stability in oil prices. I think of the fed yesterday as sort of following the hippocratic oath which is first do no harm. I think they didnt want to screw things up if theres any risk of doing so. But is there a risk, stuart, of making the perfect the enemy of the good, where you wait a little too long for exactly the right confluence of events and the result is that youve waited too long . I tend to agree with that. I think you put it well. They waited. If they wait another two, three months, say december, its probably not too long. Unless the u. S. Economy is much weaker in the next couple of months to justify their concerns about the Global Economic weakness, you know, coming back to haunt the u. S. Economy, then i think waiting longer than that would get to be procyclical. If Oil Prices Stay where they are, when we start to see inflation early next year and drop out those big drops late last year and earlier this year, those cpi numbers yearoveryear are going to come springing back. I think that will bolster the feds confidence in their inflation forecast, and they will begin a process in december stew u, between now and then december, there are a couple things that leap out to me as topics id like to get your thoughts on. One is the possibility of a government shutdown. Weve been down that road before. They typically dont last that long. They typically dont have all that much effect on the economy or the marketplace, but the other things is corporate profits. As we get two weeks from now, were going to start seeing them, and the outlook is not particularly ebullient. On the government shutdown, who knows if thats going to occur. We all hope it doesnt, it doesnt come to that. I would say its not likely to occur but either way the fed will know that probably by december. On the corporate profits, i think thats part of the reason the fed did want made the decision so that the dollar might weaken a little bit or at least not continue to appreciate. Clearly that doesnt show up in the Third Quarter when the dollar was stronger. So those companies that have International Operations are going to feel that negative. You mentioned earlier some of the Home Builders. I think thats not going to be an issue and theyre going to be some good numbers out of the Home Builders and businesses that deal with the housing economy. All right. Fantastic, stu. Thank you very much. Stuart hoffman of pnc. Check out netflix this year. Shares of the streaming service more than doubling yeartodate, although they are marginally down today. Elgin cramer is speaking with the ceo about the growth ahead. Lets look at some of the most active stocks on then nys. We are back in two. Do not go away. Lease the 2015 rc 350 for 429 a month for 36 months. See your lexus dealer. Sometimes they just drop in. Always obvious. Cme group can help you navigate risks and capture opportunities. We enable you to reach Global Markets and drive forward with broader possibilities. Cme group how the world advances. Awe believe active management can protect capital long term. Active management can tap global insights. Active management can take calculated risks. Active management can seek to outperform. Because active Investment Management isnt reactive. Its active. Thats the power of active management. Weve gotpeptocopter ummy town. When cold cuts give your belly thunder, pink relief is the first responder, so you can be a business boy wonder fix stomach trouble fast with pepto. Excellent looking below the surface, researching a hunch. And making a decision you are type e. Time for a change of menu. Research and invest from any website. With e trades browser trading. E trade. Opportunity is everywhere. Welcome back to power lunch. Netflix is down today, generally down day though, but ts still up 5 so far this week. Mad money jim cramer speaking to Reed Hastings about the growth path ahead. A lot of times analysts ask you and theyre often confined by the four walls of their business models, why dont you raise prices . Original programming cost too much. You went against the grain on both of these. Why were you so certain you could do so . Weve invested in original content like orange is the new black. Again and again, were just doing more. We have a new movie, the besass of no nation coming out. And more people join the service and thats how we make money. Juke see this exclusive interview tonight on mad money, 6 00 p. M. Eastern and its only on cnbc. We should also say that netflix is part of the socalled fang spox, facebotocks, faceboo netflix, and google. Facebook is up more than 20 . Amazon is soaring 75 . Netflix doubling and google up by 25 . So putting a fang in it. Ty, to you. Thank you, mandy. To the bond market, Rick Santelli tracking the action at the cme. Hi, rick. Hello, tyler. The day after, and today is the day after of course the fed statement and nonnormalization, looking at intraday of 10s. Pretty flat, flat as a pancake and here we hover at 214. We settled yesterday at 219. Last friday at 219. Even though 24 hours ago we had a 229 yield, a lot of that volatility actually disappeared. If you look at the shanghai composite for four years, does that look like a chart that surprises you with its weakness . No. Its a pretty much down chart. Did it just start yesterday . No. Certainly seem as though at least a portion of the fomc Committee Just woke up and thought china is weak. Look at the crb and commodities . Does this look like something that just hit recent lip . These are long term trends. Cant imagine it will change much in the six weeks between meetings but well have to wait and see what turns out in october, tyler. Back to you. Thank you very much. Employment, inflation, china, does the fed now have a new third focus when it comes to the path of Interest Rates and how serious is the china slowdown threat that rick just referenced . As we head out, a look at some of the big chinarelated etfs right now all down today more than 1 . Its intelligent enough to warn of danger from virtually anywhere. Its been smashed, dropped and driven. Its perceptive enough to detect other vehicles on the road. Its been shaken, rattled and pummeled. Its innovative enough to brake by itself, park itself and help you steer. Its been in the rain. The cold. And dragged through the mud. Introducing the allnew mercedesbenz gle. Its where brains meet brawn. Dentist appointment when my teeth are ready . Can it tell the doctor how long you have to wear this thing . Can it tell the Flight Attendant to please not wake me this time . The answer is yes, it can. So, the question your customers are really asking is, can your business deliver . Hello, everyone. Im sue hererahere is your cnbc news update at this hour. Israel is stepping up security today after palestinian leaders called for a day of rage. 800 extra police and undercover units are on duty in neighborhoods where tensions have been high for the past week. The day of rage is in response to new Israeli Security measures in and around the old city. Health officials are hopeful that this years flu vaccine will be more effective than last years vaccine. It targets the same strain of virus that mutated last year leaving that less effective. The centers for Disease Control said last years flurelated hospitalizations were the highest since the records began a year ago. Texas ninth grader Ahmed Mohammed plans to transfer school. He brought a homemade clock to school and was arrested after administrators thought the clock was a bomb. The family has not yet decided on the new school but they are exploring options inside and outside the country. And elephants have a royal friend in prince william. All eyes were on the prince as he called for action at the 25th anniversary of the tusk trust which works to conserve african wildlife. The second in line to the british throne has been a patron of the trust for nearly a decade. And a very good cause ts. That is the cnbc news update at this hour. Back to you. Thank you very much. We have session lows now for the s p 500. Lets take a look at where it stands right now and what may be more alarming than that decline of 1. 25 is the breadth on the s p 500. Really four out of five or more of the stocks in the s p are negative on the day. It is a broad selloff affecting the s p, not concentrated in a couple big names. Gold, twoweek high there is. Closing up 20 an ounce or 1. 8 at 1,137. 40. Jackie deangelis is following it for us any nymex. Probably fueling the rally is short covering, commitment of traders showing we dont have new buyers in this market but postfed we are seeing a big bounce today. Whats interesting is traders told me they werent expecting to see a big move today because they knew that a rate hike would be imminent even if we didnt get it yesterday. The commentary now leading them to believe that that may not be the case. It could be pushed to 2016 and thats giving gold a little bit of a bid here. Still, resistance at 1,150. 2r5 traders are still leery how high gold can go. Thank you very much for that. The dow is currently backsliding a little bit as well. Down by 245 appointments. The s p, as ty was saying, sitting around session lows, and the nasdaq down by 1 . Lets zero in on the nasdaq. Courtney reagan joins us from times square. Much of the week was a waiting game for the markets, the nasdaq included. We are lower on the session down a percent for the nasdaq but we will still likely end the week with slight gains at least on the nasdaq. It is friday and we have a couple hours left to go. I want to zero in on shares of vertex down more than 6. 5 . A couple pieces of news moving the shares. Number one, law firm levi and kozorski is investigating the board of directors for a possible breach of fiduciary duties. Theres a Piper Jaffray note doubting that vertex could be an acquisition target of gilead, possibly also playing into the weakness were seeing in those shares. And then if you take a look at some of the data storage names, Western Digital and sandisk, Western Digital down more than 5 , san desk dodisk down 4 . These are outsized losers at the nasdaq. Last but not least, i want to talk about facebook, down just absolutely, but we saw some interesting moves throughout the session. We started lower. We actually broke into positive territory for shares of facebook before sliding back down. The company, of course, saying that it will or hopes to launch a version of facebook for the workplace by the end of the year after 100 companies, large and small, have tested it. Tyler and mandy, back to you. Thank you very much for that, courtney. The reaction to the feds decision is generally down today for stocks. How should you be reacting . Joining us is matt tuttle. Thank you very much for joining us, matt. Its weird, we had all this volatility going into the decision and fears over potential rate hike. Now we dont get a hike, weve still got volatility. What do you feel the market wants here . I think the market wants some certainty. You know, at this point we can debate back and forth whether Interest Rates should be higher or not, but we know the fed is going to eventually do it. We know thats going to cause some pain to some people, and weve just gotten to a point where just do it already. You know, all this uncertainty is now contributing to a lot of the volatility that these guys are trying to avoid. Its just crazy at this point. Yeah. A lot of people feel there just wasnt a clear and strong message from janet yellen either, which adds to the confusion. When we spoke to you i think it was about a week or so ago, matt, you were saying you had zero stocks. Your pretty heavily invested if treasuries. Do you see any change to that allocation anytime soon . No. We were sitting there yesterday in cash and treasuries so, you know, my etfs love what the fed did. Theyre making our shareholders money, but, you know, i dont see anything yet to change that position. Were looking at 2020 on the s p 500 as the level if the s p breaks above that, i think this correction is over. And then we might look to get back in, but, you know, we think we might hit 1930 before that happens. Okay. So it sounds like youre not wanting to buy stocks at these levels. Lets bring in john buckingham, chief Investment Officer at fm capital. What do you do from today onwards . Well, you dont change anything in your longterm Asset Allocation mix as far as im concerned. Keep in mind this week stocks are pretty much flat right now from the start of the week. Yes, weve had a lot of volatility, but i dont think the fed did anything that wasnt expected given that we had a 28 chance of the fed raising rates heading into the meeting. What changed, of course, was maybe the focus on the Global Economy, but of course they have to look at the Global Economy. They have to consider whats happening with commodities and now thats going to impact growth here and, frankly, on the inflation side of the equation as well. I dont think you change anything. If anything, stocks got a little cheaper today, and relative to where we are on the Interest Rate spectrum, id rather have a portfolio of dividend payers like i have yielding 2. 8 than be investing in treasuries or cash type instruments. Do you think though, john, anything is going to be significantly better on both the global front and the inflation front by december enough to hike . Well, thats the 64,000 question. Its sort of a 50 50 at this point. As a value investor, value stocks actually tend to do well when the fed hikes rates. I might prefer they do it sooner rather than later and to get the uncertainty out of the way. It might be a nice thing to do, but, boy, i agree with you, it doesnt look like much is going to change between now and then, so maybe were talking 2016. But, again, i keep coming back to this issue of valuations are attractive when you think about yields. Dividend yields over 2. 2 on the s p 500, contrast that to what youre getting on a 10year treasury today at 2. 15 and when you think about stocks, if you invest in value stocks and you have a tenyear time horizon, on average going back the 925 periods, theres only been two periods in rolling ten years where stocks have been down over that tenyear time tram. And i know you like when youre talking about value stocks, you Like National oil well varco down 40 yeartodate. You also like apple. Thank you very much john and matt. You can go to powerlunch. Cnbc. Com to see what johns underweights are in this market. Thats powerlunch. Cnbc. Com. Tyler . Thank you very much. Uncertainty grips the markets one day after the fed decides to hold rates. How will the feds new decision that focuses on Global Markets, if that is what ts play out with investors. Some insight from Steve Liesman and ron insana. There has been a lot of tut tuting. Good word. About the idea that the fed is not only looking at its two congressionally ordered mandates on price stability and labor market sort of economic growth, but now has a, quote, third mandate in some peoples phrasing to Pay Attention this gentleman is so polite because yesterday he referred to the notion as silly. I have another word for it that we cant use mandate is maybe not the right word. I brought a little history with me did you . Not a lot of people do this and certainly some of the people you were talking to yesterday didnt have any idea what the history looked like. If you go back to t1973 these ae the events the fed has been forced to consider over 40some years. Those are overseas. Those are not american things. Yes, the iranian revolution lit tan ameriatin america. We stopped raising rates and the treasury intervened to support the pay show. Asian currency crisis. 98, russia longterm capital. Fed cut rates. Greek crisis i think a more interestingly salient point is this thank you. Is the idea that the market was already reacting to china. Joosk. And the fed was playing a little bit of catchup and it may have put a little too much ketchup on in the sense this is where we want to focus the deor where investors should. They think its overstated, its not possible for china to really have that huge of an impact on the United States, and that this is something ultimately that ends up being transitory and works its way through. Its not a global downdraft that will happen because china is going down but there are people who fear two things in china. Number one, a true hard landing which would disrupt emerging markets and, two, systemic financial risk in china because their banks are in far worth shape than ours were in 2008. Why do you think the market its in asia sold off as sharply as they did . Is it because of what the fed said about china . My take is that we have the problem of the twohanded economist in janet yellen at the moment. On the one hand, the employment mandate is being met. On the other hand, china is weaker than we thought. You have this issue where, okay, they could still raise rates as early as october, which she said, but most bond Market Participants are looking at 2016 as a likely rate hike period because of the uncertainties over the Global Economy. I think people walked away more confused. I would just add one thing which you inter hinted at, tyler. What they call the signal value. When the fed hikes theres a positive economic signal. When it doesnt hike and the question is did they know something we dont know. Exactly. And if i had a followup yesterday, i would have said, madam, chair, what do your models show for what the potential tail risk is for the chinese economic slowdown or worst case scenario. We dont know the answer. Spell it out for us. We have jim bullard on squawk box on monday and well ask him that question. He has changed his mind routinely. Whatever his opinion is i want to know what his modeling shows is the potential. I have heard three or four tenths, which is not nothing. Its not a longterm the other thing about stock Market Reaction, over the last couple years the stock market has gotten it wrong immediately after the fed and then they find their footing again after they reinterpret what the message is. Have a great weekend. Youre going to play a gig to tomorrow in teaneck. Mexicali. Two sets of the grateful dead. Mandy. I think Steve Liesman takes the quote of the day with perhaps a little bit too much ketchup on the plate. Talking of Market Reaction, whether or not theyre getting it wrong the day after the fed decision, were down by 254 on the dow. So were moving back down towards session lows and traders are very quickly turning to the upcoming earnings season as something also to latch onto. What is the jut looutlook for t earnings season. The early signs tend to be a little troubling at the moment if you look at the estimates. Do not go away. The cnbc Trend Tracker live data board is brought to you by the cme group. Moment to take a pill . Or stop to find a bathroom . Cialis for daily use, is approved to treat both erectile dysfunction and the urinary symptoms of bph, like needing to go frequently, day or night. Tell your doctor about all your medical conditions and medicines, and ask if your heart is healthy enough for sex. Do not take cialis if you take nitrates for chest pain, as it may cause an unsafe drop in blood pressure. Do not drink alcohol in excess. Side effects may include headache, upset stomach, delayed backache or muscle ache. To avoid longterm injury, get medical help right away for an erection lasting more than four hours. If you have any sudden decrease or loss in hearing or vision, or any symptoms of an allergic reaction, stop taking cialis and get medical help right away. Ask your doctor about cialis for daily use and a free 30tablet trial. Welcome back to power lunch. Shares of freeportmcmoran are down 9 right now standing out as the worst performing s p 500 stock. The miner said it has brought in 1 billion through a sale of its shares. It also disclosed plans to raise another 1 billion as the Company Looks to raise cash amid weak Commodity Prices overall. This secondary offering raising more capital putting pressure on these shares. Of course, they have been in a down trend for quite some time. Thank you. Lets take you through a couple business headlines. Boeing insourcing some of the work on its 7478 jumbo jet after ending an agreement with the supplier triumph group. Qualcomm has cut more than 1300 jobs in san diego and hundreds in other markets, and the restaurant chain Buffalo Wild Wings ending an ad Campaign Featuring the comedian steve ran i did i did after he admitted to lying about being in the World Trade Center during the september 11th attacks in 2010. With the latest fed decision done and out of the way, traders are quickly turning to the upcoming earning season. What is the outlook . The early signs are not particularly rosy. Bob pisani, we know a lot of drag will come from energy. How much is, of course, remains to be seen. I am wondering how much well have to bring down estimates for other sectors like financials. Thats the concern. Now the fed has the decision out of the way, we look at earnings and, unfortunately, were not getting a lot of help here. So take a look at the numbers right now for the Third Quarter. Were expected to be down 4. 4 . This is the s p 500. That number was supposed to be positive, folks, for the second half of the year and its not happening. Revenue is not doing anything either. Down 2. 9 . Thats also a major problem. As mandy said, a lot of this disappointment is due to whats going on in the energy space. Look, Energy Earnings expected, thats not a typo, 65 to the downside. If that was out, the s p would have a positive earnings. So thats how big it is and materials, you know about the Global Commodities collapse. Thats to the downside. Whats going to help us . The street is pinning their hopes on Consumer Discretionary, financials, and health care. Consumer discretionary is looking pretty good. Home building doing pretty good. Retailers fair, some winners and losers. Ha health care is okay. The concern is the financials. They were thinking Interest Rates were going to be higher and that would help some of the earnings, some of the companies, but that may not be happening. You saw Interest Rates not doing anything the last couple days and as a result you can see some of the regional banks getting hit heavily here and i think this is concerns overall that the earnings estimates may be a bit on the high side. So what is going to happen . Near term were going to have to hear from some big companies. Theres a few companies next week that have unusual fiscal years. So lennar, auto zone, and nike will have some comments next week. These are great companies, mandy, to talk about because theyre all consumer names. So what i need to hear is some more information about the state of the consumer and the Global Economy. And what we really need to hear is a little bit of top line growth. Were not getting it and, frankly im not terribly optimistic. Its the missing ingredient. You cannot cost cut your way infinitely to earnings growth. You do need top line. We didnt get it in the first quarter. We didnt get it in the Second Quarter, and im still waiting. Its the secret sauce. Its what were waiting for. Thank you so much, bob. Tyler, over to you. Dick fuld and ken griffin just set a record in the real estate number. Were going to start with ken griffin the ceo of citadel, set a record, the highest price ever paid for an apartment deal in new york city. He bought three full floors of a new luxury tower under construction off central park call 220 central park south, he bought 18,000 square feet, includes a Main Residence and several other apartments. Theyre going to be used for staff quarters and guest suites. Total price about 200 million. Now, thats more than twice the current record. That was paid by hedge funder bill ackman for the penthouse of another condo tower. Dick fuld is back in the deal news. He auctioned off his ranch in sun valley yesterday for more than 20 million making it the most expensive home ever sold at auction. We dont know the buyer or the exact price. Were told the buyer is from the pacific northwest. There were six bids at the sale held by concierge auctions. The property is 71 acres right on the big wood river. What a beautiful place. The emerging markets etf down 15 over the past three months. Volatility in the emerging world one of the reasons the fed didnt hike rates. So what are the biggest global risks to your money . That is coming up, and as we head out, take a look at the markets right now. Dont go anywhere, as you see those sectors, every one of them in the red today, utilities the best of a bad lot. Oh, look. We have a bunch of. Announcer babies who are talked to from the time theyre born are more likely to have a successful future. Talking and reading to children in their first years has a huge impact on what they do with the rest of their lives. The fewer words they hear, the greater their chances of dropping out of school and getting into trouble. Talk. Read. Sing. Your words have the power to shape their world. Learn more at first5california. Com parents here are this hour power points. Stocks taking a leg down this hour. The s p 500 hitting session lows and the dow moving back closer and closer to its session lows. Energy, financial, and materials the three biggest losing sectors but there are some bright spots. Viacom is the biggest winner the s p up 2. 5 and Adobe Systems is up 1 . If you missed any of the big stories, visit powerlunch. Cnbc. Com. Ty . Mandy, still ahead, weve got five big opportunities for you on this down day, and as we head out, take a look at the dow 30 stocks. Goldman, merck, jpmorgan, among the biggest losers. All down more than 2. 5 or so. Power is back in two minutes. All right. Weve got a big friday hour ahead including more on this fed hangover. Stocks taking a friday swoon. We are at session lows. Plus, the ceos of one of americas hottest biotechs is in the house. Well ask him if his drug trials are going as well as the market thinks they are. And if youre invested in gold, youll want to hear where its going. Were not done yet, mandy. You aint seen nothing yet, brian. Quick check on the markets. Were sitting around session lows. Currently down 281 points on the dow. 28 points to the downside in the s p. And the nasdaq is down 62 points. So trust me, theyre not cheering for the fact that the market is down there in the background. Theres other stuff going on. Lets bring in ben willis Princeton Securities Group and peter costa, president at empire excuse, also a cnbc contributor. Brian was mentioning the leg down were seeing in crude today. How much of the overall markets move lower is seen through the prism of whats happening with crude . Do you want to start with that . Yeah. I think the great deal of it is the move in oil. In terms of the last several months, oil has moved the equity markets, but then we tend to separate after its had its effect. What were seeing right now is a continuation of the down move in crude, but theres a lot more going on including the quadruple expiration. Thats another thing bob mentioned, cashin mentioned as well. The fed voiced concerns about Global Growth. Is todays reaction what you would expect then, peter . Absolutely. And i think that one of the things that, you know, we havent mentioned that much about is the fact that the fed is doesnt have clarity. Theres still not clarity. Theyre still not saying theyre telling you what theyre looking at and the pieces of the puzzle that they use to put it together, but they still havent come and said december were going to do this, january or february next year were going to do that. They never give you clarity. That would be way too much to hope for. It would be too simple. This is not a simple thing. What happens next week . A number of fed speakers which may offer more clarity on the feds mechanism of thinking. To lead us in a direction to make us believe that there was a strong likec likelihood they we going to raise rates. I believe that the fed when they finally do let rates start sto normalize will be an indication of a buying opportunity in the equity markets and will cause a rally because its taking the indecision. What weve left ourselves is the leaders of our central bank dont know what they want to do and thats what the market is telling us. A vote of confidence in the economy. Its also the fact that the data sets theyre looking at are still not getting theyre not getting the strength they want and if they dont get that strength, this may take we might be late into the Second Quarter before we have any kind of movement. I think it should be done now only because i think we should get it out of the way. If you look at what theyre looking at and they have a much Bigger Picture theyre backing away from the data that has proven its met their standard and theyre backing away. Theyre becoming the central bank to the world rather than the mandated central bank to the United States and they missed that opportunity and now theyre drawing in the effects of emerging markets and thirdworld markets which, quite frankly, is what china is. Their stock market is a thirdworld stock market. So you cant now youre adding that to the equation saying were going to use hard statistics but not for everything. Thats almost dangerous to add into the equation. Lets get shorttermist here. Beyond today, what happens on monday. We come back to work, what is the market going to do . If i knew what was going to happen on monday, i would not be talking to you. I would have gambled my familys fortune and made that bet. Its a hard call. It was 50 50 yesterday, but knowing that they didnt do anything, i knew the market would eventually go down and obviously that played out today. I think youll probably see a lot more volatility next week which that doesnt really take a genius to figure that out. But im thinking that the market is going to be weaker. I think oil is still like ben said, oil is the driver. Were not getting supply and demand is completely out of whack. You have so much supply. Oil will stay weak for a good period of time. I think thats going to play a lot into what we do next week. Yeah. If i had to have a position going in, i would go home long on a close like this from a market thats being oversold. Youre at obviously thats a highrisk trade but for the rest of the week because you have fed heads, European Central banks, a Second Quarter gdp and the volatility that will remain in the market because the Federal Reserve has left that volatility in the market by not making a decision. Great to talk to you. Were currently down almost 300 points. Tyler, brian, im going to hand it back over to you. Thank you very much. Its going to be an interesting two hours as the dow closes in on a 300 point decline. That does it for the first hour of power. Brian, melissa, take it away. Thank you very much. Its 2 00 on wall street. 1 00 p. M. In minnesota. The dow and oil are both down big. Stocks are at session lows and look at this chart. You heard it referenced just a moment ago in the interview with mandy that oil has been leading the market. We have talked about this for months. You can see both were weak pretty much most of the day, but about a half an hour ago the price of oil really took a turn down. Its now more than 4 off its highs. The dow also bringing it down. The dow is about ready to be down 300 points. We are off 296 right now to 16,378. Happy friday, everybody. I guess, hello. Melissa lee is at the nasdaq. Theres a lot to do and bob pisani joining us right now. I want to bring up a chart. You probably know this in your head, its a fiveday chart of the dow and what is very interesting when the market sold off this morning, i looked and thought, my gosh, we just gave back almost everything we gained over the previous four days. In other words, the market sort of rescinded all the fourday fed buildup. Another reason not to trade actively in an uncertain market. Stay in or stay out, but trying to time the market isnt working. Take a look at the s p 500. Brian is right, i will give you the reason the market is down, but he hit it right at the top. 2 to 1 declining to advancing. Volume is heavy because the quadruple witch. Why are we down . We had some very strange movements this morning in the markets here. This happens on quadruple witch. We cant figure out what the impact is from quadruple witch but there was some impact. Oil is down 4 and brian is right a proxy for Global Growth. And finally the feds message for Global Growth, letting on theyre more concerned than we thought about the Global Growth situation. He sue th you see that with ge, 3m, and caterpillar. When oil is down 4 , these are the ones most impacted. Denver is down 9 . 4 or 5 in the emp names. With the 10year yield down in the last couple days, theres pressure on banks because their earnings were supposed to be higher because Interest Rates were supposed to be higher. That might not happen. Regional banks are getting hit today. Brian, a number of reasons why i think the markets are weak. What ill be watching right now is the market on close sell or buy imbalances. Its going to be ts a quadruple witch. Well have heavy volume. These are among the biggest volume days of the year at the close. So well see whats going on. Ill keep an eye on all that. Before i let you go, on a quad ruppiruple witching day it possible we could get a big swing either way. Yes. The problem is its really very difficult to figure out. What the Market Participants try to go do in posting these orders if theres an unusual balance one way or another to buy or sell, they advertise saying theres an imbalance here, come on the other side. If theres buy imbalance, sellers, come on in. So they try to stamp it out, any of the volatility but he get a lot of volume and sometimes some price swings as well. The sellers are in and theyre drinking your beer right now. Bob pisani thank you very much. Lets get more on oil. Jackie deangelis at the nymex. An hour ago things werent good for oil but they really changed for the negative about 60 minutes ago. 7nd a the loand the losses a accelerating. We broke the 45 mark. A couple reasons i think oil is down today. Remember, yesterday we were pretty much flat but we had that almost 9 jump on wednesday. That was fueled on geopolitical headlines. The market is digesting it may have overreacted a little bit to the upside. Thats why youre getting the selloff. Also taking into account what we heard from the fed. Now there is more concern about what is going on in the Global Economy. Of course that impacts whats happening with oil because we are worried about the demand situation. In terms of supply, as you know, brian, it appears were slowly but surely ticking downward but not really at a fast pace. Demand does need to hold up for oil prices. Meantime, yesterday opec actually said that it doesnt see 100 oil until 2040. I know thats a long way out, but its reiterating that theme we heard from goldman sachs, that oil is going to stay lower longer. We also mentioned expiration. That could be some of the volatility that were seeing today but i think some of these other factors are carrying more weight and the traders on the floor tell me they watch the action in equities. Thats what sends their prices down. Its a chicken and egg kind of question. It is. Jackie, thank you very much. Well see new a few minutes for the closing. Pulling a Peyton Manning here. I want to make a point to remind our viewers of something we have talked about in the past which is this. Companies give you their amount of proven reserves. I have x billion in proven reserves if im oil company xyz oil company. Here is the problem. The longer oil stays down, you might see a wave of Companies Cutting what they consider their proven reserves. Remember that 3 billion we had . Well, now its only worth 1. 5 billion because oil has come down. That could affect their credit lines. Weve talked about this for a few months but were nearly approaching the oneyear anniversary of oils collapse. It might have to reset the values companies are using to claim how much theyve got. Keep an eye on this if youre thinking about buying energy stocks. Companies may have a wave of cutting their proven reserve numbers. The longer oil stays low, the worse it could be. So much news and noise out there right now. Its easy to be confused but lets try to cut through the clutter and get to what matters to you and your money. Paul hickey joining us now. Theres a lot of things to look at, the fed, china, oil. Maybe theyre all related. Whats the most important to you . I think we are putting a lot of attention on the fed right now, and i think in the short term yesterday and the sort of discrepancy in what they said and what they did is weighing on the markets, but in the longer term i think this selloff and weakness were seeing right now is more of the same weve seen over the last ten weeks. Weve been alternating between positive and negative returns in the s p. If we finish down this week, it will be another back and forth. So theres worries over International Markets and economies right now, but as far as the here and now, the u. S. Economy is continuing to do well. I think people are just concerned about the fed as sort of having a moving target approach to what their criteria is for raising rates and, you know, that causes angst on the part of investors. And i think as much angst as investors have about todays selloff, paul, ts important to keep in mind were basically flat for the entire week. Im curious though because a lot of people are making parallels to this years Market Action and 2011 in that they believe october would be another volatile month and wed sort of stabilize and then go into a year end rally. How does the feds inaction throw a wrench into that playbook . What do you see for the rest of the year . Well, the fed holding rates where they are is dovish, especially for equityings and more importantly growth stocks. In that respect you could say, yes, thats good for a rally into year end. In the short term, i think more prunes is warranted. The end of september is historically one of the weakest times of the year, the last 12 days of september. S p averages a decline of 1. 5 . Technology, Consumer Discretionary and materials have averaged declines of over 2 . Its a weak period for equities, and look back like you said, 2011. We had the steep selloff in august and it took time for the market to stabilize. When you see steep selloffs, the market usually it ends up in the long run being a good buying opportunity but in the short term you see a back and forth action with big swings like were seeing now. We saw it in 2011. The initial decline was in august and the market didnt rally until mid october. So i think youre going to see ups and downs here and especially worries over earnings as we get into the end of the Third Quarter. Companies are going to be issuing warnings, especially companies with international exposure. You know, it feels like, paul, the fed is kind of like when youre a kid and maybe your parents say if you get five as in a row well buy you that bike. You come home with five as and then dad is like you have to mow the lawn for a couple weeks and then you get the bike. Its like jobs and inflation. China came out of nowhere. Are you disappointed by the fed, paul . Like you said, in her comments yesterday, employment is doing well, economy was better than expected in the first half. You know, and inflation is downward pressure on it but its transitory they said. And then they said they dont respond to markets. Well, i think thats what they did there and i think they sort of caved to international pressures. Like you said, china has been weak for years now. Its been weakening. This isnt necessarily new. And in the commodities sector its not like oil certainly has collapsed in the last year, but the commodities prices havent been that bear market there started a few years back. This is not new news here. May have accelerated a little bit but i think the fed is just bowing to the markets here which in the short term is a worrisome thing. You cant be pushed around by china. You cant be pushed around by the stock market. That is not the feds edict. Maybe the bond market can push the fed around a little bit but anyway, we have to go. Paul hickey, thank you very much. Have a good weekend. Take a look at the fang stocks here. Wee talking facebook, amazon, next fltfli netflix, and google. Theyre down today but outperforming on an overall basis. Is it best to stick with whats working . Ken sanna, rob sanderson, great to have you both with us. In terms of what has surfaced as new concerns or maybe old concerns highlighted by janet yellen for the markets and that would be sort of the knock from china and emerging markets here on our economy, do any of these stocks, these fang stocks, really depend on global gdp growth to grow their own earn snti earnings . To some extent. To the extent these platforms have scale, they have data, theyre willing to deploy that data and show them where they can get more efficient return. Even if things get a little bit more tough on an absolute or macro basis, i still think these guys are performing well for a reason. So i still favor sticking with them. Rob, when you speak to investors out there, what is their sort of temperature when it comes to these stocks. Do the stocks go down on the notion they have been outperformers and therefore they are a source of fund stocks Going Forward . I think weve seen some of that already. If you look through the volatility into late august and into early september, netflix, for instance, was a big underperformer having been the best performing stock in the s p for three years. I think there was a lot of derisking and hit these stocks. To kens point, these are great secular stories. Talking to investors, theres a recognition that, you know, there will be macro volatility but theres strong longterm stories and people are more likely to be looking for areas to build positions and buy on weakness and i think stick to winners mentality. I want to switch gears and ask you about alibaba. Its an internet stock. Getting hit hard. Also a china related stock. The lockup expiration up to 64 of its shares outstanding could be coming to market on monday. What do you advise investors here . Is it going to be treacherous . Yeah, i think its still a difficult pathway out here for alibaba. The lock up i dont think is one of the things investors need to worry about. Almost 800 million shares there of softbank. We know whats going to happen with the 384 million yahoo shares and the founders are almost 300 million. Theres probably not a lot of incremental supply on monday. I think the biggest risk is the potential for a devaluation of the currency in china and thats one thing were focused on. I think it could hurt the conversion of funds back to u. S. Dollars and the pe multiple, but in terms of a consumption slowdown in china, i dont think that thats whats in the cards. Its really how does china manage their monetary policy. All right, guys, we have to leave it there. Thanks so much ken and rob. Appreciate it. Thank you. Up next, the fed is going global and so so are we. Citigroups chief global strategist joins us ahead with his take on the biggest risk to your money right now. And, of course, we are keeping a big eye on the markets. Stocks deep in the red. The dow down 1. 6 , but weve got some big money ideas on what you should do not only on this down day, but for the rest of your life. When power lunch returns. Care of my heart. Thats why i take meta. Meta is clinically proven to help lower cholesterol. Try meta today. And for a tasty heart healthy snack, try a meta health bar. We are seeing an intraday session high for the tlt higher by 1. 4 . 122 is the level it just hit. Thank you. All right. That is what is happening here in the u. S. But check out the emerging markets etf. Down about 11 over the past couple months. Brazil has been an absolute disaster. The fed citing recent volatility in the emerging world as one of the main reasons it delayed a rate hike but you cant put all the blame on the emerging markets because theres one big developed market that is shooting warning flares as well. Lets get to dom chu. Theres quite a few of them out there showing signs of weakness right now, but today given the price action, we now have one of the biggest ones out there. Were talking about germany. Their benchmark stock index now sits just at around that bear market territory mark of 20 . So germany a huge focus. And then theres the uk. A huge developed market and its down 14 from its recent highs as well. So on the developed side, there are signs of weakness, especially in europe. Here you have to talk about the emerging markets as well. Russia, china, brazil. You can see here russia down 32 , china down 40 . We know the story there and what the effect has been on the market. But brazil almost in bear market territory. Those economies, a lot of those worries coming home to roost for a lot of people. Thanks so much. Lets bring in Stephen Whiting with citi private bank. Great to have you with us. Thank you. How do you interpret todays Market Reaction . Well, i think theres disappointment that the Federal Reserve couldnt provide any further clarity. They raised Interest Rate uncertainty Going Forward. There was dovish impact. Theyve essentially told us weakness in Financial Markets will be a key issue for them. Anytime theres weakness, theyre going to move away. They want to tighten without impact. So there was the effect on the dollar. There was the lowering in bond prices, but they also raised uncertainty at a time when i think we could basically say theres a Global Growth panic. They sort of fanned those fears. Its interesting because over the course of the past several weeks, several sessions, weve interviewed countless strategists who have come on our shows who basically discounted what was going on in china as well as the emerging markets. Do you think that institutionally theres going to need to be a readjustment because essentially what janet yellen did yesterday was acknowledge that perhaps china and the emerging markets could actually have an impact on whats going on here, and it seems like institutionally on wall street that was not on the consensus view. My own view is that china is in the same lousy upturn that its been. Its been slowing since 2010, and it continues to slow, but there hasnt been any massive breakdown, and i think those who have looked at the currency move as a catalyst for further deep declines in chinas currency, a possible catalyst for a global trade war, that, you know, you should take a look at the currency and see that china is effectively repegged. So these are the types of concerns that i think have to be confirmed in the marketplace. Now, and you also see a quite strong chinese consumer, nearly 11 retail sales growth in china, and for exporters around the world to china, the complete opposite. I think understanding this complex situation in china is key. Steven, where does oil fall on your list of i have lost audio. I could sign it. Ill write it up. Steven wieting are you there . I thought that was a good question, too. Steven, if youre out there and you can hear us, we miss you already. Come back soon. Up next, five big opportunities on this down day. Weve got street talk stock recommendations on the way. The dow is down, oil is down, were still here and were back after this. Opportunities arent always obvious. Sometimes they just drop in. Cme group can help you navigate risks and capture opportunities. We enable you to reach Global Markets and drive forward with broader possibilities. Cme group how the world advances. Hey hi our cloud its a platform based on awesomeization really . Can it keep our data where it needs to be no matter what country were in . Integrate with our systems to help keep transactions secure . Combine Customer Data with likes, tweets, the weather, to predict trends . That would be awesome. Tote . Now theres a cloud that understands business. Now theres the ibm cloud. [ girl ] my mom, she makes underwater fans that are powered by the moon. [ birds squawking ] my mom makes airplane engines that can talk. [ birds squawking ] my mom makes hospitals you can hold in your hand. My mom can print Amazing Things right from her computer. [ whirring ] [ train whistle blows ] my mom makes trains that are friends with trees. [ train whistle blows ] my mom works at ge. The good news is that the dow is off its lows. The bad news, still down over 200 points right now. We were down nearly 300 earlier. All 30 dow napes ames are down the least Worst Company in the dow is apple. Time now for street talk, Analyst Recommendations every day on stocks that you need to know about. Lets do it. Stock number one, aetna. Cantor fitzgerald upgrading to a buy from a hold. They think its undervalued by investors, especially because the Medicare Advantage part of the business, they see earnings accelerating after the huma that deal. If it gets done, the target from 140 to 100, 19 updasidupside. Next stock here diller hitting a new 52week low. Upgrading from neutral to underperform. The Analyst Thinks Free Cash Flow will support share buy back. That could be about 9 of shares outstanding at current prices. The upgrade is valuation driven. The analyst acknowledges he hasnt changed his dismal views. All right. Stock number three, calpine. Ubs upgrading to buy. They like the action in some of the recent auctions. Their target goes to 21 from 19. Citigroup starts coverage of the buy on a 22 target. One thing to watch, wildfires have impacted five of the 14 power plants in lifornia. Fourth stock, irobot. A downgrade to a market perform from outperform. Lack of confidence in the back end loaded guide, concern over street assumptions for growth acceleration into 2016 and a belief competition it growing. It does though have a unique position in the home robot franchise. You know the roombas. You just wanted to say home robot franchise. Isaac asimov coming over to clean the floors. And essex property. They own large and mid size apartment buildings. Upgraded from a buy to a hold raising the price target to 251. A lot of new developments around silicon valley. It gives it 14 upside. The yield is 2. 6 . Street talk is over but we arent. Lets move from stocks to stockpiles of oil and get another check on crude. Jackie deangelis ahead of the close. Hi, brian. The selling definitely accelerating. Three reasons why traders dont want to be Long Crude Oil as we head into the weekend. Weve got those and what to watch next week. Stay with power lunch. Awe believe active management can protect capital long term. Active management can tap global insights. Active management can take calculated risks. Active management can seek to outperform. Because active Investment Management isnt reactive. Its active. Thats the power of active management. Good. Very good. You see something moving off the shelves and your first thought is to investigate the company. You are type e. Yes, Investment Opportunities can be anywhere. Or not. But you know the difference. E trades bar code scanner. Shorten the distance between intuition and action. E trade opportunity is everywhere. Hello, everyone. Im sue herera. The Environmental Protection agency is accusing volkswagen of evading federal Emissions Regulations on close to half a million diesel cars. The agency says the german carmaker installed software in the vehicles to trick u. S. Regulators into believing the cars met the federal clean air standards. The Company Admits installing the device but wont comment further. Models involved include 2009 to 2014 jettas, beetles, and golfs. Vw faces a fine of up to 18 billion. Some rain has arrived on the west coast. The death toll from the blazes stand at five. Fires have charred close to 300 acres. Zurich and geneva come in on top as the worlds most expensive cities. New york comes in number three. If you include rent, new york comes out on top. How would you like to find this playing in your back yard. A man in colorado found this cute baby bear cub playing in the hammock. The cub eventually got tuckered out, last interest, got detangled from that, and moved on. All right. Thats the cnbc news update at this hour. Back to you, brian. That bear video is very appropriate today, sue. I know ts. Were going to use that footage kind of a light hearted take on the markets decline. This is a baby bear. Lets hope this is a baby bear today. I cant wait to see it riding a unicycle. Brian. Oil closing at session lows. Lets go to jackie d. At the nymex. It looks its a 5 swing to the downside on the day. We are closing under 45 a barrel. Three reasons for the selling pressure today. First of all, this is sort of the pattern that weve been seeing, these wild swings in either direction and traders expect that volatility to continue. Also, that expiration could be contributing to the pressure today. Third, of course, the fed, concerns about the Global Economy. Definitely spooking traders at this point because theyre worried about demand and how that will impact the supply demand balance. I will say this the theme is oil prices will stay lower for longer but having said that one trader told me everything could change on wednesday if we start to see those seasonal builds in inventories and, brian, not to use a song reference here, but in a new york minute those prices could go back up again. Back to you. I like it, one could say the heat is on. Jackie, thank you very much. Bank stocks taking the fed decision hard. That Group Falling more than 2 . Lets get the next move with aaron gibbs with s p capital. In the short term they may struggle but no. Banks are looking good longer term. One of the reasons is were looking at good growth for next year. Theyre actually right now theyve been beaten up. Theyre trading at attractive valuations at 13 times forward earnings. This is one of the lowest valuations weve seen in the major support levels for the past three years, and when you look at analysts target prices, were looking at an average upside of 17 of where the stock price is now versus the target price. We see some really good potential appreciation even with the concern about the fed and when theyre going to raise rates. Fundamentally bullish view. Ari, lets go to the charts. Do the charts back up that bullish view . They do actually within that longer term period that erin was referring to. We do have a market weight view on the sector, the financial sector. Near term we think the volatility persist this is this group, but longer term we like the potential but we think that you get the ultimate inflection in this group during the next cycle. And the comparison that were seeing here is actually what technolo went through ten years where you think technology imploded, 2000, 2002, really spent the next several years stabilizing versus the market and it wasnt a leader again until the subsequent cycle in 2009. I think banks very similar condition. If you look at xlf relative to the market, obviously the big destruction during the last bear cycle into 2008 has spent this cycle now stabilizing a market performer. I dont think you get the inflection until the next cycle. It doesnt become a leader until i think you need a cyclical reset here. We like it long term. Bottom line, looks okay longer term, not right now, no need to rush. Erin likes it as well fundamentally. Ari, erin, thank you. For more trading nation go to tradingnati tradingnati tradingnation. Cnbc. Com. Were tracking the dollar ind index. Joining us now fast money contributors brian kelly and david seeberg. Brian, i want to go right to you. You were talking about this trade yesterday which seems counterintuiti counterintuitive. You think the dollar would not go higher. Rates are not rising, dollar is not rising and thats what youre banking on. Actually the dollar is rising today. We have that reversal. Last night on the show i thought the dollar would weaken for a period of time, a couple weeks or so, but whats happened is the fed being doubly dovish, if you will, doing nothing and being dovish in the statement has now opened the door for other Central Banks to do something. So lets just say the fed does nothing, they dont expand money supply, other centralbac banks going to. The u. S. Dollar is going to rise and thats a de facto tightening. The fed is inadvertently hawkish in this case. Theres so many implications of this in terms of whats going on in commodities. It would be a headwind for multinationals, good for german companies. Do you agree with b. K. . I absolutely agree with b. K. We talked about it before the segment. I think the dollar will continue in this range. Maybe grind a little higher and it will effect earnings and i think q3 were preparing ourselves for not a great earnings period. I look out and i say were getting to a point though theres a lot of names, a lot of sectors where theres opportunity that you can start making a lot of money in going into 2016. Such as . We talked about it, energy. I know people want to stay away from it. Well go through a cycle thats going to happen. How can you agree with him when it comes to the dollar im talking about at the beginning of 2016 energy equities. The stocks that have been beaten down, theres an opportunity. Theres going to be an opportunity to jump in and make a lot of money. Whats your opportunity aside from a rising dollar . This is going to sound counterintuitive but gold is doing pretty well even though the dollar is strong and gold is the hedge against Central Banks making mistakes. Thats why youre seeing a bit of a bid there. Its also setting up for a massive short squeeze in gold. A couple weeks ago hedge funds were short for the first time. Now were starting to get this rise. Does that mean you would like gold miners because you will see a lot more leverage from gold you could buy gdxj if you want real juice. They will move a lot so you have to be careful. Bonus pick, take a look at your screen. What would you add to today . I said last night, its definitely bac, bank of america. The banks are ripe to be bought. You hate that trade but whats your bonus pick . My bonus pick, you know, i actually think oil in the very short term. Im still long oil, it hurts today but i think you could buy the oil equities now for the next couple weeks. Okay. Good to see you. Thank you david seaburg, brian kelly. Stocks selling off today but well talk to a ceo of a Company Whose stock is up nearly 150 so far this year. As we head to break, take a look at some of the most widely held stocks, google, apple, micros t microsoft, jpmorgan, no surprise in the red today. Stay tuned. Well, sir. After some serious consideration id like to put in my 15year notice. Youre quitting . Technically retiring, sir. With a little help from my state farm agent, i plan to retire in 15 years. Wow youre totally blindsiding me here. Whos gonna manage your accounts . This is a devastating blow i was not prepared for. Well, im gonna finish packing my things. 15 years will really sneak up on you. Jennifer with do your exit interview and adam made you a cake. Red velvet. Oh, thank you. I made this. Take charge of your retirement. Talk to a state farm agent today. Most biotechs have done pretty well this year. The ibb biotech etf up 18 percent yeartodate, not bad, but that pales in comparison to the 144 gain for neurokrin biosciences. Of the 130 biotech caps i track, only six have done better. With us for a cnbc exclusive, kevin gorman, president and ceo. Good to chats with you again although id rather be in san diego where youre based. A lot of optimism around your new drug, 84. Its all about tar dive dyskines dyskinesia. Theres a huge amount of optimism in the Analyst Community about it. Are the test results backing up that optimism right now . Yeah. With our drug which is called 854 theres a growing enthusiasm. We had a long Phase Two Program. The Phase Two Program showed the effectiveness of the drug in patients that suffer from this debilitating disorder caused by the use of antipsychotics, and now the fda gave us break through designation. What does that mean . It means the fda will work with the sponsor to try to get the drug approved as rapidly as possible, and so it leads to enhanced communication with the fda, and really working with them as partners in the design of the pivotal study. So the fda told us we only need to do one phase three study and that phase three study is completed enrollment. Last patient, last visit took place last week and well have data next month and thats going to be a huge event. That puts it on i dont want to use the fast track term because its actually a term of art i think with the fda, but it speeds things up potentially, potentially, which also speeds things up on you and your Management Team to commercialize this opportunity. Correct. What are the commercial opportunities here . So here in the United States theres more than half a million patients who suffer from tardive dyskinesia. Weve started growing our organization internally and well be starting off with a lot of medical education for the docs by psychiatrists have never had a drug to treat this disease, and so its a disease that has been going on since the antipsychotics were first introduced. Is it too early to say what Something Like that might cost . Its too early to say what it might cost. Pricing and the research were going and the negotiators with the payors will take place after the phase three. We were granted fast track in addition to break through therapy. Is that also something that could be insured . Do you expect a drug like this if approved could become something that would get on the medicare and medicaid and the Insurance Companies reimbur reimbursement rates . Certainly. Its a drug with a high unmet medical need so the Insurance Companies roid that just as much as the fda does. Thats hugely important in your industry. Absolutely. Doctors may not prescribe it if patients cant afford it. Exactly right. You have three stakeholders when youre developing a drug, patients, doctors, and payers. You have to work with all three. You have to make the drug work for all three. Outside of tardive dyskinesia, you have been in this industry a long time. I mean that as a compliment. The deals have come fast and furious, money is cheap, right . Still. Do you think there will be a wave of more m a in biotech. Absolutely. I cant remember a time in the last 20 years where i think the science thats going on in biotech has been as exciting as ts rig it is right now. You can look at it with the number of startups and ipos that have taken place in the last two years. Its creating a huge number of companies and theres a huge amount of money that is out there, as you say, for the larger biotechs then to go and partner with or actually acquire those smaller biotechs. Kevin, its a real pleasure. Thanks very much. Safe travels back to san diego. Say hello and go chargers. Stocks are off session lows but theyre still pretty deep in the red. The dow down 240 points right now. And check out gold. It is up today but should you be selling or buying more . Were going to find out. Lets take a look at some of the most active stocks today on the new york Stock Exchange. 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Com from and the people whought you underwhelbrought youet speeds. Temperamental satellite television. Introducing. Underwhelming internet speeds and temperamental television. In one. Welcome to the moment no ones been waiting for. The Fastest Internet and the best tv experience is already here with x1. Only from xfinity. Gold is up nearly 2 , well call it 2 . Its friday, well be generous. But what is golds next stop . All right. Let us bring in thomas vitiello. Gold most people say little uptick in a longer term decline. What do you think . I think thats accurate at this point. I think a lot of the construction was short. This is a little bit of short covering. We got down to 1,080. Bounced from there, got up to 1,160. That was a major moving average and we just fell off from there. Were kind of stuck in this sideways range. We dont have the long overhang we had in the buying craze up to 1,900. There isnt that long panic that we had in 2013. Just kind of a slow burn for gold, thomas . Whats going to be the catalyst, maybe a i know weve had currency moves but maybe a massive move in some major world currency . All of this fight against deflation and disinflation, it could be like pulling a brick out with a piece of elastic, maybe one day it snaps back. But until then i think gold is really out of a lot of peoples radar. If the market gets short or long, it kind of tilts on one side of the boat or the other and people get forced out of their position and thats when you see this volatility based on data points. But secular down trend still intact. I feel so. Were not even above the 100day. Maybe if we get above the 100day. We have a higher low here at 1,100, if we can get up above 1,160, maybe thats a higher high so you could start to look at it then but i wouldnt dip my toe in here. Thank you very much. Have a great weekend. From the gold market to the market markets all ten s p sectors in the red. Lets bring in Katie Stockton from btig. Great to have you with us. Thank you. Its interesting because today its a hard day to sort of digest if youre a long investor. At the same time were basically flat for the week. Technically speaking the s p 500, how do we look right now . Are we looking to go back to october lows . Back to october lows . Well, yesterdays reaction to the fed announcement was not good, as you can imagine you saw the s p 500 close near the low of the day and then of course down side follow through this morning so thats not a good thing. It does suggest that theres greater risk of a retest not necessarily october 2014 lows but certainly the august lows. That is a very really possibility. If you make the analog to the 2011 lows or bottoming process that is a real possibilities here and yet i would keep a bullish bias throughout it, the up trends are very much intact from a longterm perspective and we have these over sold perspectives that really are explosive and widespread. Lets talk levels. 1876ish on the s p 500 just under 100 points lower. If it dips below that bottom boundary i would get ever been serve ous 1935 to 1940. If we dip below that i would lit stops be triggered. Longer term bullish bias, do you stick with what has been working, do those charts look solid to you . It depends on its time horizon. The last two weeks industrials for one i would say no. If youre talking about longterm Consumer Discretionary for one, healthcare for another, those would be areas that i would stick with longterm until they prove to lose momentum or relative strength. Just quickly, katie, the oil move today was stunging. It looks like a counter trend move. Crude oil and beyond they all face significant resistance meaning potential areas of selling pressure. We do need to view this move as a relief rally until we see some break outs. Katie stock ton. Appreciate it. Busy weeks for stocks. The two stocks that stood out to us, youre watching cnbc first in business worldwide. Big day . Ah, the usual. Moved some new cars. Hauled a bunch of steel. Kept the supermarket shelves stocked. Made sure everyone got their latest gadgets. Whats up for the next shift . Ah, nothing much. Just keeping the lights on. laugh nice. Doing the big things that move an economy. See you tomorrow, mac. See you tomorrow, sam. Just another day at norfolk southern. The great beauty of owning a property is that you can create wealth through capital appreciation, and this has been denied to many South Africans for generations. This is an opportunity to right that wrong. The idea was to bring capital into the Affordable Housing space in south africa, with a fund that offers families of modest income safe and good accommodation. Citi got involved very early on and showed an enormous commitment. And that gave other investors confidence. Citis really unique, because they bring deep understanding of whats happening in africa. I really believe we only live once, and so you need to take an idea that you have and go for it. You have the opportunity to say, ive been part of the creation of over 27,000 units of housing, and to replicate this across the entire african continent. It is time for our stocks of the week, my pick is melco crown entertainment. This gaming operator up more than 5 for the week, it is down 3. 5 down, diawa saying the opening of new Ferry Terminal could help and it could be time to bottom fish. As you know this has been a hard hit sector. It certainly has. Its an interesting stock of the week as well. My stock of the week much more boring is ely lilly, not boring in a sense its been a strong out performer, up 9 this week, had positive results from the new diabetes drug, the stock up 5 . I know jim cramer talked about it this morning, kind of a Slower Growth name but taking off in the market. You heard Katie Stockton she says stick to healthcare. Those are our stocks of the week. More on todays market side. Dow down 266 points right noccl now, remember it is quadrupled witching. The traders will talk minutes and days. Lets talk longer term for most people out there that are watching, mom and pop. Are you still bullish . Is this still a secular uptrend for the stock market. We definitely think its a secular bold trend and think u. S. Stocks are mixed within a 15 to 20 year bull market. What we would say is near term people are being to reactive still and that means that everybody got their correction that they wanted in august and now with the fed what we are calling a ms. Step from an Investment Strategy standpoint its just going to add to the volatility heading into 2016 so the return structure of u. S. Stocks although still positive we think are going to continue to be quite volatile heading into next year. If im heading your piece that you put out on this correctly, you are disappointed in the fed. What youre saying is the fed needs to be a leader and by saying what it said about Global Markets it has become a follower. As we like to say in canada, 100 . What the problem is that the fed is focusing like most investors on what was and is not focusing on what is. What is developing is north American Growth is going to pales Global Growth for the next three to five years, we think u. S. Gdp in the Fourth Quarter will be a surprise to the upside, the positive impact on lower oil, lower gas price right side finally stargtd to hit the consumer, its usually a two to three quarter lag, financial stocks are being arbitrarily sold for some reason because short term investors are focused on Net Interest Margin and not focused on the grand prize of Financial Services which is wealth management, fee based annuity style business which will drive the sector for the next ten years. We think america is going to pace growth for the next ten years overall. Brian, since you brought up canada, everybody is focused on china. We pointed out a month ago that canada in recession is three times the trading partner than china is with the United States. Does the canadian slow down at all impact your estimates on earnings, revenue, stock market use, anything . No, it really doesnt, brian, for two rnls. Number one net exports x energy increasing and canada is a huge trading partner with the United States. Number two dont underestimate the cross border relationship that canada and the United States have and especially on the financial side of things. Theres specific banks in canada that the majority of their growth is actually coming from america, not the oil patch. So we see canada hitching its wagon to the United States much like the 80s and 90s. As we start to see the manufacturing renaissance become a reality heading into 2016 and 17 canada is coming along for the ride. Do you stick with your yearend price target . I believe its 2250. We do, mel sachlt thanks for asking. I think once reality kind of sets in and calmer calm prevails and we start doing fundamental analysis again and stop reacting to every little trade under the fed i think were going to see United States stocks remain the most consistent earner with the Balance Sheets and we think those stocks will define the growth stra jekss for the next three to five years. We are going to have a healthy rally in the Fourth Quarter. A back end loaded year. Very back end loaded year. Remember, too, that this does not mean we are not going to see volatility. I think we will. 16 i think is not going to be as positive as even 15 here given our projections and we still think they will get that rally in the Fourth Quarter which will get us to our targets. Thanks. Have a great weekend. Melissa, what is on fast money . Take a look at apple, it is a relative outperformer, actually in the green and we are going to have the reporter who basically caused a buzz on the street when it comes to the apple car. What are they up to . We will talk to them tonight at 5 00. Very interested. We will look forward to it. Closing bell starts right now. Welcome to the closing bell im kelly evans at the new york Stock Exchange. Thats rather ominous music. Yes, it is. First of all, im Bill Griffeth also at the new york Stock Exchange. Not exactly a pretty day for bulls on wall street. Minus signs from the get go. This is an expiration day, that has something to do with it but maybe there is disappointment that the fed didnt raise rates or they are worried about the chinese economy. Pick your favorite boegsy. The dow down almost 1. 4 now, the s p down 1. 12 , nasz dak less than that and theres our friend crude oil