Forth, up and down have to do with people making money on that volatility. Melissa yeah. David you cant discount that possibility. Im david asman. Glad you could join us. Very important day on after the bell. This hour were taking stock of what happened this week and what investors are preparing for in the next leg of this historical market transition. Weve got a jampacked show. Among our guests, market watcher, harry dent. Back no November Harry predicted a late january, early february selloff. I kid you not. So where does a man who nailed the prediction see things going from here . Former fed governor fred mishkin joins us as well. Charles schwab chief investment strategist, Liz Ann Sonders and herman cain. We need the pulse from main street. That is why herman is here. How americans are coping with the dramatic swings. First go to the floors of cme and new york stock exchange. Nicole, dow and and s p out of correction territory. Of course that could change on monday. No doubt. You hit the nail on the head, volatility feels like it is here to stay. We had more than 1000point swing top to bottom today. We ended up 331 points. We had biggest selloff in points twice this week with over 1000 pointselloff. We had a lot of volatility for the week. Dow, nasdaq, s p, are down 5 . As you noted out of correction territory. 23,955 would have been the correction territory. Weve had such an incredible run. Look at the vix, the fear index. That jumped to 50 earlier in the week. That is the highest since the flash crash in 2015. But today it finished down but had been around 40. So weve seen a lot of volatility there. People that were betting on the downside in very calm market this year got squeezed. Those margin calls. Take look since the record, the markets this week down 5 across the board for each of the major averages. Since the election about 30 higher for the Dow Jones Industrial average. Well get you exact calculation. It will take a decent up arrow at least for now. Volatility is likely to continue. Watch those moving averages, theyre great technical indicators. Back to you. Melissa such a wild week, nicole, thank you very much. Jeff flock in the pits of the cme watching all the action in commodities. Jeff, oil ending the week down more than 9 1 2 . It is back below 60 for the first time this year, right . Exactly and in fact it got below 59 for a time, closing i think it was 59. 20 was the close. It got as low as 58. 07, i think largely melissa, this was divorced from the stock market. In some ways that is good. Oil traders like to trade on fundamentals. Baker hughes rig count coming in additional 26 rigs. High oil prices causing producers get involved in the Permian Basin and dakotas. These things dont come without any downside but were holding at 59 at this point, and where we go from here i guess you dont know. The hope Going Forward prices stablize. Melissa. Melissa stablize although we have Economic Growth going but at the same time were pumping a lot of oil. So well see. Jeff, thank you for that. David. David by the way, gold down three bucks. Wasnt a flight to safety there. Here with more on all wild market swings, he is the man, harry dent, author of zero hour. Harry, i got to give you credit because way back in november when just about everybody in the universe, maybe with the exception of you was a bull, you wrote the following, put the quote up on the screen. We ought to see the market go down by early next year. If it doesnt, then im going back to the drawing board. If the market doesnt start crashing by late january or early february, then we are not topping here. But were saying there is going to be a crash. Early, late january, or early february, harry, you nailed it. Well you know the most important thing is that this is started. Now it hasnt been proven yet because, in our newsletter to our subscribers weve been saying look, unless we break the uptrend line in bottom since early 2016, which we have tested here and broken a little bit, but were still going around it, once thats broken, the thing is, is that the next crash will be 40 from the top. That is how bubbles burr. If anybody studied bubbles more than me in history or demographics i would love to argue them. David that is your specialty. Let me clear something up. Do you think there will be any bounce we saw at end of this trading day, of course every trading day is different, we saw a bounce up to 330 points on the dow. Is that bounce up going further in your mind before it goes down 40 . Yes. It could go to the top of this kind of wedge weve been into with upper trend line and bottom trend line but that would not that be likely. I think that the markets are basically running around this bottom trend line. They have been, they went down to it on tuesday. They went up. They went down to it on thursday yesterday. Now they have gone below it today and going back up. I think theyre just going around this trend line until they break. I think downside is much more likely but its possible we could go back up towards, i do not think well see a new high here after a parabolic riselike weve seen above this trend line, i do in the think well see new high but we could see a rally, a good bit higher that should happen within the next week or not. David would you recommend, harry, would you recommend, if we have another rally say, up until wednesday, would you recommend getting out at, during those rallies or maybe even now . Yes. And we said the same thing last week. I said, you know, if the s p goes up to 2720, its a good place to get out. It went a little higher than that it has been down. The markets do rally in the next week, especially late in the next week i would get out. If they go down, then i would pause and wait to see how high they rally. David i got to ask you very quickly, harry, how did you know in november that late january, early february would be a crash such as were having now . Well, i mean, you know, i look at fundamental trends like demographics, and i look at cycles but i also look at stock market patterns. Weve been in this rising wedge. They call it a rising bearish wedge. It has been narrowing saying we have to have a top here pretty soon or not. That is was projecting into late january. David finally, very quickly, harry, they gave me a wrap a couple minutes ago, where do you put your money, if you cash out now, where do you put your money. I put it into high quality treasury bonds, long term treasury bonds. Aaa, corporate bonds. And cash. Wait for things to go down because, if this is the major top, i have been projecting for many years, everything is going down except for these safe haven things, including gold. You will be able to buy things at the sale of a lifetime a few years from now. David harry, i just mentioned the first part of the title of your book, zero hour, subtitle is turn the greatest political and financial upheaval in modern history to your advantage. We hope you just did that for some of our viewers. Harry, thank you very much. Thank you. Melissa bring in todays panel to react. Barrons Senior Editor dan mitchell. James freeman from the wall street journal and fox news contributor. Carol roth, future file legacy creator, former investment banker. Thankthank you for joining us. I will play the other side of harry dent. He predicted a lot of collapses along the way, right . The part about bearish rising wedge, sometimes something the schoolyard bully does to. Come on. Come on. Volatility weve had in the short term. S p 500, how much are we down yeartodate . Couple percent . The real story is earnings. Earnings estimates for the s p 500 are up more than 6 since the beginning of the year. The rise in earnings estimates dwarfs the decline in the stock market. To me that is where the real story is. There is lot of good value still to be found. Melissa james . This is good economy. Earnings are food. Theyre beating what whether very high expectations. You have a good news story right now, whatever your philosophical persuasion. If you like open markets, you have tax cuts and deregulation. If you think, if youre keynesian you want government to be active, much washington did a new spending blowout. I suppose there is something for everyone to be happy about, generally economy is good. Companies are doing well. Melissa dan, i dont know i have a little problem with people saying i told you so the entire way up people were saying market is going down. Yeah, no kidding. It goes up, it goes down. There you go. What do you think about all this. What is the old joke, economists have predict nine out of the last five recessions . If any of us knew what the market would do, we would be billionaires on beach in cayman islands. Melissa we shouldnt be on tv. Let me say this i show you my age. Back in 1987 we had single biggest day in the stock market. There was no recession. No problem whatsoever. The economy continued to grow. On other hand in 2008, things were completely different. What worries me, is not the real economy i think we have decent fundamentals. I worry that the fed, other 10 trillion banks created a bubble. It doesnt mean. Melissa there has been way too much liquidity out there that has to get mopped up. Weve seen it in things like people betting on bitcoin. See it in the art market. All over the place youre seeing things get bid up and people, smart people, look at that say, thats too much money washing around everywhere. Has it been soaked up a bit here in this wild week . What do you think, carol . I certainly think that it has. I think this is investor getting used to the fact that the fed and Central Banks arent going to be as accommodative as they used to be but from a timing standpoint we do have strong growth in the united states. We have strong going on global basis. If you think where Interest Rates really need to be historically to affect the stock market it probably is in 3 1 2 to 4 . In terms of fed raises to get there, we have long runway. Hopefully we have temporary volatility. And we still have the runway. It could be a wild ride until we get there. Melissa jack, that makes a lot of sense. We would see a lot of up and down. A lot of volatility, the boat rocking back and forth we get back to a more normal economy. I remember some times along the way, jamie dimon, ceo of jpmorgan, says look, we have to get back to normal Interest Rate environment, whatever that means without Central Banks around the world micromanaging that one day well have to do it. Does that mean stocks go down or do they bounce . I mean today i watched it go up 500, up 300. It was all over the place. What do you think . I dont think rising Interest Rates spell doom for stocks. At least up to, you know, like we were saying, ive heard 3 1 2 , 4 . At some point bonds start to become attractive, investors say i rock money here. What we have 16 to 18 growth in corporate earnings. We dont have to have a stock market goes up that far. Maybe we get 6, 7 gain in the stock market. That means stocks are cheaper even though theyre rising. Still mean the stocks out perform bonds. Show me where you get 6, 7 without a ski mask an handgun . You have 2. 80 on 10year treasury right now. Melissa james what about that . Corporate profits are still going up, even if the cost of borrowing is going up . You have got to think growth is outstripping that, that these tax cuts for corporations are outstripping or outpacing that. What do you think . Im keeping the ski mask and gun just in case i need it. Melissa yeah, yeah. The story, i mean if youre going to say what is overpriced, stocks expensive by traditional measures but if you had to say where is a bubble, you with say european Government Debt, japanese Government Debt. It is really the bond market where the valuations i think are tougher to justify. And you look at 80s, 90s a lot of good years for the stock market with Interest Rates significantly her than they are now. Melissa dan, where do you think the bubble is . I would agree with what james just said. If we get a downturn, we will at some point, that will wreak havoc with the european Government Debt markets. It is probably going to cause the bottom to fall out in states like california and illinois. So, if the dow jones goes down 15 , 20 , whatever is the correction, if governments start defaulting around the world, or go back european fiscal crisis, that is when you got something vaguely akin or similar to the mess we had in 2008. Lets hope that doesnt happen. Melissa carol, where do you think the bubble is if anywhere . No i think you mentioned it a little bit before in the alternative asset markets. Because the stock market has been doing so well, that a lot, im hearing a lot of people putting very large percentages of their portfolio, usually five or 10 towards alternative assets. Im hearing much larger portions than that. If anywhere there is true, big bubble to keep eye out for on fringes alternatives which could eventually have the Ripple Effect back into the regular market. Melissa stand by. Well bring the panel back in a little bit. David . Lets see how the dust has settled on the floor of the new york stock exchange. You think of ups, downs, another one of those days when man, oh, man, everything was flying. Liz claman has been down there are to the whole thing, host of countdown to the closing bell. How does it look now, liz . Theyre starting to clean up all the trash on the floor, i can tell you that. It was chaotic earlier. Not as chaotic as you might think. David, from being down here all week, there is something i think everybody should glean. That may be that were in a new normal as a pertains to stock market movements during times that are volatile. Okay. Lets show you volatility index. It was the vix that was sort of wasnt canary in coal mine. It was canary flapping its wings, watch out were starting to see Real Movement here. You see it start to spike. That is a onemonth chart. Look over the year. We were incredibly low for quite some time. There was little fear and lots of complacency in the market. Boom, the spike to the right hand part of the screen. Who got the benefit from that . The algorithmic traders or perhaps algos as theyre known. These computerized Trading Companies jump in. They trade much faster. People pay them. They effectuate trades much more quickly because theyre done by computer. This is the volatility picture right now if you look at virtue, virtue is a company that runs these algorithmic machines and they became a direct beneficiary of this. Does opposite what the stock market did. Start to bounce around the bottom, but thin it jumped 5 1 2 today alone. It was a big week for virtue. It is evolution. You cant really fight that, david and melissa. Looks like the new way. The technology has gotten so fast, so good. That anybody who wants to dip in here has to understand just as they see a stock down i want to buy it at a low price, it may bounce. That is due to preprogrammed trade. It has been a fascinating week. I think it just signals things are starting to change when it comes to putting in trades and seeing what you actually got things for. David we were talking, medical list saint were talking about before, people making money, people who trade on volatility. Theyre making a lot of money because there has never been volatility like this, at least not in about six or seven years. So those people are making cash. Liz claman, great work today. Thank you very much. Appreciate it. Melissa. Melissa here now, Liz Ann Sonders, Charles SchwabVice President , and chief investment strategist. It has been wild times. What is your take . Our take this had fundamental start to it. In midst december we put out the 2008 outlook, our title and theme was, it is get late. We were referring to the stage in the Economic Cycle that tend to bring high every inflation, high every wage growth, tighter Monetary Policy and probably a bit of a change in the landscape for equities, not least being likelihood of a pickup in volatility this is not a huge surprise in terms of what fundamentally started this. You saw hot wage number last friday. Melissa right. Inflation expectations have gone up. You saw a quick increase in expectations for how many times the fed would raise Interest Rates although that has come back. Technical exs exexexacerbatin unwinding of inverse volatility trades. What we dont know whether we have gotten through that part of the process. Everything is tied to short vol or short volatility has been unwound. But the fundamental story really hasnt changed. We have stronger economy, stronger earnings growth, those are food things but represents late cycle. Melissa late sigh sell in terms of economy. Doesnt mean peak but late cycle. Melissa because this is where, i mean, i dont know. All along weve been saying weve been waiting for inflation to catch up. It has been a surprise it has taken so long. Weve seen this very slow economic expansion. Stocks started to really take off especially recently and we saw that wage number which i think, you know there were a lot of people like yourself, well, when we finally see the wages thats when well see inflation, thats when the fed will step in and all that kind of stuff but do you really think, do you think the economy is going to contract . You dont think it will grow further from here . No no. Thats my point. Melissa okay. Later in the cycle when you actually get a pickup in growth. Melissa okay. Later in the cycle when you start to see the potential of overheating. That is what tend to happen. And that causes some of the excess that ultimately leads you into the next contraction. Expansions never die of old age. Often said they get murdered by excess inflation which leads to excess Monetary Policy were clearly not at that peak point yet but were in those latter stages that can be very healthy for the economy but also has implications for inflation. Stock market has decent returns in the environment but unquestionably more volatility. That is what we discussed in our outlook. I think from a fundamental standpoint. Came to fruition pretty quickly when we got the wage number. You saw the 10year yield break through on the upside at 2. 8 . Melissa what does that look from that perspective . What do you mean precisely by overheating . Where does that play out . I think well get over hea