Thats right, scott take a look at the chart behind me it shows the trading days between 5 drops going back to 1950 in the s p 500 an if you discount what happened here in the 70s dont worry about that. The patterns were right here around 2,000 trading days since the 5 drop and that happened a few years ago and it happened a few years ago, and it happened many decades ago in the 1950s, so this pattern happens over and over and over again, and were due for a big drop its very different than the markets weve seen so far. We are due for a 5 drop but if you look at the flipside, the other side of this chart were due for a 5 move in the positive direction its the same thing i can delete these circles start again, but here you go, right here, almost 3,000 trading days since the 5 rise in the market and thats a pattern again and again and again that you see its like a earthquake seismograph, the behavioral patterns in the markets repeat themselves and here we are again, kind of due for a big move it could be the end of this volume volatility year that weve seen eric thanks so much pete, which way . Weve been waiting for a long time i dont know that we can crack above it, unless we see some significant pullback today we wake up and the market gets pounded to the downside the nikkei is getting pounded, down 1 , the dak and kak and now up 20 points on the dow. The s p in positive territory. Its been in there since september 1st, 10 to 12 on the vix. Were right at 12 today, a little bit above that 12 range but that vix starting to pull back until we have any you know what when we do see that vix spike over 12, i think it will be very, very short term, and then return back to where weve been. Jim, which way is it going to be tony dwyer said put us in the correction camp, internal deterioration in transports and the small caps to see whats happening, percentage of stocks above their 50day moving average, indices at record high, excessive bullishness. They look for a 3 to 5 pullback it could go up 5, down 5 i dont think we should invest being worried about a 3 to 5 move in any direction. Its a direct question, i dont think youll get that correction this year. Were certainly due for a move to the downside. Its been almost two years since we had the last correction as defined by a more than 10 drawdown seasonally its working against the correction most stocks are in a gain position right now and while not all investors are taxable, a lot of them are, and a lot of those folks are going to say look, i can hold onto these stocks for seven more weeks and break into 2018, delay paying taxes for a year, maybe get a lower pax rate thats one factor at work. Every time youve seen a dip for the last six months youve seen money come in and support it youre seeing it today after two modest days of decline you saw it two weeks ago after the Mueller Investigation nabs a few scalps 2018, weve talked about low volatility all year. 2007 was an exceptionally low volatility year and that led to 2008 history may not repeat itself but it does rhyme. Steph youll tell me growth is good, i know youll tell me earnings are good. It is, it is, they are. However, what is the message of the tenyear and whats happening in the high yield market and i want to you listen to what David Rosenberg said earlier on cnbc and react to it on the other side. My point is what is the bond market telling you, not to back up to 24 but why is it low . Spreads are widening out if you look at where there was a bubble its probably in the high yield market not just here but globally thats the canary in the mine. If theres a problem in the Corporate Bond or high yield market that will show its way through the financials it the financials been outperforming or underperforming . Underperforming, small caps the same, widening high yield spreads and flattening yield curve is telling you to be a little cautious. What side are you going to go with a flat yield is not great, not good for financials but a glad yield curve doesnt necessarily mean that its armageddon for the stock market as a whole small caps arent participating lately small caps have had a nice rally off of the lows. Making note of that small caps have had a nice rally off of the lows, so have financials im not saying you dont want to be nerve bus a flat yield curve. I dont see a recession in the next 12 months maybe in 2019, maybe 2020, and lets see what happens on the fiscal policy side of things but i dont think this flat yield curve is saying were going to get a recession in the next six months thats where i would be nervous and i point to Global Growth i think people agree with you. I dont think people see recession within the next six to 12 months. Thats what people would assume a flat yield curve means. Is it time to be more cautious than people are i think as long as earnings are really good into the end of the year i think this market continues to work higher jim is right seasonally this market, this is the time when you want to own stocks and i think youre going to continue to see the winners win into the end of the year. 2018 is a different story and it all depends on the Economic Growth thats why i always say i focus on earnings and i focus on the global economies because theyre part and parcel of each other and i just dont see any kind of massive slowdown are we going to see china grow as fast, probably not but probably an offset from india and probably a little bit better in south america, probably a kn continuation in growth in europe and offerry. Well see what happens here. If i dont see a recession i think stocks continue to work. Earnings are reliant on tax reform at this point, are they not, to get another leg up to take the multiple the market even higher . Can earnings continue to improve . Unless you get tax reform considering where we are in the cycle and where the stock market has gone i think earnings have been very strong. I think the expectation for earnings moving forward into 2018 are that they will continue to be strong, a lot of that has to do with this overused term which is cinch nilesed Global Growth what if we dont get to eight to ten bucks people think get added because of tax reform . Thats a problem three or four months from now and i think the focus right now depose back to what we talked about on friday and what youre talking about right now and thats the high yield market. Youll get 10 Earnings Growth this year without tax you got better Revenue Growth this year without tax so yeah, maybe we see a stumble if you dont get tax. Theres no doubt about that in my opinion but i dont think that means youre going to sell the whole market whats been going on the last couple of days is a direct result of the high yield market, and sometimes the best investment is the one that you dont make i said on friday i dont believe youre going into your portfolio and beginning to, you know, sell out of stocks or Asset Classes because of whats going on but you have to Pay Attention to whats going on right now because its affecting high yields, its now affecting emerging market debt and its beginning to also affect Investment Grade if i said stocks have to either go up 5 or down 5 , withcy going to happen which is more likely to happen are we going to go up, the next 5 going to be up or is the next 5 going to be down . Thats you have a quarter . Eight not a coin flip it is tell me whats going to go on. What are the conditions existing what is likely to happen given where we are everything stays equal, the high yield market calms down, you get your tax reform Going Forward and earnings stays the way they are, you probably go up 5 ill put it on tax reform if you want to answer that question more than a coin flip which usually is exactly the answer, its tax reform. You get tax reform you get the next leg higher. If you dont, you go down 4 had is not crisis. Back to july when the obama kair repeal acts both failed and nobody thought the Republican Administration could get anything done including tax reform the s p 500 was 4 lower thats the decider, tax reform happens in the time frame that we think it will or stocks are going down 4 to 5 . I dont think 5 by the way, because of what were talking about. It could be a positive catalyst i dont know if well know the market will be upset if it doesnt get tax reform. I dont know if you know between now and the end of the year if you get tax reform if its 209 its a problem for the market thats with sernlt last week the market sold off,le reason we mentioned 2019 because of whats going on in the high yield market you have to Pay Attention to it. You have to have an understanding of whats going on the debt side of the market. David rosenberg says the canary in the coal mine. It wasnt across the board selling. It was telecom and health care telecom may have problems if you look at the big debt borrowers its about money flow the two biggest etfs friday on a share basis traded over 5 billion worth of shares thats bigger than any single stock you cant dismiss it im not saying that you are. Im not you cant dismiss whats going on this morning the envishment in the high yield market is better. Im saying Pay Attention what are the catalysts . We got through the biggest portions of earnings season. What is our next catalyst . More likely than down up would be my opinion. To answer straight out, down for 3 to 5 then it creates an Incredible Opportunity because the next catalyst is when we get to earnings season, tax reform or whatever, i know steph gave you a look when you started talking about it, so did i the earnings are fine without it thats just a little cher country on top it doesnt mean well not continue to grow the earnings. If we get a 3 to 5 pullback, great opportunity. Ge, for only the third time in its storied history the company cutting its dividend, slashing the payout by 50 Morgan Brennan is live in new york where the company has been holding its investor and analyst day today. Morgan reporter water this meeting just wrapped up heard a number of folks say they were to put it mildly underwhelmed by this meeting and actually could you see that from some of the notes coming from analysts so far as well. Its not the dividend cut thats driving the stock lower. Stocks down about 5. 5 , heavy volume the reason is the guidance 2018 eps guidance 1 to 1. 07 cut in half and less than street expectations 6 to 7 billion Free Cash Flow. The new Ceo John Flannery talked about the numbers extensively in the meeting. Nonetheless he said the base upon which ge is going to grow earnings and cash flow Going Forward. His vision, a simpler more focused ge he says they have to focus on creating value and do that with a critical analytical dispassionate eye. Three big takeaways from this meeting. The dividend cut, obviously with the nearly 40 Retail Investor based folks that are invested in ge stock for that income, flannery saying that he acknowledges that this is extremely painful move but the reduction is a reflection of where ge is as a company right now. Second focus on the core businesses, businesses he considers to be power, despite its challenges, aviation and health care, and the offloading of about 20 billion in divestitures including transportation, Industrial Solutions and lighting also potentially over the next couple of years, ges majority stake in oil field services, baker hughes, they might be exiting that lastly a streamlining of Company Culture and management compensation, going to be much more tied to performance the board is shrinking to 12 seats from 18. The company, the new cfo jamie miller also just saying that the boston based headquarters, the workforce there is going to shrink by about 25 and lastly for those of us that report ges earnings, their earnings methodology will change for quarterly reports as well, moving forward so again, shares of ge are lower on this but at least we have some more clarity on the new ceos strategy moving forward. Morgan thanks so much, Morgan Brennan live in new york city. Here is how jim cramer summed up whether all of this would be enough and theres a lot. Heres jim here it is, warts and all the problem is, theres a lot of warts. I mean, like a huge number of warts, like get me to a dermatologist now or maybe like a plastic surgeon, maybe something more serious heres what else cramer said, theres no magic here. This is just the beginning its not a Great Company will trade closer to 17. There are many better industrials being run like honeywell and danneher and the turnaround of ge could take two and a half to three years. Agree . 100 . Yes, 100 yes its that bad no one is buying the stock today . The problem the Earnings Guidance you have no visibility and the reason is because powergen is in secular decline they say theyll fix this in two years. You dont know if youve at the trough yet the dividend cut is an 85 payout to Free Cash Flow if you look at emerson, utx, honeywell, they have a payout of 50 so theyve got room to grow the dividend, theyve got room to invest and to grow their underlying businesses. We dont get a lot of room from ge, even with the new cuts from a stock point of view, ill make this quick, joe, you dont have everybody who is going to get out of the stock getting out today. Some people are shell shocked by this some people are frozen theyve already gotten out . No, they have not we know that were not going to name names but we know people who have been on the show and said when the dividend cut happens thats when the stock will rally there has been a they were right, for about five minutes im still going to make my point. Theres a state of denial that will take several weeks to unravel, 15 to 17 is where the stock finds a floor. I dont know 15 to 17, implying a 15 multiple, why when you play a 12 multiple on cat . That was the crux, sorry, of cramers point this morning. Why are you paying a high multiple for ge when you could pay a lower multiple for companies he said or suggested and others have suggested are Better Companies at the here and now. Totally agree 100 . What about the ones he named . Honeywell, danneher, you say cat. In that space, in like the multi dpsh. Im with you on emerson its down 7 since they reported a good number because theyre going after rockwell but their underlying business is going well honeywell great, fabulous company, not as cheap but great story, too i dont think you can go wrong im staying with my honeywell its been a great place. Debris with jim, theres other places to go in the industrial space. Back to ge for a second, yeah, okay, so its 19, it could go to 22 and could you jump up and down i made three bucks on it, but tell me where this company is going to be 6, 12 months from now. Is this going to be a 25, 30 stock, thats where you look at the secular challenges that they have cramer tried to make the point this morning is like this is the time for industrial conglco conglomera conglomerates. Many are doing well and ge is taking bad tasting medicine at a time so many others are surfing and running on all cylinder. Goes back to not the present ceo but what happened over the last five or ten years and emerson i agree with you, steph. You look at the underlying growth they had and look at where they decided to get energy, on the lows, where did ge get them, over 100 on oil. So theres a difference, it why we always talk about you dont buy anything ever for dividends. Somebody on twitter was asking me, what do you think, twitter you dont do it for dividends. If management is smart thats the first thing. Fundamentals are great and you have growth. You fit all of those when youre talking about emerson. You have growth, youve got great management and the fundamental story is there thats what youre looking for i dont know which leg ge has, they have the dividend they have health and aviation they have some good things but the bulk of their business is power gen. Thats the problem so what id like to do in industrials is look at the end markets. Mining, mine something a bottom. Thats why cat started to do better base they have a restructuring so you get the operating leverage trucks, thats why i like cummines, the truck business is getter better, engines Getting Better uri you have energy. There are may many other individuals. Stanley black decker. Love them they had a almost said a bad work, kick butt quarter. The reason the two to three years is not crazy is this is a cultural problem no one suggested crazy you could ask the question whether you think its long enough i think that is long enough but look, what needs to happen is the culture needs to change and cramer nailed this when he called it a country club culture. You see that when you find out an empty jet trailing jeff immelt everywhere he went. That drives shareholders crazy and needs to change. In order to get your margins competitive with everyone else ges chairman and Ceo John Flannery will be on squawk on the street exclusively tomorrow 9 30 a. M. Eastern. Lots of questions for mr. Flannery ill look forward to that. Meantime theres new developments in the controversy over the candidacy of roy moore, for Alabama Senate seat. John harwood joins us from washington on whether this could impact tax reform. What it all meenans . Scott, cramer is talking about warts on the ge situation right now. Roy moore is getting to be a larger and larger wart on both the Republican Senate caucus and the prospects for tax reform thats because he got a special election coming up in four weeks. Youve got the allegations roy moore engaged in inappropriate activity with young girls when he was a 30something. Mitch mcconnell the Senate Republican leader last week said if the allegations are true he should step aside. Mitch mcconnell took it up a notch by saying i believe the women and that roy moore should step aside now, he does not have the power to force roy moore off the ballot even if roy moore pulled out, his name would still appear on the ballot because were too far along in the p