Yesterdays record drop played out. This is a time lapse video of what happened with the dow down 200, down 300, down 400 as you got closer to the end of the day, down 1600 points almost at one point by the end of the session, 1,175 point decline. Decline of 4. 6 . This is the biggest point drop in history add it up, the dow traveled 5100 points yesterday down 4. 6 does not rank in the top 12 or 15 declines weve ever seen the biggest decline was october of 1987, a 22 decline this was enough to get peoples attention. The dow and s p lost more than a third of their 2017 gains just during the last two sessions if you were wondering what else was going on behind the scenes, volatility this was the big story volatility is back yesterday we were talking at this time about volatility being up at 17 that was a big deal. By the end of the session it was above 35 for a gain of 115 . This morning you see volatility up once again, another 14 this morning, 4262. Mike santoli, this is something that youve been watching closely. Im characterizing this whole event as a volatility shock. You look at that chart of the vix, it looks like a stock undergoing a short squeeze what happens when something is being short squeezed people who bet against it or bet that it remains low are forced to buy it at higher prices thats whats going on thats part of the answer to the questio is selling and why. What started as a pullback got to a point where you had this Chain Reaction of forced mechanical selling i mentioned yesterday morning we were in that kind of market because it moved lower so fast after this compressed lower volatility period. Thats what we saw play out. What does it mean now . One striking thing about yesterday, it was almost entirely a stock market event. You were look at credit markets, the bond market. It was not as if the stock market was sniffing out something scary or an economic risk somewhere i was at dinner with a trader last night trying to figure this out. How much of this is just a function of the good news being bad news or all of a sudden, by the way, are we talking about other things Something Else is in the water here theres a murder on the orient type of thing here where you have a body and everybody on the train is a culprit i dont think this is good news being bad news thats maybe a psychological trigger. Thats, hey, we dont know what the fed will do. The bond market is not acting like thats the world were in the twoyear note wreeld cayeae down which makes you wonder is this a technical issue that we snap back from if thats the case, why are we still down its a technical issue that can play out but its a symptom of a market overvalued and overextended. You can see theres nothing fundamental to explain this. Was there anything fundamental to explain the 5 upside lately . Not necessarily. This is not a normal market. The vital signs of the market are out of whack when you see down 670 for the dow, then down 200. Tell me who else is on the Orient Express give me a couple they all did it give me a couple of them. I want in this instance, for this market. Give me a couple reasons beyond the good news is bad news. Beyond the worries about the stimulus being too much, beyond the fact that maybe we are in an overheated economy i dont know that you need beyond that. You know what the term correction comes from in a market the index or a price got so far above normal trend it has to correct back to the trend. Thats what were doing now. Kevin, you buy into that . I look at it from a 30,000 foot level and say to myself, if the longterm multiple im willing to pay for earnings is somewhere between 16 and 17 , in times when Interest Rates are between 5 and 7 , thats historically what were talking about. Stay on that context all of a sudden we have this benign Interest Rate environment, 3 , the market was okay at a 21 pe 24 hours ago then it woke up and said i dont like that. Ill take 10 off. Now youre at 18 as an investor im saying i like 18 thats getting interest for me in europe, i like 17 yesterday when we spoke with you, you had been buying in europe i did it again this morning im getting a 2. 58 yield on names like novartis, roche, total, glaxosmithkline, British American tobacco they sell all their products in the united states. Even at these levels are you looking at u. S. Stocks at this point . Europe right now today, this morning, is a better deal than the u. S. S p just because those Companies Sell all their products here in new york city, i can buy them with a fantastic discount. Look, chaos is opportunity, i dont know if i hit the bottom the last 45 minutes, talking to my guys over in europe, its starting maybe to show that bottoming process, which we may see in the next 45 minutes these are wild types but great values people are wondering how much damage was done. It was a comprehensive washout the last few days. You lock at how many stocks have broken 10 , 15 below their trend. You see the lopsided volume. You got one of these markets were everything was thrown out, you can kind of pick among them and find if its so deeply oversold that we at least get a bounce were back in the days where its about the Market Reaction itself that matters. What is the multiple thatat e palatable . I wish it wouldgo to 16 thats another 10 off here. Its not going to. My guess is that it will go further than it should, maybe get into the 17 range and pop back to 18 were kind of getting that now so, its when you have the most fear, i think hasnt Warren Buffett told you this a hundred times, when theres blood in the streets, thats when you should be harvesting reward i dont see a lot of pervasive panic. I see consternation at the bizarre moves. I think youre hanging out with prose i was getting emails from family, retail its jarring, without a doubt. People were calling their broker thats happening i think its the retail which is then leading all the algos the retail probably some of the later ones in the rally, feeling like theyhad been missed out on thing. You know what sha rab anchwa ameritrade are doing it was Sleepy Hollow until people woke up it ramped late last year. There was a big rush in december and january to catch this wave now theyre thinking, oh, my gosh am i the one holding the bag if youre a client of wealth front, the first correction, if you will, that some of these robo advisers there was talk yesterday that the systems were not responding well i dont like robos, you dont know what youre doing it tells you youre buying some kind of index. I like products that show you what you own the vanguard target trust 2045 trust is the same thing an Asset Allocation model. Well see lou that does in this volatility. As weve been talking, looking at futures under considerable pressure once again. Now down 500 points pore tfor t futures. Down more than 40 points for the s p 500, and down 76 for the nasdaq were also seeing volatility in the overseas markets we have complete Team Coverage of the markets this morning. Steve sedgwick is standing by in london well get to him in a moment we kick things off with Nancy Hungerford live in singapore what can you tell us becky, steep losses on the session in asia where equities picked up where wall street left off overnight. Let me show you the nikkei 225, which has for a second day moved in lock step with the dow jones average on a percentage basis. Lower on the session by 4. 7 but this is off the lows of the session. At one point the nikkei touching down 6 into correction territory. This close was the worst point drop for the nikkei 225 since brexit still hovering around correction other milestones to walk you through, the shanghai having its worst day in two years the hang seng, its worst day in more than two years. One big move to the down side, ten havent drcent dropping 7 a big outperformer last year. Youve been watching volatility, the spike in the vix, the story in asia is the same. Look at nikkei volatility index, up 51. 7 just on the session thats the state of play in asia lets head over to steve steve now in london for a closer look at the european stock moves there. The european markets are getting away with this compared with peers that nancy described in asia and stateside. The ftse 100, when i came in, 6950 was the call on this one. 250 points worse than now. A couple hundred points lower on the xetra dax. Weve been following the u. S. Futures. As they improve, still very, very badly down, but as they improve throughout the sgs we r session we rallied as well i spoke with bob dudley of bp this morning bp yields are about 6. 5 at the moment they think they got their Balance Sheet back on track. Cash flow is fine. 6. 5 dividend. The biggest falling sector, 2. 4 , banks also getting hit again today. Ironic because so many people say to me when the fed raises rates we get more net interest margins, better nims for the Financial Sector and they should be a ramal rallying sector, but falling heavily. Maybe they will enjoy the volatility were getting out of this market. Interesting to note telecoms and utilities, seen as slightly defensive sectors, they, too are under a lot of pressure. Healthcare down 1. 6 if you want to know who is on the Orient Express, people say look at the Market Structure we dont have many specialists in marketmakers anymore. Back to you. We will continue to check in and see whats happening overseas and here. If you are watching this morning, look at the boards again. Weve been all over the place. Down as much as 600 points on the dow, just a moment down over 500. Now down 486 well be in for a while riild ri morning. Lets bring in more voices paul hickey joins us, jack caffrey, and andreasga garcia a also join us jack, what have you heard from customers and clients about this my clients have been talking about we have come so far so fast and what is fundamentally wrong . There is nothing fundamentally wrong. We have some micro structural issues we built a market designed to support people buying. We dont have anyone to take the other side even within those in the market, only 10 , 15 make purely fundamental decisions. So much is structurally traded in the form of etfs. Are you telling your clients to buy on this now for the most part, for years weve been talking about a hated rally. People sitting in cash and saying i dont believe it. Its driven by Central Banks yet every time youve seen a 3 pullback or 4 pullback that was in hindsight a great buying opportunity. Now we talk about 7 , 8 , 9 , better buying opportunities emerge those will remain buying opportunities until we can come up with a credible case of why we question earnings nobody is questioning earnings if you look at what happened last week, you saw the markets down but the market got cheaper because earnings revisions are that much more powerful. Andreas, what do you think in terms of whether this is a buying opportunity, whether we were overbought at one point i think this is kind of an unusual step in the economic sicycl cycle. As you get closer to the stage, volatility in markets picks up that does not imply the dpr direction of the market will turn 1995 we had a similar year to last year. But what im hearing, yeah, maybe there was no reason for the up or down, but we dont know what will happen next i dont know what will happen next you dont i dont define next theres always people looking for actionable ideas my actionable idea is go outside, take a deep breath. This is just what the market does we got accustomed to no volatility now were seeing more normal volatility youre saying dont sell. You are saying buy i would say dont let volatility dictate your strategy shortterm volatility should not tell you what you should be doing. You should sit down, look at what your goals are. Stocks just got cheaper than a week ago right do you see anything in this volatility c volatility that changes any forecast of any sector on any company anywhere on cash flow and earnings no can i ask a question, weve all been talking about this as if its a dip, an opportunity. Flip it around, play out a thought experiment we had tony james on the show yesterday from blackstone, he said, look, we could see a correction of 10 to 20 so this could actually go much further and the question is were already at 8 with yesterday. Forget the losses today. You could be talking about 10 so my question is, is there anything underneath this either underneath us or psychologically that you think may be taking place where people say, i dont know. I dont know because there have been a lot of people who have been saying i dont know i dont know in the beginning of the show, there were a lot of great points mike was talking about it being a stock specific rally you wanted names on the Orient Express, its sentiment. Analyst sentiment had never been as positive in terms of revisions at any point in the last decade. Last monday and tuesday consumer confidence, percentage of consumers were expecting record high stock prices. Similar periods where you have seen it, in 87, 98, 2000, 2004 whats common about those periods . Very big pick up in volatility going forward. Sentiment got so offsides in january, and even in november and december, now you have to see sentiment resettle a bit friday over the weekend, after fridays decline, were seeing people say, wow, that was an interesting decline. Monday, yesterday, people starting to get worried. If you see a down day today, you will see people get really worried. Thats the time to go in an start putting in bids. Youre saying right now unless you see a selloff today, these prices are not worth it. Even if youre down 8 across the board. Were looking to put cash to work i would put no bids in where the market is trading now. Put things in a bit below where the market is trading. This volatility, at the top of the hour the dow futures were up, now down 144 so on the fair value, by the way. Yeah. Were seeing 100point moves yeah. So theres volatility as an investor you want to go in, step in, and give yourself a cushion. But this these kinds of opportunities are opportunities as we were talking about if you look back at the top in 87, since then annualized returns in the s p 500, 9 march of 2000, the annualized return is 5. 7 if we dont know if this is a top or bottom. But even at the worst three times to be buying in the last 30 years, the stock market has been the best generator of wealth than any other asset class. Thank you guys for joining us thank you we have so much to talk about. Coming up, the nasdaq suffering its worst trading session since the brexit vote of 2016. Well talk about the tech wreck next looking at futures, dow looks to open down about 513 points the nasdaq down about 75 points. S p 500 down about 40 points stay tuned, youre watching squawk box. Lets begin. Yes or no . Do you want the same tools and seamless experience across web and tablet . Do you want 4. 95 commissions for stocks, 0. 50 options contracts . 1. 50 futures contracts . What about a dedicated service team of trading specialists . Did you say yes . Good, then its time for power e trade. The platform, price and service that gives you the edge you need. Looks like we have a couple seconds left. Lets do some card twirling twirling cards e trade. The original place to invest online. Welcome back the biggest point decline weve seen in the history of the dow looking at red arrows once again. We were down yesterday by almost 1200 points on the dow at the end of the day a decline of 4. 8 . That does not put us near the top levels of biggest percentage gains. But its something that will catch your attention we are looking at the dow, s p 500 and nasdaq down by 8 from the record closes that we saw back on january 28th add to it this morning some additional red arrows. Dow futures now indicated down by 535 points. That means if we were to open now the dow would open up down 525 points the s p would open down by 43 points the nasdaq would be down by 83 points we have seen a lot of volatility just in these numbers this morning. A lot could happen between now and the next three hours before the opening bell a market meltdown across all sectors. Joining us to talk about what some people are calling the tech wreck is dan well ives from gbh insights also mark mahaney joins us good morning to you. Techland has oftentimes lived in its own bubble, its own world. Its getting drawn into this situation. Youre waking up in the morning, getting calls from clients, you tell them what, dan . In our opinion, this is the pound the table time, especially for names that we love pound the table as in buy, buy, buy yeah. Especially on the secular growth names. You look at ecommerce, you look at ad growth, you look at Cloud Computing, big data, thats why when we look at names f. A. N. G. Names, amazon, facebook, apple with a third of its market cap in cash, big data names that are getting crushed, this is what i view as a 12 to 18month opportunity to own the secular growth names where weve seen the best tech earnings in the past ten years, and numbers we can talk about multiples, but youve seen overall numbers come up 20 from where we were a year ago we continue to expect that to happen based on all the fundamental growth opportunities. So we expect this to be the time to go on the white board, put your favorite names. I view it almost as a garage sale i want to come back to your garage sale in a second. Mark, heres the piece that a lot of folks are trying to understand theres a huge retail audience buying into the names. These are the names they know this is what weve been told to do as investors. Buy the stuff you use, buy the stuff you know what do you know this morning and how do you feel about where things land . Andrew, i like that setup we coined the term internet staples. Consumer staples, those companies you buy because you will continue to buy those products, you have a class of stocks called internet staples, google, facebook, amazon, netflix, maybe ebay, they have very consistent growth google just printed its 32 chnd consecutive quarter of growth. The profit pictures for these names have been improving. Multiples across that group of stocks have not changed in three years. Stocks have gone up whats the price to multiple average . Its a diverse group. Exactly facebook and google trade 23, 24 times gaap earnings. Facebook is more attractive as a valuation, but both of them relative to the market are still attractivie itly priced assets netflix is in an Inflection Point. Margins are going up, Revenue Growth is accelerating the fundamentals on this group are i tact theres no change in them. We will have volatility in the sto