Important for every company that exports to that country. If they slow down exports to that country will slow down. Thats why its so important right now. And underlying a lot of this is this debate about liquidity versus fundamentals. Here is how we stand in the markets. The dow is near session lows off 256 points at this juncture. I believe the lows today were 262. And were heading back to that right now. Look at that. Decisively below 16,000. Speaking of at least round numbers, the s p 500, 1797. So we are below 1800 having given up about 31 points today or 1. 7 . We cannot emphasize too much that 1800 number what that means to traders. Its very important. Theyre watching that very carefully on the close today. And finally a look at the nasdaq which interestingly enough is the laggard today. Despite juniper doing a little better. We have the composite down 71 points. Lets talk about this selloff and put it in perspective with our guests today. Weve got Quincy Crosby from prudential financial, david sourby from loom missales and company. Kyle harrington. Peter boockvar from lindsey group, and warren myers from illustro trading. Warren, give us the play by play, the perspective from the floor. Whats going on . Ill tell you, you know, the one thing i will say up front is there is no sense of real panic, so i dont want people out there to say that the world is coming to an end. You know i think so many people have been expecting a selloff for so long that once we had a couple days in a row of a down market i think this has been kind of feeding on itself and i think thats really all you really have seen on the floor. Yes, its an accumulation of a few events. I think the surprise events were the emerging markets and china a bigger impact than the earnings in the last couple days but i think those three combined are whats driving the market down but its in an orderly fashion. Quincy lets talk about china. Is this what is ailing the market more broadly . Is it because of that data . I think it had more to do with the worries over the credit markets in china. The shadow Banking System has been something that the chinese authorities are trying to wean investors off of those high returns. Theyve had a problem with a couple of the funds and also there is worry that the chinese authorities will not necessarily go in and bail out every single product or lender who is using the shadow Banking System and thats going to cause a lot of come motion commotion in markets. The fact of the matter is i think that is what scared the markets more than the slowdown. We know that china is slowing down by design. Peter boockvar, were going to talk more about this later, but let me ask you your view of the fed. All the easy money the last few years has helped to fuel the rally weve seen. Now we know theyre going to start pulling back beginning this month. Do you think when they meet next week that this selloff might give them pause in that tapering as we call it . Well i think the tapering is whats causing these problems or at least is revealing them. So i think if they did stop that would prove to the world that theyre completely trapped in a policy that is not working. So they are going to taper, but weve seen this movie a few times. It happened after qe1. It happened after qe2. It happened last summer when they hinted at ending qe and this is happening again. So investors shouldnt be surprised. But peter, isnt the point that that indicates not that what the fed is doing doesnt work but that it does. In other words in order to keep markets functioning the way they are at these levels it requires them to continue having sort of an easier stance than what theyre trying to do now . Its an artificial edifice. Its a building thats made on sand. Once they stop, with he see what happens. We roll over again. This is not a Firm Foundation for an economy and markets. The fed has brainwashed investors to think that investing is a riskfree thing when theyre doing qe but once they step away people realize that, hey, wow, buying risky assets is a risky venture. David, what do you sense is going on right now in the markets and what are you doing about it . Are you putting money to work or are you standing back and letting this thing settle out . Bill if we get another if i have cash on the sidelines and its minimal at best you could expect another 3 to 5 quite easily on the pullback. I would want to put that to work because the statistical empirical evidence strongly suggests even after a great year like 2013 where stocks handily beat bonds, stocks do surprisingly well in the next calendar year like 2014, especially if we dont get a recession. Valuation fundamentals are still fine. Earnings and revenues so far for what i have seen for 20 of the companies that have reported in the s p, they have done well. But here we are, were painfully aware of the january barometer as january goes so goes the market. This is nothing different than fumbling the kickoff in a super bowl, but you have a long way to go between now and december for this calendar year so i would be putting money to work yes. And i do worry about the fed, that they are falsifying the economy, but i think that that will not be a major issue. Peter, just to go back to this issue again here if the market is pushing Central Banks to provide more liquidity and maybe saying look its not just the fed, its the fact that banks in europe are repaying some of their money and the Balance Sheet there is shrinking, the uk has surprised to the upside the bank of japan. How important is it that someone steps up to the tage here . Ble here . Well, were seeing that in other Central Banks. Japan is obviously increasing theirs. That potentially is a factor in global markets, but it just proves again the dependency and the addiction that Central Banks have created with markets and the economy, and that the second they step away everybody cries like a baby. And the question that was broached earlier is does it impact what the fed does next week . Were going to it shouldnt. Over the next couple meetings whether the fed is going to be the parent that says to the kid, no more candy or theyre going to listen to the kid thats crying the kid being the market and saying okay here is one more piece. Kyle harrington its clear the sentiment in this market changed on january 1st. We had a great year in 2013 and its been a very sloppy market to begin 2014. What do you think is going on right now in your view . Well i mean this should come as no surprise bill and kelly. To me its not. This marketplace in my mind was not built on firm ground in 2013 when it ran up to the tune of 30 , and this week is the worst week since november of 2011 and i think that, you know whats amazing to me is the interconnectivity of the marketplace. So you saw chinas manufacturing data be disappointing. You now saw are ajengentina not stand by their currency in the peso and earnings reports coming in soso and off marketplace in the United States where theres 20 names that are in the green today in the s p 500. So and the fed concerns coming up in the near term is and should be of real concern. All right. Lets bring kenny in. He just stepped in from off the floor. What do you sense is going to happen between now and the close . What are you guying thinking about here . My sense is that they want to close it on the lows here, although its a struggle because theyre my guess is theyre going to try to close it right at 1800 you know plus or minus, but if it closes at 1800 psychologically it looks different. What if they dont close above 1800. Either way its setting itself up for further weakness next week. You can get a sense today, although its certainly not panicky, people are reassessing the rick out there. What is the fed going to say next week . Theyve already floated the idea of wanting to increase the taper. I dont think thats happening but yet no one really knows that. So people are being a little more cautious taking money off the table in case you get a spike down next week they want to be able to take advantage of it. Do you agree, warren . I do. I mean i was looking at the market on close and balances early, and they were pretty neutral. I dont think youre going to get too much of a push either way from that. I think 1800 ong the s p is a key number psychological. At the end of the day i think the damage has been done for the day and probably setting the tone as kenny just said for the beginning of next week. I do want to stress everything is calm and orderly here and if you keep your head and maybe thats either a good for bad thing depending how you look at a selloff. Thank you, guys. Thank you. Have a good weekend. Thanks. Got about 50 minutes as we head into the close and match markets sitting near their lows of the day. One of the worst days weve had for the major indexes. The dow off 245 points at this hour. Lets talk about this will it selloff on wall street force incoming fed chair janet yellin to halt the tapering for a little while . In fact could it make her even increase the stimulus untaper so to speak . Well talk about that. How much blame should chinas weakening economy get for this sea of red . Its an important issue. Well talk about it next. Keep it right here. Youre watching cnbc, first in business worldwide. [ male announcer ] this is the story of the little room over the pizza place on Chestnut Street the modest first floor bedroom in tallinn, estonia and the southbound bus barreling down i95. This magic moment it is the story of where every great idea begins. They had the power to do more. Dell is honored to be part of some of the worlds great stories. That began much the same way ours did. In a little dorm room 2713. This magic moment welcome back. Another big selloff on wall street today. The dow is now down for a fourth straight session and has declined nearly 3 this week alone. Dom chu is sifting through the charn carnage back at hq. Kansas city southern is the worst performer plummeting after posting weaker than expected Fourth Quarter profits after weakness in its Energy Business including lower coal shipments. A tough day for google. The Gmail Service was experiences outages during the course of the day, and then gaming stocks being hit hard again, after jpmorgan report yesterday that macao gaming growth was possibly slowing. The transports are experiencing their worst day in nearly nine months. Airlines are leading the way lower, jetblue, delta, United Continental, american airlines, all you can see to the downside. On the flip side though theres proktor gamble. Its moving higher after Second Quarter profits beat forecasts by a penny. They said they expect to see second Earnings Growth in the second half of the coming fiscal year. Slowing Economic Growth this china part of the threeprong attack on the stock market. We have John Rutledge, chief investment strategist who has traveled extensively through china. It started with this manufacturing report out of china the other day and the market started to sell off at that point. Is that really what this has been about just the fears about the growth rate in china . Well no. I think it started at the beginning of the year when we saw a lot of the emerging market currencies decline due to the fact that the fed started to taper. What we had was twopronged approach where we had the fed withdrawing stimulus as well as the fact that china pmi slowed. If you look at the top trading partners of argentina and some of the countries that are having the biggest currency fights on their hands right now, the top three is basically china, the United States, japan or germany depending on which emerging market youre looking at. So thats a doublepronged assault on those emerging markets. We saw a lot of vix buying. I dont think people are selling stocks. What theyre doing is hedging in the vix. The vix went up to 17. As well as selling the futures in the e minis. We use that 1835 series a pivot premartin luther king day. The yen strengthened and the correlation there was very high. We think right now this is playing out just as expected. John rutledge explain to people what this is really all about then. What has been the catalyst for the selloff . Well people have an itchy trigger finger at the moment and to paraphrase yogi berra, investors want to be pessimistic, nobody is going to stop them. So i think weve had this is mainly sentiment driven but to echo what my colleague is saying theres a huge carry trade element to this. The fed and other Central Banks have been forcing developed country Interest Rates down to zero for a long time which means investors borrowed money in these currencies to invest in the emerging markets to capture the spread. As the fed pulls out of tapering and people start figuring out theres still a lot of reserves out there, the u. S. Rates are going to go up. Europes growing, japan is growing now, which means people are shutting down these carry trade positions. So you see big drops in emerging stock markets and in currencies and also in the commodities that depend on them. I think the reduction in the china manufacturing report was really minuscule actually. Actually the level of Manufacturing Activity in the report is still growing. Its the outlook thats now a little bit below 50. Its mainly a financial issue, not a fundamental growth issue. So were unwinding essentially the gains we saw in the markets because of the easy money policies of the fed. John, how much lower do you think we go especially if we close below 1800 on the s p today . Well i think right now were in the a 1 move right now is a lot different than it was at 1,000. Were looking at 1 moves were moving the market 200 points and 20 spot points. So we dont think that the downside is too critical. If we look at 10 , thats 1662. So what i wanted to say was if we look at the mexican crisis the russian ruble crisis every one of those in the 90s was a buying opportunity. So no matter if the correction is 3 5 6 , all those corrections were bought heavily because everything fundamentally in the United States is fine. So if we close our eyes and say you didnt have fed intervention in those previous currency crises. You did after the crisis happened. Thats not true. We had fed intervention in the fact they lowered rates and started to raise rates. But to the degree were having right now. Other thing i want to say is the fact that were so worried right now and if we look back in time, those again were buying opportunities. If we close our eyes and say that growth in the United States is 3 and the fed is still adding 65 billion we hear you. Sir, we hear you. Bottom line bill i think that this is going to spook the fed out of more tapering this time around. And there you go. The same thing happened to greenspan in 98. Go ahead, John Rutledge. The same thing happened to greenspan two johns sorry. The fed does not announce more papetapering and theres a change in the character of growth where the developing countries are growing and the emerging markets are slacking off a little bit. Developing countries dont buy commodities. So this is also weak for Commodity Prices but i suspect next week finally i get to buy some stocks again unless remember prices today are still 40 higher than they were two years ago. But just to be clear, John Rutledge rutledge, because a lot of people including john are saying this is a buying opportunity, but in each of those prior cases when for example a rebound in the yen, an unwind of the carry trade, caused a crisis you didnt want exposure until after the crisis hit. How do you know whether were going to head down a similar path or not . Are you that confident that next week already the sands will have shifted . I think that there by the time the fed finishing taper, there will be 3 trillion of undeployed excess reserves in the banks. Those reserves pushing into the asset markets is the fundamental for us lifting dollar asset prices. Those are not going to go away. In fact, that number will be bigger six months from now than it is today. All right. Got to go, guys. Thank you both. Have a good weekend. Okay. We have agreement there. Well stop right at that point. See you later. 40 minutes left in the trading session, and were starting to set new lows for this day. The dow now down 266 points 267, and the s p continues to fall below what is considered a critical level of 1800. Were at 1795 right now. Thats right. Bonds are rallying big time today as well as stocks keep selling off. It makes sense but will this correlation last and which is the better place for your money right now . Both sides of that debate are coming up next. Also we want to know how you think investors should be playing this market right now. Tweet us your thoughts on that. Well reveal your best responses later on the closing bell. [ male announcer ] the new new york is open. Open to innovation. Open to ambition. Open to bold ideas. Thats why new york has a new plan dozens of tax free zones all across the state. Move here, expand here, or start a new business here and pay no taxes for ten years. Were new york. If theres something that creates more jobs, and grows more businesses. Were open to it. Start a taxfree business at startupny. Com. Welcome back. Want to send it straight over to dominic chu for a quick market flash. The dow transports worth another look because they are now down session lows 4 on the day. This is the worst day that theyve had, the dow transports since september of 2011 down 4 . Big names, kansas city southern, United Continental and the Airlines Delta air lines, kirby. A lot of big transport names leading to the downside. Worth noting as we head towards the close, the real weakness in those transportation stocks. Back over to you guys. I think it also bears repeating that Natural Gas Prices are up what 9 10 today. Absolutely. Nat gas up 24 just this year. A lot of the cold weather, of course, but weve got demand its going to be a higher cost for consumers and producers that benefit from generally much lower Natural Gas Prices. Thats it up 10. 3 , almost 10. 4 just tod