Hortons. Well speak with two freshmen congressm congressmen, one democratic, one republican, about what washington is prepared to do about it, or if all this rhetoric is now just electionyear politics. Is bigger better . Apple seems to think so. A bigger iphone coming and maybe a bigger ipad as well. Could this be the tablet that finally allows you to throw out your laptop . I hope not, mines kind of new. As apple stock climbs above 100 bucks, well investigate what apple might have up its sleeve. Im rather attached to mine as well. Im with you. In the markets with an hour to go, the Dow Jones Industrial average off seven points, further away from its alltime closing high of 17,138, i think, if im not mistaken. The s p 500 yesterday closing above 2,000 for the first time, today giving up three points. The nasdaq giving up about five. There has been there have been headlines, we should say, about tensions between russia and the ukraine, scott. But frankly, markets here have been more or less jogging in place all day. Yeah. Volumes light. Obviously, you get later in the week on whats an already light and short week, people are heading out for the labor day holiday, not a real surprise. And a big rebalancing day friday as well. That maybe could have some impact. At least volume has picked up a little bit from yesterday and friday, but in any case. Joining our closing bell exchange, an Dale Doolittle from peak theories, keith fitzgerald, Jack Bouroudjian from index financial partners, and our own rick santelli. Great to have everybody with us. Abigail, im going to start with you. Everybodys allowed to have an opinion, abigail. Yours seems to be getting a lot of conversation today, a 50 to 60 correction in stocks. I mean, we laugh, but youve got to come on and justify how youre making a call like that. Why . Absolutely. But first, you know, i want to make a shoutout to my buddy jack. Recall, jack, two weeks ago, you said that after labor day, wed be talking about new alltime highs. Youre a week early, not a dollar short. Great work there. Second, relative to this correction call dont deflect the attention. Thats what thats called. Yeah, you got me there. But second, relative to the correction call, ive been making it for some time, and clearly, stocks have only gone up, so it is a very difficult position to defend. However, i think that when you look at the technicals of the markets, you know, this overshooting that weve seen to the upside, i just dont think that its supported by the underlying technicals. I think we have this overreaching forward yield. I think its an overconfidence on the part of investors, really driven by a lot of the central bank accommodation. You know when we look at just the fed, 4. 4 trillion into the Financial System alone, but you know, thats an important point. It really hasnt trickled into the economy. Okay. When we look at the velocity of money, alltime lows. S p 5002, 200 off, that disconnect will come together and i think in a selloff. Someone may say, okay that makes sense, except that 50 to 60 , i mean, the s p going to 800 from where it is . I mean, come on. Truthfully, scott, thats teuf being kind. I think we could see it closer to 600. Come on, dont be mean. Think about 1999 and 2000, okay . Nasdaq doubled five months before it crashed. I mean, anything is possible. Thank you, rick. Well said, rick. But youre not suggesting you dont believe this, rick, do you . No, i really dont, and ive never advocated selling stocks, because i think that until we run out of forest that Central Banks can turn into papeer i think the games going to go on and on. There is no incentive for investors to challenge the current derangement. There isnt. And i dont see any major xbox nous shocks out there, and its a moral issue, but its never been a market issue. German 10year at 90 basis points, french at 125, spanish 10year at 2. 13. I rest my case. Its incredible, rick, every time i look at levels on the european heres whats interesting as well, once we saw the big selloff in the eurozone crisis, everyone looked and said how could we ever have had bonds trading so low . But theyre not trading the yield so low. See, thats the thing thats whats interesting about today, were right back where we started and its worse. Yeah, the bunds trade, but you know, just think about it this way. Would a euro at 1. 32, okay, so youve got to pay 1. 32 for a euro are you going to invest 1. 32 in any of those yields i described, or are you going to take your buck and get 2. 38 . Theres a lot going on. Its the spread on inflation, its the spread on everything, but all the metrics are under the control of central bankers, and i dont see it changes in the near term. Although when it does, abigail absolutely, when it does because this whole thing is on confidence, overconfidence, cockiness at this point. No, wait a minute and could turn on a dime. The only thing i would say, and ill let jack and keith respond, but it would be one thing if all this was happening and the u. S. Economy was losing momentum or heading into recession. Instead, the u. S. Economy, im sorry to say, is reasonably well. That makes it a different story as one thats fragile as if the economy were here behaving like it was back in december of 2007, when it was peaking and heading into decline. Perhaps. I think thats a great point, kelly. I think that there are areas of shakiness. We are seeing the consumer maybe slide. We had a good confidence number yesterday, but three bigbox retailers did guide down. Also, housing is starting to slip, but i think we really need to think about the 10year yield. There are smart investors pushing that yield down as bonds rally, and its not for without a reason no, the europeans that ricks talking about, looking at relative value trade. Yeah, there could be huge room on that 10year yet, trust me. There could be 75 basis points exactly, rick, and if that happens, people need to understand why its happening. If its happening because the 10year looks cheap relative to other places where you could buy Government Debt in the world forget the raise [ everyone talking at once ] no, wait. Its a 140 spread. Think about it that way. Doesnt matter if its 4 against exactly. Relative value trade, its just about spreads. Sorry, jack. Go ahead. No, no, you know what, im just listening to it and im loving this, because it tells me there are people still very skeptical out there, and that goes right along with whats been happening with this rally for the last five years. You know, we keep seeing new alltime highs, and we keep seeing these yields, which are keeping people out of the market. They are now looking at that 10year, and theyre starting to preach armageddon. And abbi, i love you, but thats exactly what youre talking about. When youre talking about a 60 move down in stocks, thats an armageddon strategy, and thats not an Investment Strategy for me. Im not looking at the technicals, im looking at fundamentals, im finding value. I see this market trading at 16 1 2 times earnings, not the 30 times that it was trading back in 99. Its trading where it should be at a very reasonable level, especially when were talking about a zero Interest Rate environment, were talking about record operating margins for corporate america, were talking about Balance Sheets that are healthier than theyve ever been, and everybody keeps looking at this and coming up with the wrong type of scenario. Theyre coming up with an Interest Rate scenario that, by the way, is right now all risk and no return. I think what we have to do is ignore the bonds. I dont know, 19. 4 yeartodate 30year. Sorry, jack, youre wrong oh, come on, the only reason thats happening, rick, and you know that wait a minute [ everyone talking at once ] its numbers. Theyre called numbers. Its real. You cant just like the 2,000 print we saw on the s p. Youre absolutely right. Look, you guys i think what both of you are saying, and please, keith, correct me if im wrong. Rick, youre saying look how well bonds are doing, so jack is wrong, but i think youre both saying the same thing, that bonds are performing well and that stocks are performing well, and thats not necessarily inconsistent. Listen there you go. You find a healthy 80yearold, im a good runner. Find a healthy 30yearold, i am not. Its all relative. I dont agree with jack that the fundamentals match up, but when you throw in all of the sugar cane thats being sprinkled around, jacks been right for a very good reason. Nobody votes out central bankers that look like santa claus. Come on keith, you want to get in . Come on, keith. Absolutely. This is like a game of musical chairs. People are lacking confidence in the fundamentals. Technically speaking, this market is about average. Its at 18 times earnings, 16 times earnings. Who cares who will you run the numbers . But if you look at the correlations, when the market is fractured, the market is scared, the correlation is very high. 95 , 97 of securities move all at once, but right now, correlations are about 70 , saying there is still a lot of room to be selectively targeting certain things. Energy, for example, some parts of that look cheap. Some parts of technology. Ali baba just tripled revenues. Thats going to give a boom to all the broader technology stocks. As much as i hate to say that, youve got to be along for the ride, and why . Because team yellen is still continuing to make this up as it goes along, theyre pulling at strings, theyre inventing new theories to explain the unexplainable. That to me is why youve got to be here, even if youre cautious. Abigail, i mean who wanted to get in on that . Its jack. I just want to say, one of the problems weve been having, by the way, is if people are not as smart as rick and keith and abbi and a few other people here that were talking about, people either look at bonds or stocks. They dont think they can buy both. When they see the yield in the 10year, they get scared. Good point, jack. And whats happening is theyve been getting scared as weve been making new records and theyre missing the biggest rally that we have had in our lifetime. Rick, history suggests that bonds and stocks can go up together. Theres no reason why they cant. Well, look well, youre right, youre right, but its mostly a bad news historical perspective, because under the perfect scenario, historically, when equities are making passes at record or historic benchmarks going up, usually thats associated with higher rates, and everybody cohabitats in a very happy way thats right. Because good things are driving rates up. But see, right now, good things are driving stocks up that are mostly relative value against poor things in japan and europe and Central Banks. And the u. S. 10year not only is disappointed in u. S. Growth historically, but its impressed when compared to other sovereigns and their rate. So, it gets kind of the third dimension on this stuff. And abigail, i started with you. Thats where ill finish, anyway. I mean, you suggest a rug pulled out from underneath us sort of scenario, where theres no fundamentals whatsoever in place to support the fed getting out of the ball game, when in fact, as kelly has noted, as some others on this panel have already noted, there are some fundamental underpinnings at work here that certainly make it a less dire scenario than the one that you portray. Perhaps, but when we look back at 20062007, i dont think many people were talking about the rollover of the credit markets and the housing markets. But are you suggesting some sort of crisis of that in 20062007, they were. Of that magnitude to get to the levels of 60 down, if not more . I think it will have to be a pretty significant riskoff event, systemic, and i continue to believe, despite all of the great points youre making about the sovereign yield, i continue to believe that the move in the 10year, the move down in yield, is based on some sort of treading water at the very least on the part of smart investors. So, yes, they may still be in stocks, but theyre moving out of stocks and putting it into the abigail had rosy glasses on [ everyone talking at once ] im sorry, rick. They had a lot of rosy glasses on. I remember greenspan stephing, worried about credit spreads, worried about housing being a piggy bank. There were lots of issues ignored. No regulator, no central banker ever, ever wants responsibility of saying the partys over, and thats why dodd frank and all the regulations are absolutely meaningless. There you go. Fantasy island. Exclamation point right there. Guys, thanks. Thank you, everybody. Thank you. We have about 45 minutes to go and the dow off about three points as it hugs the 17,100 mark, and the s p tripling now off its 2009 lows. Yesterday, notably crossing that 2,000 milestone, today about 2 1 2 points off. Yes, so, that was the big milestone yesterday, sputtering a little today is the s p. Got us wondering when the nasdaq is going to revisit 5,000, last seen in march of 2000. Wall streets top market pros are going to weigh in, coming up. And also ahead, can orbitz and American Airlines afford to play hardball in their fee dispute, which led american to pull its fares from orbitz . Well find out why the two sides may have no choice but to come to terms. And up next, some notable short sellers saying theyll go in when the fed gets out. Will the market really drop that much when janet yellen and co. Stop printing money . [ woman ] the cadillac summer collection is here. [ male announcer ] during the cadillac summers best event, lease this 2014 ats for around 299 a month. 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But if youre going to make money as a short seller, as a dedicated short seller, like i did it in the past and i intend to do it again when the time is right, you really need a certain backdrop to allow the fundamentals to matter. And quite frankly, even though the fed has been reducing the amount of money its printing, its still printing enough money that, apparently, the stock market continues to go up. Well, reaction now with our own Steve Liesman and lee munson from Portfolio Asset management. Guys, good to see you. Steve, you know, what do you think about what fleckenstein said . I mean, its hard to make the argument that the fed hasnt had a dramatic impact at the very least in where asset prices have gone, and the difficulty in trading on the other side of what the fed is doing. You know, with all due respect to bill, i cant help but think hes contradicting himself in there. I mean, he says the fed is the problem, and you need a certain fundamental backdrop. So, fundamental backdrop means to be a fundamental backdrop in the economy, which, if he means the fundamental backdrop in the economy and the fed is the problem, then whats he saying . Is he saying that the fed is helping the fundamental backdrop in the economy or hurting that backdrop . And if all hes saying is hell get in when the fed gets out i mean, i Wish Investment were that simple, but if thats all youre going to do, it seems to me like you could be making a mistake in that if the fed gets out, it will be getting out at a time when the fundamentals of the economy are improving. Steve, remember it actually was that simple the last couple times the fed tried to end quantitative easing, so its been the case in the past thats true and an excellent observation, although i might point to the recent history of the stock market, which has been much less concerned with the commentary coming from the Federal Reserve. I mean yes. If anybody knows anything, we know the qes going to end in october, and some time next year, a debate about whether or not its spring or summer, and i think given whats been happening, its more springy than it is summery, and the market doesnt seem to care in fact, whats been happening is bond yields have been falling and stock prices have been buoyant. Well, and especially the price about so, bills wrong there. Seems to indicate that this time, the back drop is more resilient. Lee munson, is it . Have we reached that point right now where the backdrop of the economy or the fundamentals are more resilient, so the markets not so freaked that the fed might exit here, or is exiting here . Well, no, i think that, you know, its one of those things where i would rephrase this thing about the fed. The Business Cycles dont end on their own. The fed kills them. But that being said, its not about qe. We all know that qes going to end. Its really about what kind of hikes were going to have next year. But the bottom line is that, you know, its summertime right now, and youve got to invest youve got to go out and play. You cant be worried about winter coming and say im not going to go out and invest in stocks, because eventually, the feds going to raise rates and thats going to cause a problem. Weve got so much slack and were letting a few hawks on the Federal Reserve try to convince us that theyre going to push yellens hand because they want their next speaking engagement at a big rotary meeting. So, i think youve got to still be invested. You dont have to worry about, you know, whats going to happen a year or two from now. Part of the issue, though, steve, and i think it speaks to fleckensteins point, is that with the fed doing what its doing, its awfully hard to figure out why certain things are happening in the market. I want to read you a couple of things i got sent to me today from people we all know and respect who appear on this network. One big trader says, confusing is an understatement in describing how to trade this market or why its reacting the way it is. Another one, qe manipulation of global Interest Rates has been the most significant effect to Ca