Energy actually is the Leadership Group with oil touching that fiveyear low and then getting a little bit of a bounce and energy names with it. Lets talk about the markets. Joining us now is dani hughes and kenny pulcari, diane gartnick and our own rick santelli. Dani, what do you make of todays move . It occurred to me months now we have one story of the stock market. Its great. Commodity and bond market tells us theres manager to worry about. What does today tell you about where we come down on the question . We dont know. We have seen the market fall off dramatically today and come back dramatically, as well. The underlying issue of oil and oil prices is big one and you see the dichotomy, as well. Consumers are benefitting and you see housing prices rising, as well, so they have a lot of juice in that and then the job recovery, as well. But then you see Oil Producers getting hit very hard and the concern about the price of oil and domestic Oil Producers and how to make money going forward. Thats the big dichotomy we see. Can the rally in the stock market keep going if oil doesnt stabilize . No. I think if the oil doesnt stabilize and continues to be nervousness around it, its in the overall market and stays and actually oil will stabilize in here and then the market finds the footing and move higher again. Why would you think it would . I dont know. In my gut i dont see oil going to 40 a barrel. I bet you didnt see it going to 63. It was a level where most people thought it would find stability and it does feel like its going there. Dennis gartner and the guys from morgan and the analysts, in my gut i dont see that and so i think it might churn here for a while in the low 60s. Thats okay and stabilize higher but the truth is what is really changing this conversation from a month ago . We knew what was happening in asia, oil, japan, europe. So why all of a sudden is everybody starting to panic thinking, like, oh my god, this is new information . We have millions of barrel of oversupply on a daily basis an we dont know why and if china is a huge problem and leads to a slowdown in overall growth or is it its an importer. Diane, people think its both. Yeah. One of the thing that is really important is thinking about the price of oil and positive impact for consumer. People talking about the wonderful impact for households and equally positive is corporate earnings. One thing that spooked the markets is very strong u. S. Dollar and how that was going to drag on earnings. Lo and behold, one of the largest inputs to corporate earnings everywhere is energy. And with the Energy Sector being so low and Energy Prices that major input coming down, thats got to offset some of the really negative impact of the high dollar and ends up being great for next quarters earnings. Exactly the point. Right . So whys everyone getting nervous . Listen. We saw china off 5. 5 . China was up 32 for the year. 5 move in china is putsing perspective. Right . I think another issue, too, two types of Oil Producers. Rich and poor countries and when the poor countries cant make money, theres geoplitd call problems all over the place and i think instability is a person, as well. Well, okay. Okay. That might be true. I would add just india and china are also beneficiaries, as well. So from the Global Market, its emerging markets, its beneficial, as well, to those countries. And now the core question. The bond market and the Commodity Markets, put oil aside, are saying something about growth or theyre not . Sure. It is saying something about growth. Its saying that theres deflation in the marketplace. If you look at europe and the pmis and the inflation data out of europe its not good so when youre looking at the global kind of landscape of Economic Activity i think what you are seeing is oil is reflecting that and the strong dollars reflecting that and what we have here is an opportunity for sectors like the airlines to outperform, sectors like the autos to outperform and pick battles. Right now, i agree with kenny. Oil should stabilize here and going back to 80 in a month . I dont think so. Why are the airlines hammered today . Because i think tranports are hit because i think theyre stocks from 27 looking at american airlines, from 27 to 47 in 2 months. And thats profits. And i also think its one of those days where the mindset is accentuate the negative and people are jumping on board. Jeoverseas and so much carna . Yes. They got nervous. Lets take the money out of the let me regroup. Thats why i think its going to stabilize and then find its way higher again. Maybe, rick, people are facing the realization the fed language changes sooner rather than later and changing rates and throws it all off track. I dont know if it throws it all off track and anybody that doesnt think low Interest Rates dont fuel a lot of the positive Investor Confidence in many of the markets and indeed some of the financial inflation with regard to things like equities, were going to find out. Ill tell you what. Today was one of the first sessions, near dollar futures, not the Foreign Exchange side of it, really saw some very large blocks of selling and when theyre selling in that part of the shortterm structure of the curve, that is always something nervous about potential changes in the overnight rate. Are they going to handicap or give you the day . I dont think so. Its important. Remember, everybody, two thirds of our economy is consumption driven and stronger dollar helps two thirds of the economy. Big boys always lose on deflation. Whether you have a lot of debt out there, owning real estate, whatever it is. Two thirds of the economy much of the middle class is going to benefit from a lot of whats going on with energy. You mentioned the big block trades. Were seeing all kinds of Warning Signals from different regulators, very concerned about the bond market and whether or not there is enough liquidity out there and that when a massive selloff if and when it occurs it is painful because you just will see a lot of gapping down. Are you seeing evidence of that . Hearing concern about this . No. See, this is the flattening yield curve story that we all need to reckon with. I think the futures and short rate vs a much more difficult time than the longer end and even in a fed tightening mode is preoccupied with International Flavors of relative trades overseas. This is a wild yield curve ride in my opinion. Dani, i want the know, partly plays into the yield curve story, as well, about the financials. Okay . Everybody says i cant find a person who says dont buy the financials, yet you have more reason today to be worried of owning a financial stock. You have the citibank charge. You have bank of america ceo talking about trading revenue weak. You have new fed regulations that banks raise more capital and if they wont cooperate, maybe they will or wont, Energy Stocks may not cooperate, where will you go . Financials usually lead us up. Dont forget, too, they make money on Interest Rates and not making money there at all. Where do you go . People are chasing yield right now and i think you see trouble, too, with Investment Managers and Hedge Fund Managers that if they have done well they have to take their profits right now at the end of the year and if they havent done well like a lot of Hedge Fund Managers havent, thats why we see the sloshing around looking for that short term. Diane, bottom line this for us today. What did you do today . Theres important to da that to focus on with yields. Now that we know that the fed is going to be raising rates in 2015, were finally on the cusp. Right . All of the companies have been holding tremendous amounts of cash on their Balance Sheet waiting to see when rates are going to raise so that they can begin to invest one quarter prior to rates going up. I think over the next few months well see an awful lot of new business formation, lots of capital finally going into place where were going to see some investment and property plant and equipment longterm asset that is are cash to be deployed into working. I think thats really whats important this time around. Not yesterdays financials but instead focusing on the manufacturing of 2015. Thats the space we should keep an eye on. All right. Thank you. Thanks so much for joining us. All right. 41 minutes before the bell. The Dow Jones Industrial average lower by about 82 points. And the s p is lower by a little more than nearly 5. Up next, todays initial selloff sparked by the fed fears and our Steve Liesman and former head of the miami branch tell us what theyre hearing. Billionaire mark cuban speaking with melissa lee and scott and me exclusively. A lot to talk about, drones, Artificial Intelligence, maybe turning on humans. We have heard that from a number of guests. Does he think netflix will kill cable any time soon . I am never getting married. Never. Psssssh. Guaranteed. You picked a beautiful ring. Thank you. Were never having kids. Mmmmmm. Breathe. I love it here. We are never moving to the suburbs. We are never getting one of those. We are never having another kid. Im pregnant. I am never letting go. For all the nevers in life, state farm is there. E financial noise financial noise financial noise financial noise all right. Welcome back. Theres the market picture with 45 minutes to go. The dow well off the lows of the day, still down 80. Energys getting a bit of a bid. Helping things out. You can see the technology is, as well, tech selling off bigtime yesterday, michelle. Certainly into the close. Huge swings, i know. Tesla, twitter. Down multiple days. Maybe stabilization there and enabling the markets. A lot of commentary of how theyre a huge part of the s p 500 more than historically and is there a reversion to the mean at some point . One of the guests in the Closing Bell Exchange suggesting taking profits is not a bad thing. Right . Exactly. Youll obviously take them from the stocks that outperformed the rest of the crowd. So maybe thats all this is over the last two days as we have been obsessing over the oil prices. Yeah. Also we had a lot of jitters in the stock market because there was a report that the Federal Reserve may change some lack wage and lead investors to believe the move to raise rates could come sooner than many anticipated. Joining us now is steve lies mans with dorothy weaver, ceo of Collins Capital and former chairman of the Federal Reserve bank in miami, a branch of the atlanta fed. Dorothy, welcome. Steve, good to talk to you, as well. Is this going to happen to change the language . They could. The nuance of saying considerable time and lets be patient is pretty minimal. What theyre trying to do is obviously keep their options open while giving sufficient guidance that theyre not going to spook the markets. Steve, so this is coming from these reports about dudley when he refuses to say rates low for a considerable time and instead saying the fed must be patient. Whats the difference when it comes to when they might actually raise rates . You know, i think think of it like a bicycle with training wheels and without. You take the wheels off, you lose a guarantee that youre not going to tip over and the way to think about that is considerable time was around you were pretty sure you had a sixmonth window. What it will do is create some possibility that they could move earlier. Just to be clear, this news is effectively more than a week old and you could say its older than that. I think its pretty baked in, this expectation that considerable time going this meeting and discussion about it leaving in an earlier meeting. Stan fisher talked about this last week, the vice chairman of the Federal Reserve and baked in and doesnt change the reality of living without that essentially a soft guarantee from the fed. And what this does is if the economy improves, i think we need one more jobs report like the one we had. A good one way the decline of the Unemployment Rate and with evidence that the decline in oil prices is not spilling over into a generalized decline in the price level or into the core inflation numbers. Then i think its possible the fed can move earlier. Dorothy, do you think steve says maybe baked in to the market at this point. Do you think investors are willing to accept the fact that the fed is going to take this language out, is going to eventually raise rates and how much do you think members of the fed even care about what the Market Reaction initially is going to be . I think the fed does care about the Market Reaction and the market, though, i think was said is pretty well baked in, not a question of if but only a question of when. So i think the market has already begun to position itself with that in mind. The wild card in this is not really even what we have been looking at historically from the feds point of view. Our unemployment and our inflation. Its really now turning to focusing on the global. And the situation and the growth expectations and europe and china and japan. And its concern over those and now youre getting the bifurcation of we have quit qe and now an economy between what were doing and the rest of the worlds doing, so we cant just look at our numbers. Were going to have to continue to look over our shoulder and see how that is going to have any sort of contagion in slowing down growth in our markets. Steve, you and i have talked about that very point, right . The u. S. Economy better and the fed raising rates and supposed to be focused on whats happening here and not necessarily worried about the impact overseas but at the same time, its intuitive, right . The whole world is slowing down, the f theres potential crises in emerging markets with the strong dollar, that can cause feedback right back to the u. S. Economy, right . Do you agree with dorothy. They could stay on hold for longer than people expect because of whats happening overseas . I think to an extent. Folks at home, it is michelles sympathy for the central bank that is have failed to insulate themselves from what they know is coming that really is the discussion that we have. And i argue that these guys have had a long time to prepare for this. I agree. I dont have any sympathy for them either. I know. Just having fun here. But i think that only to an extent. I think it is extraordinary that the usda that has been as strong as its been given whats happening overseas and the end of the day with pretty much still the largest economy, of course, depends on how you mshl it. We remain the price maker, not necessarily the price taker and the great hope is essentially strong u. S. Growth helps out other countries rather than the weakness overseas dragging us down. Im surprised so far through the fall we have not really seen that weakness wash up on our shoerls and i expect it to stay that way given the way the data is going. Either one of you want to comment on this . Jeffly gunlak saying the 10year yield crossing from reuters could fall to 1 . Wow. Dorr chi, what do you think of that . No. We certainly saw a very dramatic and quick dip just on sort of fear at one moment in time and so the market is skittish and it could move quickly. The questions going to be what is the triggering point . Whens the catalyst . How quickly does it bounce back . Dorothy, steve both, maybe, steve, you take this. If hes right and the 10year gets close to 1 , thats going to suggest that you have got some major issues perhaps here in the United States. Thats going to keep the fed on hold. Thats exactly the right way to think about it. One cannot have a conversation about a yield on a 10year or price on a stock in a vacuum. If we get to that point there a es a whole series of events likely happening. You likely have and likely bad. Core inflation number is falling precipitously and stock prices way down. I want to point you to an extraordinary speech of new york fed president dudley gave not too long ago and he said, look, part of the speed with which we move and how far we move is going to be dictated by how markets react. The fed wants to bring the markets along with it. Theyre going to try to avoid in this next step in policy normalization and try to avoid another taper tantrum. All right. Dorothy, last word here . What should we thinking about the most talking about the fed . I think the most important thing is that the fed is really in a delicate balancing act right now because certainly were seeing employment numbers come in strong ler. Growth not been dramatically impacted by the slowdown globally and the inflation is not climbing. One inflation they really want to see, though, is wage inflation. Oil prices will go up and down. Food prices go up and down. Theyre really looking to see wages beginning to go. They have just been going nowhere for so many years and i think thats one of the big keys that theyre looking to see before they do anything too dramatic. Steve, would you be shocked if the fed did not raise Interest Rates next year . I ask you that a day after i read a few notes that were being passed around on the street. I believe it was Morgan Stanley said maybe its going to happen much later than people expect and what dorothys suggesting. Goldman sachs saying whats going on with the dollar and crude oil and inflation that maybe its going to come later than expected and that could mean bigger things for equities. Would you be shocked if they didnt raise rates . I would be. I dont think thats going to happen. I dont think the economy will have those kind of outcomes or print weak gdp numbers. Look, i think what you want to do, scott, take your cue from where you think the leadership of the fed wants to be. And i think they want to get back or begin a normalization process. I think janet yellen is preparing the markets for this and personally ready to do it and i dont think she wants to rush to do it and set the train in motion and i think its goin