Year. Is that really possible . We begin with a continued selloff in Global Markets with a picture at this hour a bit different from where this day began. Here is where we stand on wall street. Stocks coming back quite a bit after plunging to a threemonth low right out of the gate. Once again, china, front and center. Trading there lasting less than a halfhour before Circuit Breakers kicking in. No surprise, u. S. Stocks not reacting well to that. Nor did they react well, guys, to the continued, steve, devaluation of the currency. Yes, the dow is only down 200 now, and i say only because it was down more than 300 right from the getgo. Yeah. And its pretty scary. Happened at the beginning of the year. Last january were not good periods. But they didnt have the velocity, downward velocity, volatility, so early. Now, the issue is with the currency, with the yuan continuing to be devalued thats the Biggest Issue . To me, that is the absolute Biggest Issue. Its even bigger because china doesnt want it to happen. So its really a confidence issue that the rest of the world has in china. China is trying to support the currency, but china doesnt know what to do. Theyre teenagers when it comes to capitalism. Theyre stubborn. They dont ask for help. And theyre inexperienced. So instead of coming to us and going to the ecb, and going to developed countries Central Banks to ask for help, as we do, as draghi does, as is convention, theyre trying to do it on their own and they dont know what to do. So theres a loss of confidence in the economy, a major loss of confidence. Youre seeing capital flows hit a crescendo in terms of coming out of the country. Youre seeing reserves go down. What i talked about yesterday, their debt is twice their gdp. What stops our market from reacting the way that it is reacting, moment by moment, day by day basis to whats taking place in china . Earnings and guidance. And also, keep in mind, tomorrow we have the labor report. What do we want to happen tomorrow for the labor report . Do we want a weak labor report so we can take the four rate hikes off the table . Do we want a strong labor report so we can see the economy is accelerated and the dollar will rally . We dont know what we want. That creates an environment of uncertainty. So theres nothing out there right now to answer your question that acts as a catalyst. You have to hear Domestic Companies talking about what the earnings are and whats the guidance. So, josh, china now halts the Circuit Breaker mechanism. Who knows how that market is going to open when it does overnight for us here. When are we going to stop reacting to whats happening in the chinese stock market . Thats a good question. And actually, the irony is that china put these Circuit Breakers in place to prevent market panics, but theyre actually causing them. And you saw a lift in Global Markets the moment chinese securities officials said okay, were done with the Circuit Breakers. So actually removing them was the real Circuit Breaker. But this is not really just a china thing. And ive been saying this for a long time. When you think about the amount of the chinese stock market thats owned by offshore investors, its 2 . So put another way, 98 of the china market is owned by chinese investors, and i agree with steve. Its a very immature market. Only about 25 years in existence. There are 99 million investors and none of them have more than a decades experience. Its noninstitutional like europe, like here. In the u. S. , we have other issues. Were probably in the midst of a cyclical bear market, as we speak. Doesnt mean we have to have a recession. Doesnt mean we have to crash. Take a look at the russell 2000. Its 17 off its highs. It broke the september lows from this morning and its actually trading exactly where it was in september 2013. To have that many stocks on the verge of a bear market well, the average stock is in a bear market. But still, there is a belief on the street. And youve heard it on this network today, that no, this is not the start of a bear market. This is august redux. And were going to have a sizable bounce off of this and chinas going to subside and the earnings are going to be better than people think. Maybe the economy here is going to support that. And its not going to be as bad as people think. What do financials have to do with the chinese economy, the decline in china . Why do financials why are they down so much . Why is the biotech index down 11 year to date . This is a little bit beyond whats going on in china. People need to come to terms with that. Kathy lien, who joins us from new york. Do you want to explain why you think the chinese are doing what theyre doing with their currency and why its having such a dramatically negative impact, certainly from a sentiment standpoint here . Certainly. I agree that Chinese Markets are relatively new, but i think that china knows exactly what theyre doing with the currency. Depreciation is a policy tool for the chinese. Theyre realizing its hitting the brakes faster than they anticipated, so they felt like they needed to respond with more depreciation in the u. N. But the intervention that we saw from the chinese that confused a lot of traders overnight is not news. This is a very familiar tactic they took in august, where they devalued the yen, and shortly thereafter, they ordered their state banks to buy the currency in order to drive out speculators. Speculation is a problem. What is surprising is that all of the moves are front loaded. But i think this is part of their tactic. This is only the first of their fiveyear plan to rebalance their economy from exportdriven to consumption driven. They need to stem the slide. So i think this is part of their process. Kathy, i appreciate you joining us today. Lets bring in mark fauber, the publisher of the gloom, doom and boom report. Welcome back. Thank you very much. Whats your read on the markets, not only in china, but here in the u. S. And how theyre reacting . Well, basically, as someone just said, most stocks are down substantially and have been in bear markets. I think as of todays opening, the markets became extremely oversold, and this was probably the low for the month. In other words, i think we can have a recovery rally. But as i pointed out before, between 2,050 and 2,134 on the s p, there is huge oversupply. In other words, there is resistance. And stocks are unlikely to make new eyes this year. I think we are going to go lower. Has nothing to do at all with china. Why are Home Building shares in the u. S. Down 20 to 30 , and no higher than in 20122013 . Has nothing to do with china. What it has to do with is that the u. S. Economy is weakening and weakening much more than is perceived. Are you saying that were going to have a recession here in the United States . Many sectors are already in recession. And what has driven consumption in the u. S. Was the active inflation, rising property prices, rising equity prices, rising bond prices. This is no longer happening. For the last 12 months, all active classes have performed poorly with the exception of bitcoin. How far do you any the s p has to fall . The peak was 2,134. I would think that most stocks will drop between 20 and 40 . And that would seem to me to be conservative. Steve weis . The way i look at it is this way. If you ever did come out positive lie like weight watchers, putting a baskinrobbins franchise in their meeting rooms. So i think the upside is going to be greater than just the bounce. I think the housing stocks are a poor indication of that. Weve pulled demand forward in housing and autos, but yet we have wage growth thats finally occurring here. Were seeing that. I know you can come back and see the top margins are peaking. Ill give you that. But i see a strengthening economy. Its not 4 . Europe, the underlying economies in europe take that out for a second, which is okay. But you take other economies there. You take the mid cap companies. Theyre actually doing quite well. All the data out of europe in november was very positive. So i dont see it the same as you do. Im more optimistic. I think china is the problem. Its isolated. Its emotional. Its sentimental. Its not gone. But it doesnt speak to the vibrancy of our economy and in europe. Well, you know, different people have different views. And everybody gets the data. And some people have this interpretation of the data and other people have this interpretation of the data. Mine interpretation of the data that is coming out is that the economy has been slowing down significantly. The Manufacturing Sector is in recession. And the service sector, as i said, has been kind of booming because of the trickle down effect from rising asset prices. But that will not continue. So well see in six months time who is right. If you had your choice so if you think the u. S. Market is certainly not the place to be, because you expect the s p to go down 20 to 40 or most stocks within it to do that, where would you put your money to work . Well, i think in 2015, cash wasnt such a bad investment. I happen to think that treasuries are not going to make you rich. But compare to german bunds, government bonds having a negative yield and japanese government bonds having a yield of 0. 22 . I think treasuries are reasonably accepted, especially when the talk is about eventually introducing negative interest rates. Mr. Faber, i appreciate it. Well talk to you soon. Thank you very much. We will talk again in six months time. Marc, i actually do love your work and love reading your stuff. Thank you. Mr. Faber, mark it on the calendar. Well call you again in six months. Okay. Byebye. I think, look, earnings are going to be really, really important. Were in this dull period where were waiting for a couple weeks. Youve got all this news going on internationally. People are kind of waiting thinking january is going to be a quiet period. But i do think whats going to be really driving our market is what are Companies Going to say . Oil is at 30 bucks. The consumer has a lot of money right now. Theyre going to be a little uncertain given all this volatility. But those are positives in terms of youve got more money in the consumer pockets. Companies are going to be lapping comparatives. I think its going to be better than what people expect. Coming up, all out of love with apple. Tony sakanagi has this to say about the tech giant here back in october. I think its a different kind of company. I think its best days are behind it. Since then, apple down 14 . Find out if he thinks the stock is a buy at 98 and change. Plus, trade school amid the turmoil. Our experts tell you the one real thing Retail Investors should do with their portfolios today. As we head to break, a look at the sector heat map. Youre watching cnbc, first in business worldwide. Welcome back. Facebook, amazon, net fliflix a google seeing a rough start to 2016. Amazon tracking for its sixth straight day of losses, down by about 8 year to date, and thats just in the first few trading days. Facebook and googles alphabets, google also weighing on the nasdaq today. Both off by about 3 or so. But there is one big exception. Thats netflix. Up about 3 this year. The only member of the fang gang, so to speak, thats trading positively in todays stock. Back over to you. Dom, thanks. The question really is whether the fangs are getting a little dull. I think youve got to watch. We like google. We like facebook. I think they have real earnings power behind them. What about netflix . The last two days of netflix have been remarkable really. Netflix and amazon are very momentum plays. Netflix, theyre getting back in there. Had some good numbers maybe for the next quarter. But very hard to own them in 100 times earnings. That stock continues to have some trouble. It broke below 100 bucks. Our next guest has said on this very program that the companys best days were behind it. Tony sacconaghi joins us on the phone. Tony, thanks for coming to the phone today. Appreciate it very much. My pleasure, scott. Whats going on with this stock . Theres a lot of noise in the supply chain, that iphone units are weak. Investors are fearful that numbers have to come down. When a stock like apple, which also has a big consumer momentum following, numbers come down, its very difficult for the stock to work. So thats what were seeing. Theyre saying i know it calls for 980 in earnings. Maybe it will only be 9 next year. Were seeing the stock go down in anticipation of that. The other sort of worry i guess you could characterize it at that i hear from investors that ive been speaking with, some of whom love this stock but have since gone short. Mention the obvious. The iphone demand coming back. Tough comps. The currencies are beginning to lose their luster or are already starting to do that and its going to have a big impact on asps. Those are the prices theyre charging for their phones. It could impact margins. It could impact revenues in ways that people arent fully recognizing yet. Whats your take . We believe that the most pronounced impact on currency hedging programs would be on margin. So what happened in fiscal year 2015 was that apple had a 3 billion gain from currency hedges. And many other companies did, too. So obviously, because the dollar was very strong last year, apple collected less revenue as a result and less profit. They offset that with financial hedges that contributed 3 billion. What happened this year in 2016 is that those hedging games, because the dollar has stabilized, will likely not recur. So you still have the impact of a strong dollar, but you dont really have the offset from currency hedges. But were not talking about an insignificant number. Let me also say its my understanding that apple has been telling investors dont expect the same sorts of benefits that weve been getting from the currency hedges that weve been making. From what i understand, raised prices on the 6s in some of the markets that were being most impacted. Were able to renegotiate contracts with some of their suppliers as a result of the currency hedges. But the company in its october 8k, and i have the language in front of me, certainly mentions the potential real impact from the very types of things that were talking about today, specifically margins on sales of the companys products in Foreign Countries and on sales of products could be materially adversely affected by Foreign Currency Exchange rate. Youve done your homework well, scott. So i think the currency hedging games last year contributed about 170 basis points. So thats whats at risk. I think the debate is whether price increases can help offset that. Whether negotiating with suppliers can help offset that. Importantly, apples been making the product for a year. There is some debate in the investment community. Its not as heated as it is around iechbs, around could we see growth margin pressure. If that were to occur, that could be an incremental negative for the stock. Is that the one thing or one of the key things that would cause an analyst like you with a rating you have, which i believe has still outperformed, to rethink that . Certainly noting that apples not been caught flat footed by the movement in the currency or the way that its reacted to it. I think that would be bad news for the stock shortterm. Our belief is and our feeling on apple is still quite constructive. Because yes, iphones will likely be down year over year and the street is getting increasingly comfortable with that notion. But if we think fundamentally about the iphone business and say is it a Healthy Business or not, the answer is it is. If we think about the world, there are about five billion out there. Theres still a couple billion feature phones out there that will become smart phones. If we look at apple last quarter, it sold 46 million phones on a sellthrough basis. 14 million of those were to people who switch from other platforms. Another ten million were to firsttime smart phone users. People who had a feature phone moved to a smart phone. We dont think the market is saturated. We think apple is still able to gain share from other platforms. We think apple is still able to attract people. So those are positive forces. What were seeing a very, very tough comparisons that are going to lead to a downturn this year. Because the business itself we think is fundamentally healthy. Made for a bull bear debate the likes of which we havent had on this stock in quite a while. I appreciate you coming to the phone. Well talk to you soon. My pleasure, scott. First, a break. Coming up, transports in trouble. What the bear market in trains, planes, and automobiles says about the broader market. Plus, he called the oil drop right here on this show. We retest the lows we saw in september of 2008, and the financial crash. I still think we hold at 32 or higher. Oil hit the lowest level since 2003 today. Find out if tom kloze is sticking with that forecast. Thats coming up next. A bathroom . Cialis for daily use is approved to treat both erectile dysfunction and the urinary symptoms of bph, like needing to go frequently, day or night. Tell your doctor about all your medical conditions and medicines, and ask if your heart is healthy enough for sex. Do not take cialis if you take nitrates for chest pain, as it may cause an unsafe drop in blood pressure. Do not drink alcohol in excess. Side effects may include headache, upset stomach, delayed backache or muscle ache. To avoid longterm injury, get medical help right away for an erection lasting more than four hours. If you have any sudden decrease or loss in hearing or vision, or any symptoms of an allergic reaction, stop taking cialis and get medical help right away. Ask your doctor about cialis and a 200 savings card id like everybodys reaction, not only to what apple has been doing, but the kind of conversation and what we were talking about. Do you own the stock . We used to. We sold it over the last year. And i agree completely. I think the problem with am, its not a growth stock anymore. So how do you own it as an equity . You have to be at 3 , 4 dividend yield until comps come back down, and its the law of large numbers. That is the big issue with this company. How do you in five years grow bigger than the market . Josh . I agree with what hes saying. Absolutely the Shareholder Base is going to change here. Much more value, much less growth. We dont know what businesses will be in five years from now. Ten years ago, this was a Computer Company that maybe had a shot to do phones. So im bullish. I own the n