CNBC Notes

Is bad news good news like last year - when the market just disregarded bad news and
kept going up?
-No now bad news is badnews. And not many are buygin the dips - the volume
is low now but there are no buyers.
If volume is low as in selling volume, most players and holding on to their shares. But
there aren't many buyers.
China is absolutely a big deal, you can't have it both ways.
Does volume matter? Price action is truth.
1969 - 1867 are both fib retracement lines.
Yield curve - we're below 120 basis points for the first time since 2008 lowest since
2014 - that tells us theres economic weakness
pMI - no s tell us theres ecomonic weakness.
He things we're looking at a correction and it blows past the supports above, and goes
to 1620. -- Brian Kelly (beaker)
The name of the game is China. Hey says you want to fade the rallies and that's exactly
what I'm seeing. Some buying but more
selling into that buying.
1867 will tell us a lot.
Beaker says 1620.
The global stock market is already in a bear market. The standouts like japan will
eventually succumb.
Catalysts.
Santelli - 10 year yields - getting smaller (due to increased demand for safety)
See dollar/yen and dollar/yuan
This is a liquidation, not a rotation - mentioned carry trade. What is that exactly?
China - lost foreign exchange reserves? so that means?
1

Watch the chineese currency!!

Bob Doll - Nuveen Predictions
this feels like august -china will fix it before too long - guns will be to their
head.
US Consumer is doing just fine. In OK shape
To come out of this funk, we oil stable and a cessation of the upward $/yuan
movement .
87% of our econmony is domestic and only 13% foreighn trade
(take xl spreadsheet on thumbdrive to work)
Most of the world is in a bear market. Marc Farber (Gloom, doom and boom)
-asset inflation is no longer happening - so the economy is weakening since
-he thinks most stocks will drop betw. 30-40 %
we are slowing - see manufacturing sector
asset prices are no longer rising. Due to the easy money
He likes cash. He doesn't like bonds either.

bear market for stocks isn't done yet.

How the F can a bear market last only a couple of days? BS!!
Cramer - says selloffs are all different. Some are real catastrophes and some are not. He
thinks this is not.
a better use of my time is to do cnbc web site first then maybe 3pm show next and first
part of fast money
Cramer isn't interested at the market at this level.
economic slowdown is catching up the market.
There is a selling imbalance in wall street.
The market psychology has turned that's for sure.
The issue is Global Growth
Next week we have Earnings Season
low oil
high dollar

The Economist on China:

The obvious conclusion to draw from the market sell-off is that Chinas economy is in big
trouble. Why else would investors be in such a rush to dump their shares? Growth is certainly
slowing, but the problem with this view is that the Chinese stockmarket has only ever had a
tenuous relationship with reality. It is often derided as a casino. Wu Jinglian, a veteran
economist, has quipped that this is unfair to casinos. They have strict rules and gamblers cannot
see each others cards. In China's stockmarket, the rules rarely apply to big investors, who treat
price manipulation as a basic trading strategy. Iron rule of Chinese stockmarkets: any
observation based on intraday movements will be obsolete by the close of trading. None of
this means that the Chinese stockmarket should be performing well. Share prices, especially for
small-cap stocks, are still extremely frothy.
It does appear that Chinas state-backed funds have been active in the market, buying up shares
and giving retail investors a little confidence. Signs that Beijing has been intervening to support
the yuan have helped shore up confidence too.
Wall Street Rule: Markets don't bottom out on a friday - saying on Wall Street that seems to be
true. They will go down further if they close lower on friday.
It's impossible to call bottoms or tops.
The Chineese currency is the #1 problem right now.
IMF Global Exports
http://www.imf.org/en/Data#global

The baltic dry index is a leading indicator of global shipping demand.

https://en.wikipedia.org/wiki/Baltic_Dry_Index
https://people.hofstra.edu/GEOTRANS/eng/ch7en/conc7en/bdi.html
http://www.imf.org/external/pubs/ft/survey/so/2015/RES100615A.htm

http://www.timeanddate.com/worldclock/china/shanghai
http://blogs.wsj.com/briefly/2015/08/10/5-things-about-chinas-currency-devaluation/
Currencies:
When China's currency is cheaper, it is easier to buy Chineese good than American Goods and
that Helps Chineese Exporters and Hurts American Exporters
When the US currency is stronger(more valuable on the world market) it take more resources
to buy American goods but it makes World goods cheaper if one buys them in dollars.
A strong dollar makes exports cheaper for US to buy but US products more expensive for the
rest of the world to buy.
How much lower can the juan go? Exports account for 23% of the chineese economy.
http://www.forbes.com/sites/kenrapoza/2015/08/25/how-low-can-the-china-yuan-go/
A weaker currency helps Chinas exporters sell their goods abroad.
China is making a concerted effort to increased domestic consumption, but exports still account
for about 23% of Chinas total economy.
Exports have been declining in China due to the global economic slowdown and the rise in the
yuans value. According to estimates from Bloomberg,
for every percent decrease in yuans value there is a corresponding one percent increase in
Chinas total exports.
1/13/2015
4

Albert Ewards - sockgen analyst - when an economy is hurtling towards recession it's almost
always the manufacturing sector which takes the less volatile servies sector by
the hand and leads it into a recessionary underworld - S&P goes to 550. Been bearish on assets
for some time. Not always right. Banner names on wallstreet. Extreme bear.
Don't forget to watch the vix
When the rails stop running , the ships stop shipping. when manufacturing and energy collapse
together, when small caps underperform in a strong dollar environment,
theres a good chance you're going into a recession. Fed funds rate is -1 . ?? He thought he
smelled fear at one point today. We're in a pretty tough environment. Sarge guy.
Joe Duran - United capital financial - we are likely into a recesssion - 2/3 has been when fed was
increasing rates. flattinging yield curve, china, credit rates, transportations
going down, we are going back to normal volatility at the very least. we have a 15% decrease
every 300 days ususally we have n't had one cor 1500 days.
Rick - 10 yr note aution says it all - they were piling in to the 10 year notes Yields have come
down (people flocking into bonds) Lots of global anxieties. Buying bonds like crazy.
Now the training wheels are off and the markets are reacting how we would predict. Copper is a
sentinel commodity and manuf a sentinel sector. Rick agrees with sarge.
The fed is not going to pull a rabit out the the hat, they have no more bullets. We're still
creating good jobs. So they aren't likely to get involved. The fed won't reduce rates to -1,
but Europe might since there's a serious problem. The stock market guys are calling a recession.
Sarge says 35% allocate to cash. (I agree)
Joe - You don't want to stretch for yield.
Booze industry - recession proof? hmm.
1901 was extremely significant level to break. If we test it again, we need to pay attention.
Chinese Yuan: Good!
http://www.cnbc.com/2016/01/07/chinese-yuan-heres-whats-happening-to-the-currency.html
to PDF:

The problem is that most outside traders consider the yuan to be more than 10 percent
overvalued against the U.S. dollar.
Allowing the market to take the exchange rate to that value could potentially devastate China's
domestic economy,
but it's an expensive and potentially impossible task to fight the market now that the
5

yuan is a global currency.

"Once you start to do it, you can't be half pregnant," he said of the currency liberalization
process, one that likely began as a politics-inspired goal of having the yuan included
in the International Monetary Fund's Special Drawing Rights basket of important reserve
currencies. Beijing has long pressed the IMF to make the yuan part of the select club of
currencies, along with the U.S. dollar, the euro, the yen and British pound sterling. The addition
is scheduled to take effect this year
Rick Santelli - if you lock investors in a pasture, they're going to want ot get out - circuit
breakers or no. The fed rate hike was a catalyst.
Rick watches the dollar /yen - Think about margin calls all over the world, and deleveraging, you
can tell it's a liquidation. The carry trade has unintended consequences.

What is the fair market value of the Chineese Yuan? around 6.8690 recently
Fair value on a proper trade weighted basis.
Some economies and currencies are very interlinked with china particularly. NE Asia, singapore,
malaysia, most exposed to the depcreciacion of the Yuan
Also note the Dollar/Yen Note the interest rate differential driving the dollar/yen higher.
DuPont Analysis - (off the internet)

Good info site:

http://blog.gavekalcapital.com/?p=10104
Counter Cyclical Stocks like HealthCare and Consumer Staples are doing better now.
Bob Pisani - we are seeing a slowdown in global business activity. causing the oil decline
Nike, General Mills, BBB, 19/23 have missed on already lowered expectations. Big companies
The global consumer is slowing and they are getting hurt by the strong dollar. They must be
exporters.
It's the chinese currency and not the chineese economy that we are worried about.
The devalued yuan will benefeit consumers of foreign goods but will hurt factories here and
exporting of goods.
We won't probably export many tractors to china for a while.
There was a big decline on rather heavy volume.
Brian Kelly = beaker.
7

Mike Santoli - a normal looking guy.

Today was a "sell what you can" environment - not total panic.
we have china deleveraging. - getting out of debt.
Bob Pisani - Traders have gotten used to selling into rallies.
1/14/2015
How can the market change from total bearish to bullish?
Guy - Do we believe the bounce? Not necessarily. Let's see. We're heading in to a 3 day
weekend and usually have a fade friday afternoon.
One Guy isn't too quick to get out there and start buying hand over fist. I missed the fed
president bullard talking.
Santelli - We might have a future very similar to Japan's - not what what we expected.
The velocity of money never recorvered after the crisis becuase:
1) lack of confidence in the post crisis economy
2) Great story in the American Thinker about the velocity of money - the big
drop in interest rates. Which is part of the problem .
There's one reason why long term interest rates are down
1) The relative value trade in europe
2) Global growth is FLAT AS A PANCAKE!!
1900 - is a new support level

NOTICE WHERE THE SUPPORT and RESISTANCE ARE!! and whether it breaks through support
and resistance!!
--market was up 220 points today and S&P was up 30 pts. - it faded at the end of the day. (some
traders didn't want to stay in overnight, some traders wanted to sell more)
Note my astrological clues for the day. How but SUN TRINE DOW JONES
One chart guy:
Encouraging for the short term. He's concerned that the market is too quick to jump the
gun. (Exacly what I thought)
1860 is a real imortant level - the August lows - if we do we'll have some real
accelleration to the down side.
S&P back to 1997 - shows real momentum deterioration for a couple of years
There's one thing he tells investors to look at: The 10 Month moving average. When
indices are below that you want to be out of the market.
When indices are above that you want to be involved. Historically looking, you'd have
missed a major decline and saved a bunch of month
8

To fix this we need to get above 1990. for right now.

1/15/2016 - After a 400 pt drop and 500 pt low.
There is not a feeling of panic - there is a volume pickup. There are starting to
discuss the word capitulation.
Down volume 628,000,000 shares (panickers)
Up volume 23,000,000 shares (nibblers)
Rick Santelli - the carry trade has made the euro and yen move higher against the dollar and
they don't want that.

3x Bullish shares
TQQQ - Powershares ultrapro QQQ
DDM Proshares ultra dow 30
TNA - Direxion Sm cap bull 3x
direxion
EM MKTS bull 3x
--go up and down 3x market

Blackrock CEO Larry Fink - thinks this will force businesses to take action. More layoffs first and
second quarter.
--thinks the market will be higher in the 2nd half of the year.
Art Cashin - Crude is off of the lows and we are off of the lows like that is. If crude continues to
weaken then the market will continue to weaken.
This is earnings season, and corporate buybacks are standing aside until earnings season is over
and that's one support for the market.
This is not similar to 2008.
Hedge Funds have had people calling their money back and they have to sell things to get
money back for people who want it back.
Selling on margin calls is going on.
We are all under the thrall of crude. We took out the aug 24th lows which is not good.
There isn't a sense of panick that you have in a capitualtion bottom. When you have a purge
opening like today, ordinarily the selling exhausts early in the day and we get rally attempts.
Buy crude has kept the market down today.
Watch the china currency as well.
Art says we might see 0 again before 1%. the other lady agreed. Sue Herera.
We are re-evaluating the stock market - and looking at valuations. He thinks we might break
1800 but more of a buying opportunity than a full fledged bear market.
In 2009 all the sellers just petered out and there was no one left to sell therefore the market
went up really fast. If there's no sellers, it just takes a few buyers to move things along quickly.
If there's no buyers it doesn't take much selling to drive prices lower.
The market will stabilize and then resume it's uptrend.
9

He thinks the US market is holding up better than the other markets even though it's going
down.
Before we didn't have a complete global collapse around us before when the market bounced
back.
He thinks this is the time when you might want to get your buy list together. I agree.
Unload some of your winners on the strong days.
Whatever you buy up today, you're going to feel pretty good about in the next couple of years.
oil from $30 to $20 is a big % decrease - but not a large economic impact. The material price
declines in oil are behind us.
Jeff Grosseman - BRG Brokerage - Today goes back to the China News. 28.5 is a technical big
deal for oil.
We need any sort of decent bullish news will set it back off. The market is highly succeptible to
the upside now.
See
Marathon Oil
Whiting
Denbury
SIM energy all down 25% this week.
But some might go under, ... The credit default swaps - the cost of default risk is shooting up.
I should probably stay out of oil companies since I don't understand them.
In Texas they say that all the fortunes are really made in a downturn.

INVERSE ETF's
SH - PROSHARES SHORT S&P
DOG - PROSHARES SHRT DOW 30
DDG - PROSHARES SHORT OIL & G
DUG - PROSHARES ULTSH OIL
PSQ - PROSHARES TRUS SHORT NASDAQ (QQQ)
Europe didn't get the bounce that the US got (becuase it was a US aspects)
Fossil Group went up today. ...???
Worst performing stocks today: INTEL DOWN 9% WHY?, DUPONT, DISNEY, MICROSOFT.
jACKI DEANGELIS - OIL LADY - Very strong down sentiment in the market now.
Supply is going to continue to go up. and Iran is coming on line. There will be more volatility by
all accounts.
Larry fink says another 10% down from here.
TWITTER - see what they are saying on twitter.
DRQ, CLB, XOM, HP, SYRG - oil companies with clean balance sheets and low debt.
Buy the dip or take cover? Every time you have a pull back to this degree, it has been bought.
10

Oil might be trying to find a bottom.

What if you try to catch a falling knife. ? You don't want to declare it as the bottom and go all in.
Gamestop? Next week may bring a positive catalyst - The selling has been indiscriminate
throwing out the good with the bad.
The cure for a market selloff is a market selloff. Nothing else is yielding anything. So the game is
stocks. There are fundamental traders
who are waiting for the right PE.
The market is a discounting mechanism - but that sounds like bs to me.
IF you don't know what to do , then don't do anything - you should never have to feel like you
should buy or sell the market if you don't know what to do.
FAST MONEY
it
Guy Adami - there is more to go - it held the 1864 - held bounced and closed above it we might have a bounce on tuesday. They are still selling all
rallies - it might bounce up to 1920 - but you need to sell it when it gets there.
Beaker (Brian Kelly) - China and Oil are still issues and the broad indexes like
Transports - thinks we're already in a recession here in the US.
China is going through a deleveraging. Thinks that silver may do well. Do Pendulum
on Chinese Growth - Russel and Transports have been down.
China could be growing at 0%.

Steve Grasso - Thinks the worst is not over yet. Our economny isn't as good as the bulls
think. Needs to see the markets firm up or more stability before he buys more.

Woman - why are the transports down? 30% Sometimes they are telling you something.
Dan nathan - Intel says there's reason for concern in China. The people on the ground
in china. Financial Institutions stopped buying our stiff and auto makers stopped
buying our stuff. Covered some shorts and doesn't like 3 day weekends.
He says earnings season will affect the stock market coming up and not china
but Grasso disagrees. Grasso: they're not going to give earnings the
benefit of the doubt in the face of China and that is the biggest wildcard.
The traders did buy today. Holding Apple and Disney
Bill Fleckenstein - Thinks theres more to go - and might have a dislocation where the
market breaks hard and fast. So far it's been a rolling dislocation .
11

This is much bigger than a market correction. It's a global correction.

The August 2008 Flash crash said: the market is uniquely crash prone. I think the
market is britle because of high frequency trading, ETF's , a lot of momentum investors .
I don't think there's going to be any painless backdoor.
Now - he think's there's much more to go. The exact path, he doesn't know, his
real fear is that there's going to be a DISLOCATION. (Like where the market breaks hard and
fast)
so far it's been a rolling dislocation. THe market is going to
accellerate is it goes lower.
INTEL - thinks it goes even lower. The data center growth is
slowing drastically. All the datacenter players have been cutting back. They have ton's of
capacity
in place , If GDP slows and data centers slow then . The world
economy is weak and the FED can't do much, so he thinks that the marketts are going much
lower.
QE3 - is what took the market to 2100 and now it's done and
the market stopped going up. I took a year to peak out. Now the monetization that drove the
markets
to the moon is out of play, the economy wasn't that
great last year , it's gonna get weaker cause these financial markets are going to feed back into
the
economy. THIS IS MUCH BIGGER THAN A MARKET
CORRECTION. He thinks there will be a big feedback loop that will work together on the
downside and
make this a whole lot worse.

intel - (and AMD) - have tons of capacity in place (see Fleckstein) ( was talking about
chip makers)
They all say to sell rallies. XLU - SPDR Utilities Select
Full blown currency crisis in Asia. Time will cure all ills, but how long will that take?
One guy was day trading USO right up to the close.
Larry Fink says there's not enough blood in the street right now. - But it will
result in a buying opportunity at some point.
Leon Cooperman - Omega Advisors - Says the market he's grown up with no longer
exists. That dod framk and the volker rule has prohibited the brokers from carrying inventory,
the commision structure provedes no reward for brokers who take risk, the
specialist system has been destroyed, the SEC make a mistake in getting rid of the uptick rule,
which aids the mechanical trading systems that are momentum based and not
fundamentals based. It exacerbates the moves in the market. He's not sure the market is rght
in forecasting a recession.
12

Bear markets are associated with 4 factors

1) The market smells an oncoming recession and declines in
anticipation of it.
there's a soft spot going on, but there's no signs of recession.
2) The market became too euphoric and was in a bubble. (true) Is
sloppy and very overvalued and vulnerable to a big decline.
John Tepplepin: Bull markets start with a bull during pessimism,
they grow in sekpticism, they mature in optimism, and they die in euphoria.
Right now the market is 15x earnings - not unreasonable. No
overvalued and attractive relative to alternatives.
There's no sighns of euphoria now.
3) A geopollitical event which we cannot forecast.
4) The fed takes the punch out of the punch bowl - but the fed is
reluctant to move.
--a recession and throw you into a bear market.
--He thinks that the market is going down to be bought. So if we don't
have a recession, stocks will do better. He thinks this is more of a growth scare
and not a recession. He's not selling , and he's fully invested. He
thinks that is a SCARE and not a BEAR MARKET.
-we have ISIS which is a global problem
-multiples are a fx of confidence, interest rates, and growth rates. Right
now confidence is being shaken.
He thinks we're nearing some lows, the thinks economomic activity is
more of a soft patch and not a recession.
He doesn't look at the FED is a wildcard.
Every day he asks what his choices are for that day? and bonds are a
bad decision.
The thinks that about half the s&p 500 yields more than bonds.
China is not as significant to the global economy as it seems. it all blows
over. he's more worried about our credit markets. China has had and effect on the
commodity stocks but they have all been destroyed.
People are now shorting the S&P as a hedge against the high yeild
bonds in the credit market
The S&P will have to find a level that it's comfortable at. Don't be on
margin. This too shall pass.
Watch the economy, it's haning in there, but maybe in a soft patch. No
one of credibility is forecasting a recession.
The fed recently said the economy looks good (me) - and I agree that
this might be a scare and not a recession.
He's watching the 1825-50 level.
Doc: When are we going to see a more reasonable bounce? When we
see a lot more fear, you need to see heavy volume, Doc thinks we'll get a capituatory
13

low before we get another 10% lower.

Jim: Lee said: Last year we had greece, ebola, and other worries ,these
issues come up and they pass. This is not a structural decline that we're looking at here.
There is Nothing in this china scare that is structural to the us
market.
Rebecca Patterson - at bessamer strus - she likes coopermans ideas. Note the liquidity changes in the market, ETF's and quant trading strategies that can be
exacerbating the markets in the short term.
we have oil and it will find a bottom, it's not going to zero,
there will be a bottom but where and when it gets there is the question.
Asia: Is there a currency crisis? All the emerging countries
currencies. They have been overweight the dollar.
You want to focus on China - the switch to market
focus, this is a structural shift, you have to watch them. She thinks they are at fair value now
and she doesn't expect it to change quickly from now
on. Maybe slowly. I wouldn't be a hero though.
Emerging markets - you have to get the equity AND the
currency to work together inorder to get a decent return.
They are not selling equities here there has already
been a big selloff. Why would I crystallize those losses?
We're not seeing stats that the consumer is capitulating at this
point. If the consumer holds, inflation expectations come down, fed rate hikes get pushed back,
the dollar stabilizes, and all of that is a self correcting mechanism that
will help stabilize the equity market. The issue is timing. when?
Bank stocks are earnings driven - Financials are the 2nd worst
performer in the S&P - The fed believes that the economy is on the 2% track.
If we are headed into a recession the FED will not be hiking 4 times.
Lending in the energy and basic materials sector is a problem . the fed
wants to normalize rates for that time when a recession hits.
Liesman - just because the stock market is down doesn't mean that the
economy is weak. The market does not predict the economy. It's a global market.
China is 3% of US trade. We'll here from FED speakers next week.
Josh - the real reasons why this is happening. No one wants to be long
going into a long weekend.
We're in a buyback blackout period before earnings. That's not
where you want to be when all of the buying that takes place in the market is CFO's putting
more money to work in the buyback program which is what
happened last year. So you don't have anybody buying right now and they don't come back
until after these companies report.
There is more money than ever that is being managed in some
sort of a technical (algorithmic) fashion. Technitions saw this coming. They have been watching
the
internals break down for over 6 months. They are watching
14

sentiment breaking down over the last 3 months. The techs were not going into this fully
invested,
and those that were heavily invested are the people that are
out there selling as each one of these levels breaks through. The levels are actually what are
driving money into and out of the markets. The S&P is now
below the August lows.
What are FANG Stocks? Facebook, Amazon, Netflix, Google.
Josh just bought apple for $96 - they are not going to cancel
their buyback, they have over 200 billion in cash, most can't be used for R&D and most will be
used
for shareholders, John Nagaian is buying as well,
Nagarian also bought Gap - The pits don't think the fed will move 4x this year.
NO one likes to buy going out of a 3 day weekend.
Brainy guy - some of these oil companies are getting close to
insolvency. Saudis are playing a big game.
TIA portfolio mgr - TIAA Kreft - until oil stabilizes, and china
getsa a handle on things - next week we get a ton of earnings. See if the stocks rally on good
news.
-they like INTEL's cash flow at least they have
some cash.
Art Cashin - 9am Squawk Alley
The S&P has 10 sectors. The Energy Sector is doing the worst
due to oil.
The price of oil has been driving most of this -- it is driving down
the
391m down/21m up Larry Fink thinks we'll be seing more layoffs. But he thinks by
the 2nd half of the year the market will be higher.
Art Cashin - oil is the culprit - Normally when you have a
purge opening - the sellering usually exhausts itself in the first 45 minutes or so.
That's not happening here due to oil prices. Today is an
expiration day and the volumes get distorted.
There is an event risk that world markets will react to
this monday and we will be locked out of it. (Simon)
The tide is going out and it's taking all the boats with it.
Art Cashin - How much further do we go down. 10-12% more
from here - 21% since the start of the year.
The tech space is changing - and the market isn't sure who the
winners will be.
15

the big hiring numbers we saw was mostly holiday hiring. over
35% of the jobs went to teenagers
The jobs numbers are really opaque and suspect. only 3% went
to 25-55 year olds

1/18/2019 Monday
Rick Santelli - Globex the electronic markets that are still open
Futures - yields have been going down, prices of bonds have been going
up.
The Yen (japanese) futures are down. Watch the carry trade, The yen
has been rallying against the dollar.
When peole are trying to get out of the chinese market - that speaks
volumes about china.
We're taking off the froth of the market. We're clearing out the foam of
the markets. Great foamy head metaphor.
Autosales have never been better - but not so for auto makers stocks.
Slowest global sales growth since 2010
The STOCK MARKET IS NOT THE ECONOMY!!!
Will china impact the fed - which is data dependent - past looking
China has never been the 2nd biggest economy in the world and we
have never seen it slow.
Steve Leasman, - the fed bases it's rate hikes on forcasts. What can we
project into the future?
Michelle - the best guess is not a big effect. it could be wrong.
China sells a lot to us , they don't buy a lot from us - Us exports to china
isn't even 0.7% of the GDP Steve: 1) Direct purchases by China of our goods
2) The weakness that could spread to their partners
3) The systemic risk component - we don't know where
the debt it, who holds it and the extent to which there's a congagion effect.
THe market is very nervous of the post 2008
era.
Fidelity's director of global macroecon - China: scale of 1-10 = 7 or 8
The transmission between china and the markets is through the liquidity channel.
We have a policy divergence, going on. The 2 larges economies
in the world are tied together through a quasi currency peg, as the dollar has
gone up and has become overvalued. It's economy is growing
by 1-2% and there is capital flight now. The Commies are trying to manage an
orderly process. by 15-20% overvalued. still? There is capital
flight from the chinese economy. The PBOC is trying to have a gradual and orderly
devaluation . It does this by drawing down it's foreign exchange
16

reserves. That is like global tightening. not QE. When you have to spend your foreign
currency reserves. Why? It's a transmissionn effect - it effects
the overall liquidity of the market, earnings in oil and materials, and brings down
earnings in the US stock market - the liquidity channel.
Michelle- Baltic Dry - commodity prices - because China is
buying less commodities than it used to.
We'll have a v shaped bottom sort of like 2009. We're still in the
catching the falling knife mode.
We export twice as much to europe as we do to china. Europe
is having a hissy fit right now. The ECB is the most aggressive on the planet as far as QE is
concerned.
V in emerging markets equities, commodities, and the value
stocks. We are in the falling knife mode. Con't catch the falling knife!
Guy thinks we are overrating china and underrating europe. But
it has a high speed central bank.
He thinks japan is ok. But the us is on one end of the policy
spectrum and china is on the other end of the spectrum.
He's seeing a few divergences that you might see at a bottom
like what?
This is not the time to be selling or trying to pick bottoms, just
stay put for now. March is the next supposed rate hike.
PBOC is forcing the fed to hold off. We may see another bounce
for the fact that the fed can't raise cause of the china turmoil.

One guy - china's stock market is not realy closely correlated

with it's economy. He thinks the currency is more hurtfal to chana than the economy.
Stock market volatility is pretty typical usually right before or
right after a federal funds rate hike. The us markets tend to do well when the us economy
is doing well. Do what allows you to sleep at night.

Italy - what happens to all the bad loans - thats what the people
are concerned about. Concerns about banks with bad loans.
Italian banks are going through mergers, but what
happens to the bad loans? THey have to go somewhere? don't they?
Greek banks are also crashing. and spanish banks not so
hot.
Santelli - Markets vs the Economy You need to dissect the jobs numbers temporary v permanent, wages ver low dollar jobs.
we can't disconnect from the other economies it's all global.

17

deuche bank guy - why do we care about the PBOC? We have

investors that have invested in china. It has an impact on the equity market. So it impacts our
cash flows. Do the chinese have tainted assets on their balance
sheets? The black market chinese market which is weaker than the official market.
It tells us that the locals are very concerned. and they are
buying dollars locally. and the PBOC is trying to stop it. The ripple effects are that
The disturbance show fade in the next few days. Buy some
PFG?
You want to see stability both in the equity markets and also in
commodities.
One guy says the trend is your friend - and that trend is lower
for us equities. How can I use that?
We're trying to digest a world without the fed shoveling cash at
us. We have a slower china - who is a voracious consumer of goods and services.
Now we have falling oil prices. He does'nt like the
closure of the walmart stores. If walmart is beginning to slow and reposition,
we had better pay attention to GDP growth.
The thinks we will fall further and get to a 20% discount.
Warren buffet is looking to buy and he isn't selling.
If you must act - sit on your hands. Don't do anything rash when
everyone else around you is losing their minds.
S&P transports is headed down., Walmart is cutting stores.
Countries who export commodities are getting slammed. Their
currencies are also lower.
Canada and Mexico.
DOllar yet - the yen is startingn to strengthen and the dollar
weaken relative to it This is a sign that
when eever there is stress in the system, or liquidity concerns
of any kind the yen strengthens agains the dollar. and that has helped drag down stocks, why?
Transpots are in correction - and that is a signal for the rest of
the market usually.
Slowing global growth. Transports have been signally an
economic slowdown for some time.
Watch the dow industrials as well as the transports - DOW
THEORY
IMF - economic outlook
cutting global growth outlook to 3.4 %
weaker outlook for us- but mostly for developing economies.
If I dont' know what to do don't do anything
start with the macro view and stick with it - the trend is your friend.

18

=====================tuesday action =================================

The bottom's not in but we did get a bounce. It didn't fall apart in the afternoon.
Investors are continuing to position defensively. But he doesn't think the bottom is in.
Nothing has changed for beaker in the last 2 weeks.
The path of least resistance is no longer higher. -- the new guy said.
Beaker - there is a 2008 moment going on in china they are deleveraging - They've had a
huge credit bubble which is not popping.
that will be hanging over the market until they solve that problem.
-the global economy is slowing down from that. China will devalue from
10-15%
there's too much debt, they have to get rid if it, they can default, they can grow
out of it (not likely) or they can devalue.
The global slowdown is not affecting the us markets but it might. When oil turned south
today the S&P roared down. We pulled down 10
s&P's within minutes. Volatility is so extreme now.
The new guy isn't buying anything. The bull market is done.
He would sell rips or else sit on his hands.
The bounce we saw today was a classic bear market move.
Buying dips: Big portfolios can't move quickly. The precondition for buying dips is that
the market is rising. So if the market isn't
rising anymore it's not buying a dip, it's a downtrend.
Once you break trend, don't buy dips after that- becuase you risk a major move lower!
It's a time for caution, not a time to find a stock to buy.
a bear market means
a bull is defined by 2 things, a succession of peaks and troughs that are higher than the
preceeding ones.
a bear market is defined by peaks and troughs that are lower. Which we have now.
a bull market is also defined by a period of strenght where most sectors are
participating. We don't have that either. This is not what a bull market looks like.

The buyback index - has been underperforming the market - people don't care about
that they want to see growth.
Ponytail likes the fundamentals of cisco.
Closing Bell - buy the dip is out - sell the rally is the new mantra.
Some guy is predicting some financial black swan event.
Why the face? Oil keeps going down. no peace without oil settling down.
Anything related to global growth went to the downside.
Russel 2000 index is most reflective of the us economy. That has been diverging and hit
19

a 52 week low today - and has been diverging from the Big Cap Index.
-he says to stay away from this market for a while before you step back in, wait for some capitualtive behavior.
The markets are still sick. Don't buy them until the markets get well.
This market is being held hostage by crude. The traders are selling into all
rallies right now.
People are selling what they have to sell not what they want to sell and you can
get some bargains and uner 10 PE.
Transports are down - what exactly are the transports?
Theres too much inventory - and too much overcapacity in the shipping
industry.
right now there is no rotation, there is just liquidation and we are probably
going to see a V shaped recovery and people won't be expecting it and they
probably won't catch it.
Halftime REPort - steve - going to buy but don't just dive it right now. many time people
are fooled by trying to pick a bottom .
global and oil are pulling us down.
5% next move is up and soon, but it may not happen.
Doc why can't we sustain any kind of bounce in oversold conditions? The crude oil
market is desparate to get some dollars in. The soverein wealth funds.
cause they have to hit the exits. They have to get out. and they sell because
they have to sell. Burning $100 bills and hitting the exits right now.
Fink said there's a chance that we do down anohter 10% - probably.
Doc bought a few stocks today. Stephie link bought visa today.
--best trade is no trade. buying is fine. When do you buy with more agression?
What's leading the market is consumer stapes and utilities.
that's not the formula for when to get aggresse with your buying.
You need to see more sectors being bought.
There is a transport selloff - of business carried by trucking companies. joe
Terranova - doesn't really trust the transports since we're a service economy more now.
Shopping for bargains - Doc agrees that apple pullback is a buy. But I don't like their
maket future.
SHAKE SHACK - has a new sandwich - check it out. Doc says don't get into it now.

Wednesday Morning CNBC - Davos

Scott (Guggenheim Partners) - His company is out of the markets and is short some
S&P - he tells people to start looking for opportunities. But basically just stay out of the market.
I think we're coming to the end game. He wrote a piece last year that
said we could see $25 oil and we are pretty close. I think if we don't get above 1860 before the
20

close
we're probably going to 1650 to 1700. The overvalued condition exists
pretty broadly.
It's China - we've discovered that the markets cannot be artificially
maintained for a long period of time, clearly the currency is overvalued, something has to give,
and with the overnight rates in HongKong up to 60% some days to
defend the currency, this isnt sustainable and somethings gotta give.
China is the most vulnerable. His view is that CHINA is going to have to
revalue, there is more downside in chinese stocks, and that's going to flow over into the rest
of the markets and we're going to see more turbulence.
Ian Bremmer (Eurasia Group President) - it's a state capitalist country the country can keep the false music playing - and their capacity to do so is pretty high.
Historically, if you saw geopollitical risk anywhere you bought it,
because you knew the market would bounce back up.
It is not true for the geopollitical stuff we're seeing today. Europe ,
China - is going to take years to play through.
We used to have the fed to help us buy the dips. (joe)
Scott - from an investor's standpoint - the trend is pretty clear. It's down. The
complacency and lack of panic in the market bothers scott.
Until we get some kind of panic we don't have an indication of a
bottom. If we can't get back above 1860 today and we head down as he expects, then the fed is
on
hold and they might reverse course.
Ken Rogoff, in his book This Time it's Different - the end game is you
defaul, restructure, or you print money and inflation will be less of a concern than system
stability.
and we'll just have a bunch of inflation.
Earnings doesn't mean shit in all this global economic turbulence. it isn't
just about the US economy.

Jaimi Diamon - isn't worried about the price of oil. On the flip side the consumer has a
lot more money in his pocket and might spend some.
Thinks normalization is a good thing and that a .25 basis point ir is not
even tightening.
Halftime Report - Kenny Fulcari - big guy - John and Pete Nagarian and Mario Gabelli. Crude oil has dipped low.
Mario Thinks it's a growth scare and not necessarily a recession.
They are expecing a blowoff which is good -it's psychology and
behavior.
We can have a cyclical bear market without going into a global
economic depression. We can have areas of the market that really get hard hit.
What looks horrible today can look really great next week so you need
to keep perspective.
Gabelli - sell down to your sleeping point if you're really that
21

concerned - an old saying on wall street. It is what it is.

Kenny: People shouldn't panick. The market isn't that panicked yet. You
don't feel that capitulation yet. You don't feel like people are throwing
the kitchen sink and the bathroom sink out the window yet. And when
you get that FLUSH that's really going to signal when the bottom comes.
It's gotta FLUSH and when it does then that signals when it's going to be
over. You stick to the plan, if the fundamentals are good in the stocks and the
companies that you're invested in. Then stocks that get really mispriced
because of this herd mentality represent great opportunities if you've got that
long term horizon. John and Pete and looking for opportunities.
John and Pete There hasn't been a lot of clear paper signals in the
options market.
When you've got these sovereign wealth funds they are liquidating
everything they can because they have to to cover their obligations.
The only liquid cash for them are equities. Like Citigroup. So
he's selling the shit out of that.
If you have save investments, you are not down as much as the
nasdaq. like bonds etc.
Citibank is down 23% year to date. If there's a dislocation in
price it's a good opportunity for a long term investor if you think the story
is still good and hasn't changed. Gabelli- the market is throwing
out a lot of good opportunities.
Diamon - dont' buy treasuries. They'are priced like it's a bad recession.
Kenny - 1820 is a key level and 1770 is the next level after that.
Slick Guy - this is soverein wealth funds that are forced to liquidate.
SWF's that have oil issues, currency issues, capital controls being instituded,
it's a global problem and there is forced selling out there. If we get to
total panick mode you'll hear all about it because the media will be all over it.
But he doesn't think we're there and we don't necessarily have
to get there.
August - is what a FLUSH looks like. There is some panic. See the vix.
You don't have to decide when the worst is going to take place.
you don't have to guess when the worst is yet to come.
The VIx popped 30 today. Nagairan thinks it will go over it. He
isn't feeling the FLUSH lower yet. He thinks it's yet to come.
Is it time to pile into gold?
Ray Dalios - says the risk is asymmetric to the downside. at davos.
We havent see the bear streans momment or the lehman moment in
the energy stocks yet. Bankrupcies. Lost jobs etc.
You have to see that in order to see a bottom. When there are
22

business casualties.
The market hasn't felt pain in a while. You can get numb to it when
you're feeling it all the time. (Nagarian)
OVX has spiked and stocks are down double digit losses in 1 day - that's
more like a FLUSH in oil.
Slick - QE isn't wating in the wings to bail us out now.
Bob Thasani - there's a new contract for crude oil for the month. We
are down with crude price.
There is some signs of climax selling and twilight zone numbers. 30-1
declining to advancing stocks. a 90% day is 10:1 is bad.
3 billion volume = 2x and is good indication of selling climaxes.
We haven't seen in the economy where people are saving money from
oil.
The oil correlation won't stick forever. Bear market rallies are
notoriously sharp , vicious and breathtaking to look at. It's a relief rally.
Bear market rallies end because people sell into them. It's a good thing
to get out of the system.
MG: You could have another 200 points onthe S&P - a 20% decline then around the end of the year things start looking better.
Foreign guy - there's a shortage of dollars out in the developing
economies.
MG - who's holding the debt of all these distressed countries?
Mohammed Alarian - The next stage of a broadening dislocation.
Global growth , liquidity and volatility . Oil, emerging marekets, junk bonds,
now it's full scale contagion. - cascading technical dislocation. in
massive price overshoots. Markets are starting to feed off eachother and can't
find a firm footing.
CONTAGION - is what's going on. GLOBAL CONTAGION.
This is more an adjustment to a different volatility and liquidity
paradigm. The training wheels of the fed are off and we aren't used to it.
The global system is not at risk. There is not a financial sudden stop like
in 2008. This is a global market correction from excessive risk taking
and a very repressed volatility regime. The fed may not increase
the rates now. They are taking another look at it.
It distorts the financial system. We'll get 2 in this year but
probably not 4.
Rich Saprostein - fundamentals are not deteriorating as rapidly as stock
prices. What we're seeing now is a fear of the unintended consequences
of the fed's 0 interest rate policy in 3 ares of concern:
- emerging market countries where they borrowed 3.8 T of
dollar denominated debt and have weak currencies.
- hi yeild markets which consist of about 15% of oil related
producers
-commodity sector
-these could lead to a watershed occurance: a default, an
23

inalbility to replay the debt or some significant event which will impact the
markets - THE FEAR OF THIS CONTAGION.
The stocks aren't matching the US Fundamentals. Weak oil prices is a +
for the US consumer.
Our net exports and < 1% of GDP to China. Our economy is not robust
but it is still growing.
Doc - keep an eye on the VIX.

We are on FLUSH WATCH!! A BIG SPIKE in the VIX like we saw today.
Margin Calls...having to sell stocks. He thinks we're seeing them.
JACK BOGLE - When ever has selling (not buying) into a collapsing tape
worked for anybody? Never never never.
Breadth 10:1 and big volume - suggests a peak in the selling climax.
Jack Bogle - founder of the vanguard group - The average investor
should do NOTHING. Don't stop in vesting when the market goes down.
Keep buying when the market goes down. YOu get better
prices. Just stay the course. What were' seeing out there is pure
speculation and you can't respond to it.
passive vrs active mgt. - indexing always always works best.
The smart money trades with the dumb money - The high cost
of trading makes this very difficult.
There is always a bubble - but each one is different than the
previous one.
The economy and the stock market is not the same thing. The value of
stocks and the value of the economy are tightly linked. They track.
In the long run they are correlated. In the short run they can get
out of joint. it's all expectation. ih the short run listen to the
economy not the market.
Rick thinks this year is ALL about Margin calls. If you're fully
leveraged.when prices fall you need to start selling things.
when you get a margin call you have to SELL. The cost of poker
has gone up and how much you can hold in a fully leveraged
portfolio has gone down.
This a reversion to the mean.
Mr Hull - is an active manager and an market timer. The stigma on
market timing has gone on too long. We have predictive analytics.
Steve Schwarzman - china is slowing but it is NOT collapsing.
This is all an overreaction. The problem is the
communist party management of the resources. the stock
market and the economy.

Liesman - the fed's next move will not be a cut. Maybe a pause, but not
24

a cut.
The fed has a long way to go before it reverses course.
5 most pressing questions John Nagarian Dr J, Doc.
1) What changed on jan 1 ? The chinese devauled a little too
quickly and that shook up markets. And that there were going to be 4 rate
increases this year.
2) Who's doing all the selling - the soverign wealth funds saudi
arabia, kuwait, norway - hedge funds, some also. They have to raise money,
their budgets are the same but their
commodity is down. The have to pump to pay.
The invididual investor is still buying. Dollar cost
averaging. and some dip buyers.
3-10 billions of selling in SWF in the last 3- days
3) What are clients supposed to do? is a buying opportunity in
energy anyway - there is a capitulation in energy. When there is great
fear to get out then that's when we want to get
in.
4) who's making money ? Hedge funds that are short
commodities.
5) Who's to blame for all this? Saudi arabia ? yes and norway.
Sinapore kuwait, saudi arabia. Petrostan.
they want to hurt marginal producers in the US
and also IRAN.

RICK SANTELLI - thursday - all the traders are telling him that they are going to
sell rallies.

FAST MONEY!
Why was the rally - tremendously oversold conditions. The Drahgi statement.
Fed meeting next week where they might comment helpfully.
The rally has a little more room to run. Beaker agrees in the very short term.
Beaker still thinks oil is going lower and also the markets.
he thinks we use any rips to sell into
Guy Adami he thinks we should fade 1920 in the S&P . There was a
consensus feeling about sell the rips.
It's a trader's market.
Beaker - we still haven't resolved china - 6-8 months from now the market is
going lower and we will be in recession.
We should be worried about the uS not china - Slim Guy
GA - there is a slowdown in transports - AAPL - good growth in China 25

Steve Grasso - is talking Fibonacci Retracements - talking

1867 was the recent low. 2014 low was 1820
We hit 1812 and bounced. Markets undershoot, overshoot ,
undershoot, they overshot this time.
You look at the 2016 hi and most recent low and do fib retracement
levels. 1884 is the first retracement.
Closing above 1880 tells us you can be a buyer of this market. 1928,
then 1964.
Where do you sell this market? 1964 to 2000 is the sell zone. If it holds
you continue to buy more aggressively.
exit strategy 1880 - if it trades below that that's when you bail on the
market - but he thinks we go higher from here.
Bidu - china is getting back into it.
Decker - going straight up
XLU - beaker says.
HALFTIME REPORT Scott Wapner - santoli Ivy Zelman - housing. - expert. Are we at a tradable bottom? Stephanie
LInk - She says it depends on oil.
Didn't we just have a sun trine neptune? For this market to go higher
we just need to stabilize. She thinks we want to be overweight consumer stocks.
It aint going to be rainbows and puppy dogs either.
People want to buy growth, and it sells at a premium, FANG STOCKS.
JIM LEBENTHAL - with wed pm - we have a 3 day rally. it would be better if we could
disconnet form oil , there is a lot of supply out there, not just iran, iraq,
libya, he's like to see the DISCONNECT FROM OIL.
Santoli - we're up 4% from the wed midday bottom. The market had been
trading as if recession was a 75% chance. JIM - jobless claims are tiking up some,
but no real economic numbers that suggest stress. Santoli - the
leading indiccators look NOTHING LIKE what it looks like before a recession.
Larry FInk - says stay in equities - Warren Buffet ssays it's a long long
race.
SL - don't forget to keep diversified - and do like warren buffet.
JIMThe balance sheets of banks are far far stronger than in 2008.
GUEST - the fed will do the right thing.
Should you buy apple ahead of earnings or stear clear until there' s
more info on IPhone demand?
Home sales - ivy zelman - expert.
Gene Munster - AAPL could rally 50% by the fall. Valuation a 10 year
basis is on a historial low, Investors are handcuffed going into the earnings call.
They are afraid there is going to be a bad earnings. Why not just
26

wait for the reset? Why not just wait? He think''s it's priced in.
PRICE TARGET is 179
Wapner - what about currrency risk - affects IPHONE sales in
china.
Buy analyst thinks it's imbedded in the iphone numbers.
The best bet around is to buy TESLA - or for AAPL to buy TESLA - tesla
has been beat up.
Jim - is in AAPL - they sell short cycle products - The june qtr is too
preliminary - there might be a massive reset - he doesn't think it's going to happen.
BUT I SHOULD PROBABLY GET OUT BEFORE EARNINGS. AAPLE
HAS A 2 YEAR PRODUCT CYCLE AND people always want to upgrade after 2 year.s
Fat guy - Gune M - has been right for a long time.
SL - portfolio managers - isn't willing to be long apple until we hear
good news from the earnings and will pay of if she does hear it.
American Express is going down the tubes. It's a value trap.
Starbucks has weak guidance and high expectations . But has a great
balance sheet
Schlumberger - fat guy thinks people will be happy to own this.
Wapner - HOMEBUILDING stocks having a very good day. Ivy Zelman She thinks business is Ok and the mood is more positive.
The group has gotten hit really hard and business is still
ok.
KBH - there is tremendous upside tading at .7 times
book. The market is pricing in a huge recession.
Housing is in a solid footing.
KBH- hi beta small cap - trading below liquidation
levels??
CAA - larg cap best in class -- both trading below
liquidation levels. ?? thinks it's 65% upside.
Lowes - over home depot - lowes has better value now.
--the housing market is on solid footing. check it out.
existing home sales. Use my real estate background.
--we get pending home sales next week - the
spring selling season is upon is
the industry is healthy - there is not enough
inventory. US housing is doing well. I heard the market prices were up.
For ea recession - she would have to see- housing does
well when if it is not a houseing led recession .
27

look at where the stocks have been traidng - like there's

already a recession going on.
How will the fed and mortguage rates affect business?
non bank mortguage lenders are out there lending.
credit is easing the millenials are getting in the market.
it's about mortguage availibility and credit. - We can
have rates up to 6% until there is a problem Millenials are buying again.
JIM - job growht -> household formation and home
buying.
SL - likes toll under 30
whirlepool -- HD and Lowe's are both good.
OIL has it bottomed? Seeing futures pits. See sunday NFL playoff game.
seems to be stabilizing at over $30 per barrel. Oil volatility index
hitting 70 and capitulating.
The inventory number is still a huge issue - don't expect
oil to get over $35 per barrel. See if we can hold $30 if so then it might be time to buy.
Power lunch - wall street is skeptical of the rally.
POWER LUNCH:
Michelle Caruso Cabrerra Dominic chu - thinks there is more downside ahead.
10 year yeild. - still hoving around 2% mark The yield has gone from
2.3% to 2.06% but is up a little off the lows. This is a macro factor.
Transportation Stocks - shows guage of economic activity. are down but
just pulled up a hair.
FANG stocks - the heavy weights are not helping things this time. -- the
wild ass buyers aren't wild ass buying them.
Are sovering wealth funds to blame -are they the next shoe to drop?
Bob Pisani - Someone is out selling large portfolios.
Oil coutnries - 4 trillion in liquid assets. They are under pressure
to keep their budgets going.
The petro dollars are all in the market and now the arabs need
money. But not a whole lot of it is in equities.
But the dynamic is in place. - Countries with less dollars buy less
equities.
where is the oil money ? real estate, private equity, and it isn't
liquid. That's why the stocks are selling.
6T russia, SA, etc. are having huge budgetary issues and
oligarchs with private portfolios.
--a stealth liquidation -that's why there is no rotation - this is a
28

liquidation.
She has real evidence - the kutari's are shutting down al jazeera.
especially since oil is falling.
Since we took out $40 in oil the entire world changed, -- in dec.
Saudi's are under lots of pressure also.

it doesn't feel like much of a rally - expect more volatility in the months
to come.
we don't think there's a big cataclysms coming - but there is
uncertainty and the tails are fatter now.
China - OIL - and how it impacts other asset classes.
the rally seems to be very policy rhetoric driven . We'd like to see real
confidence in the fundamentals.
We can't expect the fed to bail us out.
powerlunch.cnbc.com - powerplays
Rick Santelli - yields haven't moved much - in a macro view. Yields are
up just liek the stocks are up.
Larry Fink Blackrock - say in equities - these are just corrections - it's a
long long race.
over a long cycle you're going to do fine in equities.
CLOSING BELL:
Drivers - due to oil's move higher.
Bob Pisani OIL - stated as short covering but after 30 it was real buying in the market.
lately it's been 3 weeks down and 1 week up. - this is the week up. If it
starts going lower monday then look out.
Is there a bottm out there? Big oil tech: we're very close to the bottom he can't see it going much below $25.
There will be more increased demaind for crude oil - for summer gas
starting in mid february. and that will help gas.
Kelly - the oil panic that wasn't - (tall girl)
BOB - all 10 sectors were up 9:1 advancing is good. 90% upside day. It
will help the technicians worry.
Financials - were doing badly lately. a bounce in energy and a
very big bounce in financials (heavily weighted in teh S&P )
Nothing has changed the fundamentals in OIL in the last couple
of days.
John Corpina tech - is not convinced of this rally and he want's to see
afew more sessions like today before he is.
a neg from today - was there was light volume. THe market did
NOT sell off at the end of the day. Not today.
next week is light on the econ calendar - AAPL is TUES.
Anohter guy - see's it as an exhaustion rally - and not a trend reversal.
29

The markets feel sick. and China might

be the next shoe to drop. There is a lot of danger out there still.
Rickster : watches the shanghai composite. 29.27 oct low which we are
still below. There is no employment report.
1 week from today we get the look at 4th qtry GDP. The fed
mtg will make a difference.
If the dollar closes above 100, Yield in bonds are up a little the
last couple of days.
John Corpina - is happy we closed above 1880 if we can stay agove 1900
that would be good also .
AAPL - Alphbelt looks much better than apple.
it's a white knuckle ride for apple going into the meeting.
a NYC cab driver thinks that sales are going to be soft for aaple. - sell
monday
GOOGLE's growning and makes lots of money
apple is traiding at 10x earnings . This is Great Fundamentals! Still get
out monday!
apply has plenty of cash to invest. do they have other products in the
pipelind that are doing well besides the ihphone?
how are mac sales?
Iphone 7 will be the key. will there be M&A or buybacks?
We'll have to see what apple does after the earnings report.
HOMEBUILDING Stocks are on fire.
good housing data, oil is good, tech says this is a RELIEF RALLY.
He needs to see a retest of the oil lows...
US recession? Guest - doucebank economist - here the rising dollar is
creating a slowdown here. The dollar is why the
manufacturing is slowing here. We have the worst behind is in dollar
appreciation.
If the fed raises rates that pushes the dollar even higher - absolutely.
Recession at 20% - don't confuse the economy with the stock market.
Fundamentals in the economy still look good in the economic
data.
Tech - you have to buy the energy sector right now. except for exxon
and Bp. Do like warren buffet.
election cycle effect on stock market.
There's no chance of oil being $25 for 5 years. No way. we are in the
goldilocks period of supply how long is that going to last?
the small companies will get weeded out and then the
price will go back up.
WED at 12:30 am was a climax selling point. CLASSIC.
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TIM SEYMOUR - slim Oil has been very important to equities lately. It is very hard to
time the market.
Guy - we're closer to a bottom in oil than to a top
the markets are going to continue to be
volatile - people are hyper fearful.
tremendously oversold conditions - most
traders are going to fade this.
TIm thinks we're in a very sideways environment - including the
currency. we still have to play through a lot of stuff.
TIm - says we'll start to trade on some real earnings like applle
-you still need to stay defensive 0 Pepsi , proctor & gamble international growth, kimbely clark - produce globally and are good defensive choices
santoli - the stuff in pain won't automagically start to look better.
chairman of arramco - said the price is irrational - Guiest - the oil price is not
even exceptional - this is a normal price of oil in current dollars.
she doesn't think saudi arabia is intentionally doing it. SA can't cut back
without hurting itself. and not in hell since iran is coming on the market.
if there was an agreement between producers that would be a game
changers - opec and non opec together.
Guest - we always think what's happening now is going to
continue - oil flows in cycles like everything else.
The market in oil will go back up. I should plan for that.
1/31/2015 - FAST MONEY
Beaker - (biggest bear on the bench) Stay in Cash The DOLLAR is the big
issue here. It is a global wrecking ball. The BOJ just added fuel
to the wrecking ball. Beaker thinks the fed needs lower the
interest rates.
Tim - nothing has changed in the market fundamentals
Dan - we were coming off a very oversold condition and that's why
there was pent up energy.

Guy- Dont fight the fed. Rule of thumb. It is a fool's errand. A stronger
dollar has NOT been beneficial for stocks.
BK -S&P is now out of correction territory. Bk says stay in cash. This is all
about a dollar rally. What the BOJ did last night was to add fuel
to that wrecking ball. This stuff only ends in crisis when
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it happened in the past. 1925,1928,1985 and plaza accord and european debt crisis.
the fed needs to losen moneary policy.
TIM - you can't fight the fed. Buy the fed? The market was panicking.
But don't buy, don't sell. The market has structural problems. The GDP #'s aren't great.
Nothing's changed.
BK - don't buy stocks.
DAN - the market was very oversold. So you don't sell further. Was
covering shorts all week. (Closing short positions). to tim: Do you think stocks are going to
react well in a - IR environment?
TIM - people were freaking out at the bottom.
BK - this is different because our FED is increasing rates. TIM - maybe
they are maybe they arent.
Brian had been saying this is going to happen (Guy) We held 1820 , if we
see 1857 we could see 1920 (and it overshot today) . Right now everyone is at a
heightened sense of awareness of what is going on with the
markets.
Guy - a stronger dollar has NOT been beneficial for stocks
Tim - markets will be volatile and go sideways. There are some good
companies still reporting.
NIRF - neg ir policy going forward
manuf - is in a recession and that leads GDP
BK - buy anything with a yield. since there are neg IR's out there. Might
be more in demand. likes TLT
DAN - likes verizon but got out. for now. He's thinks stocks will get to
1950 and maybe 2000 next week.
FAST MONEY Halftime Report
JIM Lebenthal Steve Weiss - if china straightens things out (long shot) we might be off
to the races. He thinks the BIAS is up for now. It's a trading bounce. take advantage
of the volatility and don't be afraid of it.
New Guy - thinks we are rangebound but there's opportunities. ECB is
doing easing. BOJ is that really going to get japanese biz going? probably not
China has dumped a bunch of liquidity into the market
for the lunar new year, China's president is still preoccupied with stuff.
SLICK - long term investors should always be buying dips. and they
should be buying them systematically without respect to the headlines of the day
and the long term will be fine.
Announcer - there are still reasons to worry but more reasons not to
worry right now. ??? Risk appetite is coming down. Where are the animal spirits
going to come from that will take this market to new
hights? He just doesn't see it. It's ok to have a rally in a bear market, but the broader
trend is still down. He'd love to say otherwise.
JIM - the markets should still hinge on US economic activity.
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SLICK - wages which are not improving - that's the key.

Ann: The next meaningful move in the market is LOWER. GUEST:
Evercore ESI Tech analysis: Technicals suggest that this is precisely Jan 2008.
It's all about the Benjamins and it will continue to be about the
Benjamins. The dollar will continue to weigh on the crude complex. Crude will
weigh on emerging markets, and high yeild. Why does a strong
dollar affect high yield? what does he mean?
Look at the 2/10 spread. We were at 105 now we're down
around 77 basis points. And that spread is breaking lower than it was in 2008.
Why is the 2-10 spread important? Because it looks like crude
oil, which looks like hi yield, which looks like private equity and a lot of other sectors here.
-He doesn't think we're going to 50% there's a lot of room
between 10% off an all time hight to 50% down. He thinks we're looking at a normal bear
market
cyclical correction withing a structuall 7 year bull run,
1670-1700 vis a vis the collapse in commodities and high yield credit. At the top of a bull market
psychology is very strong and we think a 10% correction is the
crash of 1929, but it's not. a20% pull back is consistent with what we've seen with
the damage in the asset classes.
SLICK - Josh brown - 1984 - like - Went down from Jan all through the
summer. He thinks we go lower through out the summer.
it was a cyclical bear market? what is that?
GUEST - right on. We have to go lower first. He doesn't think it's a
secular bear market. But it's just a realization that a mere 10% off the top is just not enough
in the current environment. He thinks it's going to be a very
challenging 1st half, but we have to go lower through the summer. to the 2nd half.
we will see some of those bankrupcies that were alluded to.
and we will rally in the 2nd half.
GUEST2 - kid - finding opportunities in the selloff. Looks at valuations
and likes them. but is concerned with liquidity in the oil sector.
Value is in Big Banks, Semiconductors, energy. Big Banks and
discount to book value. and Fundamental trader. (UBS)
STEVE -doesn't think this is like 2008. Thinks crude can go to either 20
or 40. He thinks the BIAS is down. but you have to buy values not market.
JIM - there is no stress in the banking system these days - so it's not like
2008.
New guy - not leaving apple for dead. Steve - doesn't think aaple is
going much higher. (might want to stay away)
CLOSING BELL - Japan set - interest rate overnight.
LIesman - move will affect the $ -fed will note that. Doesn't think that
the Fed will move much further away from its global partners.
each country is doing what's best for them. like 1985 plaza
accord. Look up. BOJ vote was tight 5-4. narrow margin.
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Pete Costa - oracle of the market. It's about earnings not cheap
money. He thinks there will be another pull back coming.
Rick - what all these world banks are doing is mutually assured
DISINFLAtION. it will createa - loop and it will create their worst fear.
There is a larger question about global economies, debt,
servicing debt - japan is getting ever closer to 300% debt to GDP.
It's mind boggling that anyone could think this is a good policy
and a good outcome.
(1/2 japan debt is held by the central bank)
Guest - it's very hard to fight these central banks and not to take
advantage when the trand is your friend.
Right now the trend is the weakening yen and skyrocketing
japanese stocks that are still only trading at 50x earnings.
(he means that on a RELATIVE basis)
Rick -the globe is completely interconnected. Handfulls of individuals
in fancy offices can never get it right. (let the markets do it all)
Steve Grasso - Boj stole the headlings but you also have the END OF
MONTH PENSION FUND REBALANCING. It's a fair amound of the move up
we're seeing today. not all of it but, a fair amount. But both of
those together.
1928 is a resistance level. 1965-2000 is the next level, sell and
reassess.
Wells Fargo exec - central banks see the same thing we do. They do
worry about what the market worries about and tries to stop it. The market
is never wrong and it's never right.
less than 30% of companies have reported earnings so
far. They are a backward loooking mechanism but the market
just reacts on the news.
MIKE SANTOLI - BIG INSTITUTIONAL MONEY FEELING
UNDERINVESTED ON THE LAST DAY OF THE MONTH OF A REALLY BADLY PERFORMING
MONTH. global liquidity was not drying up really fast. GDP was
as expected, BIG INVESTORS WERE UNDER INVESTED. ON LAST TRADING DAY OF MONTH.
- OTHER GUY - BOJ problems are structural and demographic. it
won't affect us much. Is there going to be a global recession. Today the market says no.
XLE - energy ETF is on down much compared to the S&P.
Guy - lower interest rates means economy goes
DEMONSTRABLY LOWER - it greenlights the chineese to further devaulue their currency.
and that drove us down. Did the market go up today for
the right reasons for wrong reasons.?
It speaks to everyone thinking the global economy is
lousy, but the market can go back up short term.
Santoli - weaker yen is better for risk assets.
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S&P 500 sectors

- telecom up 5% - yields are coming down. - gold is
going up - dividident payers -seen the most traction so far
utilities up 5% - dividident payers -seen the most
traction so far
stapes stocks - dividident payers -seen the most
traction so far
financials down 9% -- ????
materials down 10.6 %
http://sixfigureinvesting.com/2010/01/how-to-go-long-on-the-vix-index-2/ (just me)

Evan - putting money to work in energy oil stocks - would rather

own exon than facebook. Doesn't believe in paying 80x
paying forward earnings. If oil goes up there is a lot of
upside.
Guy - inerest rates are coninuing to go down - Just look at TLT the IR tells you everything you need to know about the US
economy and the global economy. The global currency
war that is taking place before our eyes CANT END WELL.
Everybody is in this global race to 0 and it can't end
well.
SF FED PRES - says us fed is still on track - but is not worried
about the US Economy. expects current trend to continue.
- didn't sound more dovish. and is a little more hawkish
lately.
2/2/2016 FAST MONEY HALFTIME REPORT
Going Long in a bear market. The big drop today is becuase oil is
getting hammered again. The short term bounce is about to run it's course.
coninuted selling pressure in health care and financials. due to
presidential election? maybe.
Joe Terranova: When you're looking for a TRADABLE BOUNCE you're
looking for things with a DEGREE OF CONFIDENCE : how much confidence you
you have that the momentum's going to continue to the
upside?
--Living up to the volatility index. The correllation continues with oil.
What breaks the correlation with oil?
--does your stock have institutional ownership ? what does that mean?
-- are the companies just gaming the system with the numbers? are the
analysts doing their job?
--even a warrent buffet is more of a trader than a long term value guy
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these days.

GLOBAL GROWTH IS DECELERATING.

Banks are losing money on the oil eqity. The yield curve is flat so they're
not making any money on that.
This could be a multi month to multi quarter slowdown. GLOBAL TRADE
IS ALSO DECELERATING.
Dow transports still down 25% from its recent highs.
FINANCIAL STOCKS - BOA, CITYGROUP, GS SCHWAB, ETRADE - all down 4-8%
just today.
Banks balance sheets are still in very good condition.
see bearded guy -on banks on power lunch at 1 hour 4 min.
and the next guy before rick and rick
I should analyze the banks.
Start watching the Russel 2000 and get why.
Can't fight the gravity of the overall market. - santloli

VIDEO ON OIL 2-3-2016

Correllation of equity prices with oil market why?
Typically when oil falls it's positive for the economy. But it has fallen so much
that people are scared and they are
asking if it correlates with a global deflationary spiral because they are
scared and watching the oil prices
they get scared about stocks. The Market is paranoid about the oil
prices.
Bretton woods - the last 5 major recessions have been preceeded by a
SPIKE in oil, not a fall in oil.
it does scare people but the underlying global economics don't suggest
we're headed into a global recession.
It's more of a supply issue and it should normalize to around the $50
range.
Share buybacks aren't the best use of cash. Part of the oil dynamic is
driven by POLITICS. It's the proxy war between
saudi arabia and Iran Russia and the US over shale manufacturing. He
thinks it's basically a SUPPLY ISSUE.
in the 2nd half of the year we should run out of excess capacity and the
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price should reset a little bit.

Blurb on PreMarket and After Market Trading:
http://www.learningmarkets.com/understanding-pre-market-andafter-hours-stock-trading/
Stop losses when the market GAPS down: - Interesting - answers my
GAP questions - and issue with stop losses after hours when you're worried about large gaps
down.
http://www.investopedia.com/ask/answers/06/limitgap.asp
http://www.thetraderisk.com/how-to-survive-in-a-stock-that-drops-16overnight/
http://www.financial-spread-betting.com/Stop-loss-leverage.html
http://www.trade2win.com/boards/stocks/164796-how-avoiddreaded-gap-downs.html
FreeStockCharts.com
http://www.freestockcharts.com/

What is OVX? Has something to do with oil?

Evaludate your risk/reward before a trade.
China, oil, european banks. - until they stabilize you cannot buy anything. Cause there's
no growth.
The stock market is like a man walking a dog on a leash. The dog is walking all over the place,
side to side which is like the stock market.
The man is the economy or company fundamentals - which is walking down the middle
of the path. So if you buy the right
companies over time, the prices will match up over time.
Except: sometimes the stock market drives the economy into recession. Also: what
about the global economy?
Don't discount a contagion like drive of the economy down. Cyclical bear
market that doesn't coincide with a recession.
There could be a negative feedback loop for the above reasons.
The wealth effect is what the fed's been banking on all time time. What is the
wealth effect?
Reflexivity - a neg feedback look that feeds back on itself.
Josh Brown - the global economy is pulling us down. There are forces beyond
the fed at work now.
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The S&P 500 gets half of its revenue from overseas. Many parts of the global
economy are in outright recession. Manuf here is in recession.
Distressed sellers - soverign wealth funds are also liquidating their remaining
funds.
NFLX was downgraded today.
The problem is still CEO: China, European banks, Oil - The saudi's are trying to
knock smaller players out of the market and they haven't
accomplished that, so we haven't seen anything yet!!
TF, WATCH OIL CHARTS!! - analyst thinks the damage will occur at 18 for oil.
Oil CEO's are not looking for a rebound any time soon.
China has been closed for the lunar new year all week.
Stocks are following oil.

Watch the RISK OFF ASSETS and see what they do to figure out what the market is
thinking.
gold, 10 year bonds,
Talking about the TLT - it is a trade, what is it?
OVX - what is it? oil volatility index?
Tim doens't think the entire market is just the S&P - he's watching the
transports.

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