tv Squawk on the Street CNBC March 22, 2018 9:00am-11:00am EDT
growth in combination with a fed that wants to look for an excuse >> are you predicting spring, do you know >> it is nice out there right now. >> is it over, do you know >> not snowing right now >> not right now so can we -- it's coming, right? maybe there will be growth >> mike, thanks for being here we'll join you back here tomorrow right now squawk on the street this was a major breach of trust. and i'm really sorry that this happened you know, we have a basic responsibility to protect people's data. and if we can't do that, then we don't deserve to have the opportunity to serve people. >> that is the story of the morning. zuckerberg speaks. welcome to squawk on the street live from the new york stock exchange carl and david are off today let's take a look at futures they have he taken a turn for
the worse. dow jones would open lower by 259 and the nasdaq remains under big time pressure, opening lower by nearly 92 points. technology has been such a story. so many names have rolled over of late and it is the big key to watch this morning we're watching the european markets as well. take a look overseas how things look and there is a red across the word almost everything is down at least 1.5% in some cases not quite that much but you get the picture there from germany, france, spain. take a look at the ten year note yield as well. it is in focus given the fed meeting, the decision on interest rates yesterday and there is the ten year note yield. 2.83 this morning. we're keeping a close eye on oil, brent crude at the bottom there just shy of 70 bhuks our roadmap starts with what else mark zuckerberg, breaking his silence about the social
network's newest data scandal. and stock index futures ticking lower ahead of the open, investors digesting the latest rate hike outlook bracing for the china tariff announcement as well and drop box raising its price tag, the cloud storage company set to make its public debut tomorrow we'll tell you what need to know before it prices the ipo tonight. but let's begin with facebook. shares falling yet again this morning despite mark zuckerberg breaking his silence on the scandal involving cambridge analytica and apologizing for how his company handled user data calling it, quote, breeach of trust. zuckerberg promised tougher steps to combat data misuse. >> and going forward when we identify apps that are similarly doing sketchy things, we'll make smur th sure that we tell people that too. that is definitely something looking back that i regret that we didn't do at the time and i
think we got that wrong and we're committed to getting that right going forward. >> so from silence to an offensive. now they are going out and zuckerberg is speaking at multiple locations is it enough >> well, first of all, is it enough for users i don't know you have to get the word out he goes on cnn, the "times." that just one side of the story of where you go in terms of the media. but when you have breaches, when it comes to the stock market, ob, where are the big breaches equifax, huge breach of faith. stock went down 39%. yum brands when the e com le e. it went down united airlines, you drag the guy down the plane minus 6%. home depot credit card you kind of get what is happening. remember, the stock market,
there are two kinds of stories to the stock market. there are people that come on the network and say no one will use them again and that was the major source of revenue. that says that you will have equifax. and then others say a few weeks, maybe they appoint a special prosecutor to look into it, maybe fire the people who did it and that is more like a target down 18. that is what people try to do, figure out whether it is 18, 34, 6. and that is what we're trying to do >> so you have the whole #delete facebook campaign, of that zuckerberg saying it is not good, i don't think we've seen a meaningful number of people act on that. speaking directly to what users of facebook may do >> well, if you are going to go the way bears are saying -- and i don't mean bears in stocks, i mean people in social media. it is the end of artificial intelligence artificial intelligence is trying to figure out what you like and offer to you. in amazon, i like artificial intelligence because it tells me what i like.
netflix tells me what i like and in facebook i like it. here, buy this so the backlash from people who come on mf mf i don't know how your fellow will be on halftime, but it is almost like it is a cottage industry of people who hate social media. and they will have a few days in the sun and maybe last two weeks, maybe you have some big -- maybe you have the lead director, terrific woman from genentech come on. people get bored of it i'm actually bored of it now, but i'm so steeped in it but two weeks from now, people will get board ared. and then they want to see how the friends are doing. we don't want the stuff getting to the russians. we don't want to give them to the chinese, but we don't hate everybody. >> we just showed on the screen just to reiterate, we do have one of the co-founders of the company that would go on to
become facebook, divya innarenda will be with us on the halftime report and we'll talk about this scandal where everything goes from here. we'll get his thoughts >> they love some job losses >> you are still advocating for a feinberg, a special investigator or something? >> look, if we trusted him, we wouldn't need to speak to him. right? like jpmorgan. hey, listen, if you have to defend that you aare trustworth, then you are not trustworthy so susan desmond is the lead director, she has gravitagravits if anyone says i'm being facetious, america's most important game, lost trust because tom brady deflated a ball now, you can say that is not the russians i don't really give a dam. here is the deal
paul wei paul weiss comes in, they ban him for four games number one guy number one guy fox, maybe some people are doing bad things maybe not. paul weiss, yes, cramer is really working for them. and then they fire people who had major, major, major money -- >> you are suggesting in a zuckerberg, sandberg, they where not handle the scope of this themselves >> no, because the media has spoken and they are people we don't trust. we trust in outside counsel. that is the way it works to we really trust bp? deep water oig is sieter is sing so they bring in feinberg. he comes in with the t-shirt, he says i'm sorry i don't care i don't care you know what, that wasn't even
as good as jamie dimon he should have said hey listen, we were dumb and stupid. >> one of the key questions obviously is what will happen from a regulatory standpoint >> right now he is in the 18%. i'm putting him in the target breach cat gear. category. >> let's listen to mark zuckerberg speaking of regulation >> i actually am not sure we shouldn't be regulated you know, i think in general technology is an increasingly important trend in the world and i actually think the question is more what is the right regulation rather than yes or no should it be regulated >> what is the right regulation? >> well, there are some basic things and then big intake wlekts all intellectual debates like ads transparency regulation that i would love to see like if you look at how much regulation there is around advertising on tv, in n. pribr h
should it be less on the internet >> i like that that is why the stock is not going to go down too far that was very good he just needs ken chenault to say it look -- >> he is saying okay sounds like a guy resigned to the fact that his company will face more regulation >> he has to have swn else shav say it, not him. 100 people are saying their model is broon, bken, but they know jack. wells fargo was supposed to lose a huge number of customers because they cross-sold you. go back to the tape. run the tape back to when john stumpf was canned. they didn't lose customers because they got a new guy came in, even though he was from the same team, stumpf was sacrificed you always have to sacrifice someone. look, i'm not -- i've been on
the damn cross this is what happens you got to do it you got to say listen, i'm sorry, you can bring in anybody you want to look at me and you'll find out that i didn't do anything but you know not just say yeah, we ought to be regulated he needs susan desmond helman to say it then you're in the 10% >> stock down 3% right now what does that tell you on the heels of zuckerberg? >> you have to go at least down 6% how many times did we run that video about the doctor being dragged? this is down 6%. people were saying i'll never fly united airlines. are you kidding me no one is going to switch to some other -- you know the russians have a new social media site we're all going to use it no there is no rival to this. i'm tired of it. i'm putting it in the united airlines cat gea s category
that was a bad video >> i had an goexchange with bill miller who says this too shall pass and he says it is just too cheap. and i've had that conversation with other big investors as well >> but he has a little longer term than this news cycle. you have to go a few more days in the news cycle. do you think that a week from thousand if they hire someone, are we still going to drag you people up who say the earnings will be cut 50% who don't even know what an earning is and they certainly don't know what -- priced earnings multiple no oh, yeah, earnings will go down 50%. who are these people do they even know how facebook makes money? >> what about the spectacle that would be if zuckerberg went down to d.c. and had to testify, which by the way he told the interviewer as well that he said be willing to do do we need to see him on the
hill with his hand in the air? >> michael corleon no >> you see the ceo of a company down there with the hand in the air. >> he dresses up, that is helpful. but we need adults on the board. there are board member, outside directors. those are the people who have to step up. they looked at the out siside directors at wells and want the board replaced court of opinion is bad on this guy. so, yeah, he is not jamie dimon. sdwr jamie dimon looked pretty good because he said i'm sorry and i'm an idiot you have to go through the sorry i'm an idiot phase i'm telling you, united airlines is your model. >> we're in the early phases of that >> remember the first release? xwa basically said it was that guy's fault. >> i remember. >> you have a player book oibook
look at all the breaches of trust. if you think this is equifax, take it down 30%, but he'd be mistaken 37 there are playbooks, but you have to do work. it is so much easier to say this will lose everybody. to who we like social media we like posting pictures of ourselves. we like branding ourselves on instragr instragram i don't want the russians to get my in-know, but i'm not going to vote for whoever they it will me to vote for anyway >> have some water >> who says i should vote for the third party? >> still to come, we count do you know to the much anticipated crop box drop box ipo set for tomorrow. >> they will give the information about who bought to the brokers. what will they do with it? they will probably find other stocks that you like oh, my i don't care if it is up 50% >> futures are ugly, trust me. we're back after this. mercedes-benz glc...
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opening statements in a historic trial in washington today. at&t and the justice department begins today hampton pearson has the early movement in d.c. this morning. >> reporter: scott, the reason it is so early is that number one we're not actually going to get to the opening statements until 11:30 eastern time and this long awaited legal antitrust battle will finally get under way between security and the public interest, people have been arriving we are awaiting and anticipating the arrival among others of at&t ceo withdrawn drandall stephens time warner. both will come back later on in the trial to actually testify. so when all is said and done, three pillars of antitrust, competition, harm to consumers in relevant markets are the government will make the case that a merged at&t/time warner would have so much leverage over both its distribution and content competitors going forward that it could lead to
higher prices for consumers. at&t will argue the governments that backwards, they need to partner up to compete with the online likes of facebook, amazon, google, netflix, you name it. so the judge will get essentially two different versions of not only the state of the video business now, but where it is going in the future. judge leon is no stranger to antitrust. he was the last person to sign off on the comcast nbc universal merger and he did insist on stronger conditions at the end to protect online competitors so right now we're awaiting the rifles of some of the key participants we did see at&t lead trial counsel go in a short while ago, but we still have a ways to go before we actually get under way. >> all right we'll keep our eyes on that courthouse for sure. and meantime we told you you stocks are set to open sharply
lower just one day after jerome powell's first rate hike and news conference as fed chairman. facebook leading the tech sector to the down side worries about a trade war also front and center and also expected to announce tariffs on chinese imports in an effort to curb theft of u.s. technology and even taintellectl profit chinese officials reportedly prepared to respond with tariffs of their own and you think a lot of it has to do with what the president is set to announce at 12:30 >> yeah, much more zuk he is going down to taco bell. remember, breach is -- >> but we couldn't with a -- >> what matters is the chinese saying that they will take all necessary means, which is kind of like a malcolm x thing. >> and from nbc news tweeting out -- >> a very significant statement.
if they do ag, that is a big win for us because farmers are always xen about sacompensated. and this could be the problem general mills solved so the chinese better come up with a better way. that is not going to hurt anybody. but maybe they don't want to hurt anybody maybe they need us more than we think. and don't forget, european pmi not so good. deutsche back not so good. yeah, europe is down for good reason there is substance the pmi bad. >> if you look at what happened yesterday with the fed, i think people are still trying to figure out whether powell was dovish, whether he was hawkish i think he was maybe a little bit of both. >> that's what we want watch carnival, they do a blowout and stock is up. if they go down, it will be a very tough day >> it looked to me like powell was dovish near term, hawkish long term. >> that is fine. i care more about china. i care more about european pmi
i care that there is a guy in my ear saying we got to go and you and i are getting everybody angry. notice i calmed down because we're no longer -- >> he was saying it in my ear. >> i had a marshall sized jacket when i went to goldman at least i had horse sense >> i do want to talk about the rollover in tech we'll do it on the other side. your mad dash is next. and we'll count down to the opening bell meantime take a look at futures. dow would open lower by more than 250 points. nasdaq near 100 point slide. s&p just shy of 1% implied at least re "squawk on the street" straight ahead frgs pg alpha in real assets. like agriculture to feed the world. and energy to fuel its growth. real estate such as e-commerce warehouses. and private debt to finance transportation and infrastructure. building blocks of strategies to pursue consistent returns over time from over one hundred fifty billion dollars in real assets.
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about six minutes on or so before the opening bell. it is time for jim cramer's mad dash ahead of the market open and we're looking at -- >> it is the tale of two food companies. general mills yesterday, woe is me, 5%, 6% hit with inflation. and terrible in-put costs and freight costs. this morning conagra comes out, small hit on inflation, but the top line is good frozen food area is great. they have done a lot of new products and i have to tell you, conagra is what you -- they were ready they were ready for food inflation. and they were ready for freight inflation. and what do they do? they do a blowout number and i'll tell you, some of this is millennials they love frozen food. add to games and beer. and they also like packaging that is vienvironmental. they use paper and cardboard this is a new conagra. and i really like it
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you're watching "squawk on the street" live from the financial capital of the world where the opening bell is set to ring in less than two minutes time a lot of focus on obviously will be on facebook the stock sliding again. investors are taking a look at what mark zuckerberg had to say last night on television, what he told the "new york times," what we may hear more from over the days ahead at some poents tint the stock w
a buy, no? >> but you have to come the things i said. because remember, we have breach of credit pes. and they haven't gotten down -- >> but you said people aren't going away, right? >> well, they are going to myspace. i checked this with some of the people i 2345know at sun advisr living micron is about to report. if they do a good report, they will come back to lamb and then intel and then texas instruments and then analog devices. that is what happens we got a statement -- did you see the statement from we'll protect the ranchers like they don't get protection u.s. vows to defend farmers against china retaliation. u.s. stands ready to defend our producers including farmers and ranchers all right. so we're all set we got the ranchers teed up. if they start going after -- if they go after apple and
starbucks, this market will go down big all right? that's what i care about >> all right you are watching the opening bells. and s&p 500 at the cnbc real time exchange. up at the nasdaq, the thirst project in developing nations. so we're talking about technology which is really given up its leadership role. the question is does it get it back a lot of it hinging on micron? >> yeah, i think micron is really important because i think that what we have is the internet of things we have semis. i got to tell you, tariffs worry me and the video of the unfortunate of the fatality, i know that there are a lot of people in the valley trying to figure out okay, how do we make sure that didn't happen again. maybe nothing.
maybe it can't be stopped. that does matter but you know what, we're going to get tired of selling. there is a great piece about before you sell apple, take a look at the revenue stream take a look at the service stream that won't have -- today is a done day >> apple down again. >> you got to read a report. it is a really good report but that takes genuine home spun read it and that is very hard for the pajama traders >> if tech cannot resume this leadership role, what is going to fill the void >> financials and health care. >> but it is going down this morning though >> no, they can't go down. you just asked me who can -- today is not a great day. but rates can change so look, you know what maybe it goes down today. maybe the market doesn't go up
by the way, where is the president? remember he used to be highly affiliated with the stock market >> we'll see him later this afternoon 12:30 i think. >> with the aluminum workers he has challenged the elites like fred smith. that was more important too. >> and the dow as we speak down more than 300. i'm just taking a look at goldman sachs. we're talking about the financials there goldman down 1.5%. mike my oayo raises -- >> it is about volatility. >> 330 from 320. >> he is a bright fellow i think that is a good call. look, this session may not be a good one i will go home tonight, i will somewhere some home brewed and thinking about tomorrow's session. okay this session maybe is not so great. >> are you making your own
>> yeah. but you can't just look at in and say you know what, it is game over because people will leave facebook which i don't think they are except to move over to myspace, yeah. and yes, tech can be bad maybe micron reports a good number it is a down day we have to get -- >> the problem is it hasn't been just a down day. it's dabeen down days >> carnival is up. you can still make money the thesis in the market changed. we had a president who rams through a very good for shareholders tax cut now a president who is siding with labor against the elites. that is wrangling people elites lose confidence and don't spend as much. at the same time jay powell says the economy is doing well. the elites are being challenged by the president look, we were all supposed to say question will sawe will sac
workers. on the cross of globalists and now we're not doing that, we're going with mckinley, we're going with the tough open door policy which is to close the door to anybody -- the president lost mckinley by the way that is not made up. that is not fake news. go read mckinley he was a tough trader. >> your thoughts i think are shared by other investors because i've spoken to some who say the environment of the president was so positive towards business and thus the stock market and now you've had a wrench thrown into that by this trade development that has happened and then you will hear more about it today and the ultimate thing, can florida today, mexico, you want to go after that, that is like shooting a pop begun.florida today, mexico, you want to go after that, that is like shooting a pop begun the retaliatory measures that the chinese could take are much more significant >> and presidents are willing to
risk that. don't forget all the news in europe is not so great we got pmis that were bad. we have inflation numbers that were soft. drag gi draghi is not -- remember, we're talking europe they don't see zuck. they are selling our market down you look at ali baba thinking there could be retaliation we have to get through the day >> certainly saw defense smar yesterday and what he had to say. >> he was terrific it is not about the fed. it is about tariffs. go read fred smith if n fedex a worrying about whether artificial intelligence is suddenly dangerous whether for driverless cars or for facebook artificial intelligence, the luddites are speaking saying we didn't want them to know anything about us, but we want
to use their services. and you can't do that. you can't use amazon without them giving you what you want. but the lud items are speaking and they want the market lower >> so facebook off of its lows amazon to your point is lower. apple we pull up, it is also lower. >> i think you should buy amazon take a couple of advil and buy amazon tomorrow, okay? >> at some point people will look at these high growth technology stocks and they will say okay, facebook looks cheap alphabet looks cheap and that brings in support for those stocks >> today they are scared they have to wait until they see buy, but a good opportunity for people with cash people are starting to think wait a second, do we have to worry about the europeans coming down with regulation maybe we should worry about that at the same time, i like ralph lauren we have to worry about the tariff, but at the same time morgan stanley likes glaxo
we thought that the gdpr was the old name for west germany. we have to factor it in. people have to figure out what this is, figure out the consequences and then they say it didn't impact grub hub. that is how it works we could be really high minded and say jay powell, i parse that many times and i think he is hawkish, but he may be dovish. i think he may want to raise rates a lot, but he may not want to helpful? not helpful. helpful? not helpful. how about this if the president comes out and say questiwe don't care what the chinese do, we will tell they will we are done we don't care if you buy prell and colgate. if he says we need a 10% on bmw, we're done those are negative things.
chenault is great. steady hand. >> what is your take on nike a lot to hear from nike. >> nike has great personalization efforts. they where doing a lot of things right. i didn't hear anything bad from foot locker about niknike. i wish they hadn't lost trevor. but when everybody knows that the market is thoughtful, there are buyers do i want to buy it down now, but i want to buy bristol-myers because what does facebook have to do with the price earnings multiple of bristol-mye bristol-myers? nothing. right? nothing. wright now facebook what is it good for nothing. >> but it is not a bristol-myers market it is a facebook market. >> if you want to be distracted. he has to have people saying i
wrought in outside counsel former fed chairwoman reads the report and slaps them town because it was really bad. but you know what, wells fargo beat thedown because it was really bad. but you know what, wells fargo beat the trough. fr maybe that is a good barometer i don't know i think if they go by the adult playbook, find out what plans they have to give to people that feel like they were abused, and get someone who is a lead director to speak, and not just zuck, get sheryl out there, and a few days from now the stock is i don't know 160 -- maybe it is a 170 and we buy it. but this is false science right now. people are reacting -- they are using agreeigregor mendel. go google it oh, geez, yyou might -- you migt see a green giant ad
come on, this is artificial intelligence and if we're against art offici artificial intelligencintelliget it, it is here it is part of what you do. it is the bargain that you made with social media. as long as they don't give it to the russians >> but when the united stuff happened, you wanted to hear from munoz, from the ceo zuckerberg has spoken. >> initially he put out the statement that basically said listen, year going to drwe're g you off the plane. >> the statement may have been a miss >> but you -- who did you go to -- if you are in continental airlines, you're in newark, who can you switch to, wheels up give me a break. you can't switch there is a couple towns in america if you couldn't want to take continental here is the problem. the country made a series of mergers that made it so that
basically they are like railroads. you can't say i don't like nor for the being southern, i'm taking union pacific, because union pacific doesn't go where norfolk southern does. >> but you're making the case that you can't go anywhere else, you are offering support for the stock, you're telling me there is nowhere else to go. facebook is -- >> that is why united airlines because only down 6% taco bell, a lot of places to go yum brands, down 10. target really bad breach really kind of sub optimal management that quenwent down 18 zuck was not tone deaf, but there is a backlash against market power and there is a backlash against artificial intelligence. and the latter will not last because we love amazon when i buy something at amazon and they show me what else to buy, i buy it. and i say thanks jeff, i love you.
will i say i wish be he hadn't sold that information? >> jeff says thank you, we love you. >> i think amazon is a buy down 25 today there, i've spoken >> pisani is on the floorfuling what is moving 00 what is a messy open dow down 250, bob. >> but we're off of the lows already. we were down 26 points in the s&p, now 22. this started in the futures overnight and very early like 12:00, 1:00 eastern time. we started drifting lower. and remember something, futures trading does not involve individual stock trading the individual stocks open at 4:00 a.m. on the nasdaq and nyse and once it opened, we stabilized so these were all bets overnight. when facebook started moving town later in the morning it was trading, we took another leg do you know but tech leading to the down side but banks, energy, materials, 6:1. but has improved in the last few
minutes. fang stocks of course the big issue, 1% to 2% on the down side you see them do you know abouwn. so remember the scenario that kept pushing, two things here, no surprise from the fed and china's tariffs would be watered do you know by a commentary period the feds is a toss up. they didn't change the 2018 forecast, but they did change the 2019 and the 2020 and a little more aggressive on the growth forecast. so it could go either way. i heard comments either way. tariffs, well, you want to watch the big industrial and global machinery stocks they go up and do you known caterpillar, boeing, ingersol rand, generally underperforming. soi think there is significant anxiety out there about,000 pho
this and then going into february for months on he said, it wasend, t grind but that has stopped post-february, we've had late day fades. and this is not just two days. this has been going on for a month now. so there is some kind of subtle tone a lot of people are pointing to issues about the high price tech stocks and it is certainly true. the technology when you have fang stocks and semiconductors and technology is 26% of the s&p 500, if that starts to falter, you will have a bit of a problem. so facebook, 15% off the highs for facebook, its recent highs apple was 8%, 9% on off. netflix, microsoft probably 6% off of its highs recently. so when those start faltering, you have a problem because that is the market leader and we're all out of the momentum stocks you want a good well weathbellwr how about micron up 25% in three weeks, something
like that. we're $48 a few weeks ago. there is your bellwether to watch for tech finally, i want to mention nothing has changed on drop box, but they did increase the terms. $18 to $20 that is opening on the nasdaq pricing tonight. there is another big bellwether. so micron and dropbox as the bellwethers to watch we are basically 23 points down. we opened 25 or 26 and it is scraping along the bottom right now. back to you. >> and by the way, dropbox up real big, we start looking at tech i don't know i guess we can look at zuck. >> i think dropbox is an important measure. >> do you know how long it is between now and tomorrow holy cow and i have to go out to dinner that is a long thing
>> better rest up. let's go to chicago. bond pits. rick santelli is at the skrchcm group. >> well, it is easy flattening 2s are down three basis points as they sit. and you can see on the chart, it gave it unpretty quick now, if you look at a one week chart, this gives you more balance. we're just coming back down to an area that we've held support at right around 2.27, 2.2837 trards will be paying attention to that and of course the big round area at 2.25 if you go to tens, tens are down six basis points, so there is three basis points of flattening as you look at the intra day and it's aggressive 22 of february a noteworthy day.
everything there after has been in the 2.80s day number 20, today would be that day, should we close in the $2.80. and it me the risk isn't whether you get a 2.9, the risk could be if you get a 2.7 handle. so pay close attention and finally, let's look at the cumulative effect back to the flattening yield kifsh starti curve there it is. and when everything was go-go, things looks better on the growth side, we saw the steepening which peaked just under 80 basis points. now we're at 53. also important because 50 which we traded like in the first few days of 2018 was the flattest the curve has been since halloween of 2007. big numbers to watch and finally, the dollar index. unchanged today, so i can't tell you it is another disappointing voyage for the dollar index, but it really has been kind of spongy
the optimistic side is foreign exchange in total really has been somewhat in a range back to you. >> rick, thank you very much coming up, amazon streaming and gaming superstar ninja hear what the co-founder and ceo of twitch has to say about all of that and much more. and of course we're staying on top of the selloff dow still down 1%. 25 to the down side. people don't invest in stocks and bonds.
they don't invest in alternatives or municipal strategies. what people really invest in is what they hope to get out of life. but helping them get there means you can't approach investing from just one point of view. because it's only when you collaborate and cross-pollinate many points of view that something wonderful can happen. those people might just get what they want out of life. or they could get even more.
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>> sometimes it just matters how you spin a story this morning "wall street journal," whole foods is losing executives under new owner amazon well, okay, that's bad no, it's actually good amazon is finally starting to integrate whole foods. they're going to try to make stores bigger. this is going to be very important because it's going to figure out how to deliver food it's a real positive amazon doesn't want them there they're high priced. this is artificial intelligence. oops, you're going to give them information. what really does matter is amazon is doing everything that is right the new whole foods are much less expensive they're fabulous go to one. i do these things. amazon, let it come down over the protection thing that the europeans are doing. then buy it. because it's really good >> once tech sort of settles >> yeah, buy amazon. we want them to have all the artificial intelligence because when we buy clorox, we often do want to buy tide i know artificial intelligence is under attack here that's the real case
artificial intelligence is here to stay. and forget it if you can roll back the clock you can't be gregory mendel. sorry if you have to google those and you end up in the frozen food aisle. >> you closed the computer but still have more work to do >> southwest is up southwest was down yesterday home depot moving up retail has been very, very strong here. i like ralph lauren. tonight i have washington prime. i like retail here i particularly like mall-based retail how's that for a shocker it's not the end of the world. tariffs are bad if you own stocks, but the end of the worlders are back out. how about the guy who said facebook is going to lose 50% of his earnings i bet he really knows. is he inside with the cfo? >> interesting you say you like amazon and mall-based retail who'd have thunk it? >> i like carnival i don't like tariffs if i like the stock market >> yep
good stuff have a good show tonight >> thank you you have a guy probably hates facebook, that fella you have on everybody hates facebook that's why they're moving so aggressively to myspace. >> coming up, more reaction to the facebook fallout mark zuckerberg breaking his silence. keep it here on cnbc
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♪ good morning and welcome back to "squawk on the street," everybody i'm kelly evans here with wilfred frost this morning we're here at post nine. carl, david, and sara are all off today. >> first, we have economic data crossing the tape. let's get to rick santelli >> yes, we're looking for a february read on leading economic indicators, expecting a number in the neighborhood of up half of 1% and we ended up with a number in that neighborhood, up 0.6 of 1% following an unrevised up 1% you know how long it's been since we've had a negative number on leading indicators all the way back to may of 2016. this ploerobably isn't going to make much difference, but it's been steady eddie.
yields dipping under 280 we haven't closed above 289 in 20 sessions. so lots of eyeballs on this lower end of that established 20-session range wilf, back to you. >> rick, a quick question. in terms of yields today, do you think the european picture is dragging down the u.s. clearly the fed was the big factor yesterday soft data out of europe this morning. german yields falling quite significantly. >> yeah, i think that some of that will of course play in on the spread between the two but i really think that our long end was up because of possible expectations from the fed for a surprise that wasn't dovish. but in the end, i really think it's about growth, wilf. we haven't had any type of significant retail sales activity in 2018 you know, it's better this flattening curve and a soft ten than it is a steep curve, pricing in stagflation things could be worse. >> okay, rick. thanks very much and our road map today begins with is it too little,
too late facebook ceo mark zuckerberg finally breaking his silence and apologizing in the wake of that damaging data collection scandal. and stock selloff. markets reacting to fed chair jay powell's first news conference and a possible new round of tariffs on china. how to protect your portfolio in this environment plus, heading to court the ceos of at&t and time warner getting ready to defend their planned $85 billion merger against the department of justice. first, straight to the big story of the day and the week. facebook ceo mark zuckerberg finally breaking his silence in the wake of the social media giant's massive data scandal julia boorstin joins us with the latest >> reporter: wilf, after mark zuckerberg drew criticism for waiting too long to respond to the cambridge analytica scandal and not being contrite enough in his facebook post admitting responsibility, in his tv interview last night, zuckerberg was explicitly apologetic. >> this was a major breach of
trust. and i'm really sorry that this happened you know, we have a basic responsibility to protect people's data, and if we can't do that, then we don't deserve to have the opportunity to serve people so our responsibility now is to make sure this doesn't happen again. >> zuckerberg explained how he hopes to fix this, laying out the plan to investigate apps that are similarly doing sketchy things as the app in question, and also to be far more transparent with users zuckerberg said he's happy to testify before congress, and here's what he said about the widespread calls for regulation. >> i actually am not sure we shouldn't be regulated you know, i think in general, technology is an increasingly important trend in the world, and i actually think the question is more what is the right regulation rather than yes or no should it be regulated >> as investors digest these comments and the potential impact of regulation, you see facebook shares are down
fractionally this morning. bank of america/merrill lynch, while maintaining its buy rating on the stock, just decreased its price target to $230 and just moments ago, facebook's head of news partnerships on stage in new york admitting to another mistake, saying she thinks it was a mistake to threaten to sue "the guardian" over its reports on this matter. still a lot of unanswered questions, especially in terms of what this means for advertisers and facebook's business model i'll be talking about all that and more in an exclusive interview with sheryl sandberg coming up in the 4:00 p.m. hour of the closing bell. back over to you >> julia, we really look forward to that. live and exclusive with sheryl sandberg it's going to be absolutely fascinating. still feels like a lot of unanswered questions clearly mark zuckerberg has gone a lot farther than anyone else in the company albeit, there's still a gap. there's a two-year gap from when they learned about what cambridge analytica and other
companies may have done in 2015 and their decision to boot them off as a client two years later. why did they wait so long to do that >> yes, welt, it's interesting you look at the timeline, and zuckerberg does lay out this timeline in his facebook post yesterday and also in his interviews just in the past 12 hours. you know, they talk about how facebook made changes in2014 these are widespread policy changes about how much data can be collected by app developers, but the problem was the app in question that sold the data to cambridge analytica, that all happened before then and it's still unclear how much data was collected before the policy change in 2014. so facebook has a range of challenges right now they have to deal with all the data that was ever collected from their users, especially the stuff from before the policy change now they have to change their policies to make sure the way apps are operating right now is not going to be in violation or surprising to consumers in any
way. you know, right now the consumers' trust and user trust is paramount to facebook going forward. >> julia, we look forward to you talking with sheryl sandberg later on thank you so much. meantime, opening arguments are set to begin an hour from now in the u.s. versus at&t trial. the doj is suing to stop the proposed $85 billion merger. in fact, time warner ceo was just entering the courthouse hampton pearson is there with more >> reporter: yeah, we're about 90 minutes away from those opening arguments in this long-awaited anti-trust trial, the government facing off against at&t and time warner to oppose the merger. i did get a couple questions to time warner's ceo on the way into the court about what's at stake and his anticipation of how it might go over the next six to eight weeks what's at stake for consumers with this trial today? >> we want to give them better programming and lower prices >> what's your sense of what's flawed with the government's
belief that they've -- >> you know, i don't want to talk about the case before the court. let's go to due process. >> is it long overdue to get to this day >> oh, i think we ought to get on with it >> thank you, sir. >> thank you >> reporter: and it's understandable why in his words they want to get on with it. it's been about 16 or 17 months since the merger was actually announced. also, time warner is really at the heart of this case from a government standpoint. it's the government's convention that time warner's must-have content going forward would give a combined at&t/time warner too much leverage in the future with both fellow content competitors as well as distribution competitors. at&t/time warner argue, no, the government has it backwards, they need to join up to compete with the likes of facebook, amazon, netflix, et cetera so again, we're about 90 minutes away from opening arguments in the long-awaited face-off here
in washington's federal district court. back to you guys >> way to track him down, hampton. have you seen randall stevenson, the at&t ceo yet >> reporter: no, we are waiting. and yes, we are anticipating his arrival as he is anticipating the start of all this. i can definitely tell you that's the case here. >> all right hampton, thank you hampton pearson in washington. meantime, back to markets this morning look at this taking a hit as the president is expected to sign new tariffs against china, prompts a fresh round of fears of a trade war. dow down about 20 right now. also, chairman powell's first news conference. bill gross out with his latest investment outlook he joins us now. welcome, bill. >> thank you, kelly. >> seems to me your pain point is you don't think they're going to hike three or four times this year as they've just indicated why is that? >> well, i don't i think the u.s. is still a
highly levered economy, indeed the global economy is highly levered. the key question here for fed officials and for powell is what the appropriate fed fund's level is relative to inflation they call it r-star. but basically, it says that, you know, the fed fund's level should be close to where the inflation rate is, which it is now, 1.75 versus 1.75. fed officials suggest fed funds will be at 3.2% or 3.3%, versus inflation at 2 that's a highly restrictive rate in a highly levered economy. i think they're over their skis. i think they have to be more pragmatic. powell suggested he would be more pragmatic and look at growth and inflation, both of which are well contained and in some cases slowing down. >> bill, is that a concern that you have in greater terms when we look around the rest of the
world? europe, for example. if rates were to start to go up, would they have a stronger effect on economies to the downside >> yeah, i think so. and let's be fair in terms of, you know, looking for reasons why interest rates may go up the central banks, especially the ecb, is about to move from quantitative easing to a flat or even quantitative tightening mode, as it is the fed there's going to be a lot of reverse pressure as opposed to forward pressure that we've seen in the last six, seven years in addition, we know trump and the administration and the deficit of a trillion dollars plus, you know, will exert an extraordinary influence in terms of treasury supply going forward. there are influences for higher interest rates, but i do think there are influences for lower interest rates, and my forecast would be that the ten-year basically stays, you know, around where it is
>> does that mean you can own bonds, bill? what parts do you think are safest >> well, i think you can own bonds, but they're not going to return much. they might exhibit mild price losses over the next nine months but not a lot. i call it a hibernating bear i talked about a bear market three or four months ago, but it's a hibernating bear. it doesn't growl very loudly so where would you buy -- i still think, kelly, you want to keep it short. short rates are becoming attractive three-month libor is 2.26% it's close to matching the ten-year treasury. so i'd stay short mainly i wouldn't look at high-yield bonds, and i wouldn't buy long, corporate bonds. but stay short i know that's not exciting, but it's safe. >> bill, morgan stanley said the yield curve will invert before the end of the year. what's your view on that >> well, i think it's important. i don't think the treasury curve will be flat, but i think it's important to look at what we
call the swaps curve i know that's a little academic, but it's basically libor based, which is a rate that influences trillions of dollars of homeowners in terms of their floating rate notes and floating rate notes for corporate bonds so the swap spread, the libor spread, i'd ask rick maybe an hour from now to address this. the swaps curve is 26 basis points versus 55 on the treasury side it's almost flat at this very moment so i think we should be aware that the market that's more important to private investors is getting flat and is in the middle to beginning of a slow recessionary economy >> i'm still trying to wrap my head around that let's back out for a second, bill talk about what's coming out of washington this morning. maybe it's spooking markets, these new measures that the u.s. is going to announce against china. their retaliation. people ahave repeatedly brought
up this theme or idea that china might dump treasury bonds. do you think that's at all likely to come up here >> no, i don't think so. i know it's possible, and the threat certainly would have implications, but i think china has indicated they want to be part of the global monetary community and a leader at some point, 10 or 20 years down the road they're going to play by the rules. they're going to diversify in terms of the reserve holdings. i don't think that's a basic threat i do again think that central banks pulling back in terms of their purchasing power is the primary set going forward for bonds. >> for china, do you think if it's not going to be okay, they're going to dump u.s. treasuries that they impose measures that hurt the economy, and is that partly why you think all these market indicators are showing some concern about a slowdown >> china raised their short-term rates last night, just like the fed. looks like they're going to match what the fed does. that's not a significant
tightening, but let's remember, china has a lot of leverage, much more than the united states if i were to look for an inflection point in terms of danger for risk assets for stock markets around the world, i'd like to china. the current hubbub about retaliation in terms of tariffs and trade is significant we've known that for two or three weeks. all the sudden it's the main focus today. i wouldn't look to that. but i would look to -- yes, i'd look to chinese leverage and chinese debt ultimately over the long-term as a potential problem. >> all right follow the leverage. we've learned that lesson time and again. we're going to put rick on that swap spread, bill. thanks for joining us. >> thank you meantime, a massive winter storm hammering the northeast. thousands of flights have been canceled our contessa brewer joins us with more. >> between 10% and 20% of flights are cancel the at the new york city area airports.
same goes for boston when you look outside, the sun is shining and the roads are clear. inside, though, there have been more than 700 cancellations, almost 800 delays. it's packed, so many people waiting to get on these flights and waiting hours to get on delayed flights. amtrak on a modified schedule. a foot of snow in some places. tens of thousands without power. my sense from being out here is that people are just storm weary. there have been four nor'easters in the last 30 days. all these people trying to fly, they're flying in springtime when we know from an industry group that they were already expecting a number of spring air passengers, spring break, heading into easter and passover, spring training. so it's a very crowded season. flights were already booked and trying to reaccommodate all these people has left a lot of people feeling it very frustrated >> contessa, i don't know, have we gone too far the other way? as wilf likes to point out, here
in the city, it's not that bad >> there's two things. one, the weathermen hate this because they're like, when it's really bad, then you're not listening and going, hey, the last time it wasn't that bad the second thing was cnbc interviewed a lot of people out here who said, yeah, all this hysteria over nothing. we could have flown. >> all right thank you. i suppose it's all for the best. when we come back, a lot more on the data scandal rocking facebook, and was ceo mark zuckerberg's apology too little, too late another check on stocks this hour dow making a come back, still down 176 k t see ibat"s ck in two let's get started. show of hands. who wants customizable options chains? ones that make it fast and easy to analyze and take action? how about some of the lowest options fees? are you raising your hand? good then it's time for power e*trade the platform, price and service
facebook shares rocked this week in fact, slightly lower as we speak. mark zuckerberg breaking his silence regarding the cambridge analytica scandal. he apologized and said if needed, he would be happy to go to testify before congress >> i'm happy to if it's the right thing to do. you know, facebook testifies in congress regularly on a number of topics. some high profile and some not our objective is always to provide congress this extremely important job to have the most information that they can. we see a small slice of activity on facebook, but congress gets
to, you know, have access to the information across facebook and all other companies in the intelligence community and everything so what we try to do is send the person at facebook who will have the most knowledge about what congress is trying to learn. so if that's me, then i'm happy to go. >> let's bring in mike jackson, branding expert and cnbc contributor, and also bill george, former medtronics ceo, also a cnbc contributor. bill, i'll start with you, if i may. we have now heard from mark zuckerberg over the last 24 hours. that was perhaps a little bit slow >> i'm extremely disappointed in the way mark and sheryl sandberg handled this i've always had a high regard for them i think this issue is much
deeper they've tried to create it as a political issue. this is much broader it goes to the heart of the facebook model i think that's why they didn't say anything for five days because it threatens not just the political side, it threatens their business model, which is to profile data on 2.5 billion users and to segment that and allow advertisers then to target those people this is very threatening, but i can tell you they've lost a lot more than $50 billion they lost in the market on trust of their customers. so i think that's why mark didn't even go to the town hall meeting. neither he or sheryl they sent their deputy general counselor. this is not a legal issue. this is a business issue they should have been on cnbc monday morning they called you up, i think you would have had them on this show monday morning explaining and apologizing to those 2.5 billion users. i think this could be an existential threat to facebook
>> some pretty pointed questions about that business model and whether, in fact, this is what facebook does and can they really change that going forward. what do you think? >> well, you know, it's funny because the advertisers have been asking facebook for transparency almost since the inception. when i was at general motors, i was one of the early adopters of facebook because the business model targeting consumers is much more effective than some of the other demand-building options that i had in the marketplace. but if you look at what i truly believe the challenge is, is they've got to migrate beyond just looking at ad dollars and eyeballs to bill's point, really understand the serious and powerful role that facebook plays in our lives today >> it sounds like, mike, they're starting to do that though it was interesting to hear mark zuckerberg try to say, yeah, i get it, we're big, we're powerful, you know, maybe we do need regulation and now you have
investors and analysts upset he would even put that out there on the table. so mike, is this just, you know, part of the evolution where they -- everybody kind of gets it now they're important enough they need to have more oversight. >> but just where's the leadership at facebook they took an issue that's a very serious issue, and their lack of any concrete strategy to really deal with the issues that have been bubbling up for the last three years, they turned it into a crisis, as bill said i'd be really interested to hear what sheryl sandberg has to say later today. >> but it strikes me, mike, it's easier for facebook to handle this as a crisis than as this is what we do you know, this is who we are bad information gets shared better than good information on our site we try to prioritize good publishers and no one wants to read it. we sell data we want access to other people's data isn't it easier for them to
paint this as, yeah, this is a crisis we're going to solve as opposed to, no, this is our business >> yeah, i think absolutely. i think mike got it right. it comes down to trust but, you know, frankly facebook's grown too fast. it's too big, to fast. it's grown out of control. it's a little like dr. frankenstein's monster they don't have control over their own site they've known all about cambridge analytica for four years. they didn't act because exactly the reasons mike said. i think they're going to have to address this i think even on going to congress, mark was dissembling a lot. well, if i'm the right one i don't think he's been straight forward. i think in a crisis, the ceo has to come sit down and say, look, we made big mistakes here, we're going to change this here's our vision of how we change this model to regain the trust of our users because they don't have trust, they'll just go away that's the huge threat then the advertisers are not
going to want to deal with them. they're going to have to address this, otherwise what's going to happen is the eu, u.s. congress, and china, one of those three is going to decree some regulations that's going to keep them from doing business the way they want to do it i think it's a huge threat >> what's your advice to the board? can the current management pairing still sort this out themselves, or would you be giving a firmer, clearer piece of advice to the board to change things around? >> mark zuckerberg used don graham as his mentor he has sue desmond helmand now she ought to be saying to mark, you need to step into this, just like we're saying here imd not ta i would not take him out he owns 60% of the company yes, sheryl could maybe step up, but i think he deserves another shot i think he's got enormous potential. this is his crucible, and he needs to face it, but he needs wise advice. i thought he'd get it from sheryl if not, he needs to get it from the board. as a board member, i would take
him aside and say, mark, you better step up stop hiding and stop dissembling and stop saying how uncomfortable you are with the media. get over it. you're a media person. just get out there and do it and tell the truth thank you. >> gents, thank you very much for joining us mike and bill, very interesting insight. stay tuned, guys, throughout the day on cnbc. as we've already mentioned, an exclusive and live interview with c.o.o. sheryl sandberg on "closing bell" with julia boorstin at 4:00 p.m. today. must-watch television. coming up, the ceo of twitch joins "squawk alley" talking gaming and more. remember, this is one of the most watched platforms in the country. >> this deal that amazon prime and twitch prime have together is incredible. twitch prime allows people to, like, claim loot and collect
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welcome back time now for our etf spotlight with the markets selling off this morning bob posani is down on the floor looking at a new etf which debuted today. >> selling off, but we're off the lows the world of etfs keeps expanding. today there's a new etf tied to the global economy debuting. it's the break wave dry bulk shipping etf it's going to track freight futures contract these are contracts that track how much large cargo ships are getting for dry products like grains and coal and steel, concrete, iron ore this is pure shipping. you're not buying ships. you're not buying shipping stocks you're buying futures associated with the cost of doing the shipping now, why do we need a shipping etf? good question. it's really another way to play the global economy it's sensitive to global construction it's a play on china, a play on india, and more particularly, it's really a play on raw materials because this is a levered play on the commodities
and global infrastructure gain here these huge ships deal with raw materials, not finished goods like iphones the iphones are shipped on different container ships. so this is partly the brain child of sam, founder of etf managers group as a platform to promo promote thematic investigating he's the mastermind behind some of the most successful etfs in the last several years a marijuana etf, the artificial intelligence etf that launched a while ago, the cybersecurity etf has been very successful, and he's also got the whiskey etf, that's wsky. it's niche investigatinng, of c, but if you hit it right, like the cybersecurity etf. and guys, i do not see a trade yet on the dry shipping etf. we'll get you that as soon as it
starts trading >> thank you, bob. now over to bill griffith for a cnbc news update at this hour. morning, bill. >> i was taking a studio tour and somebody called me and here i am thank you. police in texas say the serial bomber who terrorized austin for weeks left that 25-minute video confession the police chief says the suspect does not mention terrorism or hate in the video but does detail how he made seven bombs. the chief described the video at outcry of a young man who was talking about challenges in his own personal life. in corporate news, the head of a big toy company has a plan to try to save toys r us the ceo of mge entertainment along with other investors are hoping to raise $800 million to bid for toys r us stores that are being liquidated, though the bird faces many hurdles. march madness resumes
tonight. starting off with a matchup of the sind rcinderella teams loyola chicago takes on nevada then villanova the favorite to win the tournament followed by number two seed duke and number four seed gonzaga. and check this out a house in british columbia was just put on the market for 7 million canadian dollars, about $5.4 million not exactly a mansion. the listing even acknowledges some tlc no kidding but it's all about location, location, location the house is in a highly desirable section of vancouver and zoning laws allow for development. which it's going to need a lot of there that's the news update you two kids behave yourselves >> you watch an episode of "the property brothers" in canada, awe yoe know that market is -- the house, millions of dollars anyway >> a wise sage told me years ago
if you want to make money in real estate, buy the worst house in the best neighborhood, and you'll do well that looks like a prime example right there. >> fixer upper thank you, bill. >> bill, thanks very much. when we come back, early facebook investor on why the company doesn't understand how much trouble it's in "squawk box" -- not even any of the shows i've ever been attached to. "squawk on the street" will be right back fire fighting is a very dangerous profession.
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the firefighters in this department rely on them, and so we have to practice safety everyday. utilizing pg&e's talent and expertise in that area trains our firefighters on the gas or electric aspect of a fire and when we have an emergency situation we are going to be much more skilled and prepared to mitigate that emergency for all concerned. the things we do every single day that puts ourselves in harm's way, and to have a partner that is so skilled at what they do is indispensable, and i couldn't ask for a better partner. stocks selling off this morning as president trump is expected to unveil new tariffs on chinese imports today at 12301 12:30. kayla joins with us more >> good morning. the president will be flanked by executives from the defense and national security industries as he releases the results of a
robust investigation, 200 pages in length, that in a variety of tariffs on imports from china based on the number or the value of the harm that is estimated to have been done to the u.s. economy by those unfair trade practices. in two weeks, the president will consider further action as visa restrictions or investment restrictions going forward the pentagon and other agencies have been studying how exactly the actions that the president is going to be taking today would affect the broader u.s. economy. china has not been shy about saying that it would retaliate several shots across the bow via opinion pieces noted the industries that would be targeted, one specifies soybeans and u.s. agriculture, saying this in that op-ed in "the global times" in china, saying, the u.s. actually has been the breaker of wto rules, which can be seen clearly by how subsidized u.s. soybeans are dumped on china, saying that challenge to china's previous dominance in soybeans.
we should note multinational companies are worried about how this action and how any potential response from china will play out. the indiana based engine maker said it could result in job losses in the state of indiana as well as its company if this launches into a trade war and said that this is not the right approach >> countries will always disagree on elements and they'll disagree with things we're doing, but remember our goal has to be to do no harm. it has to be that we can't make things worse i'd like to see it in an engagement way as opposed to a unilateral tariff way. >> that event will take place in just about two hours' time at the roosevelt room here at the white house. we'll bring you those exact details when they're out for now, back to you >> something to watch. >> i was just going to say, the journal suggesting they're looking for states that supported trump and how they could get hit the hardest in soy and those others being a good example. kayla, thank you meantime, shares of facebook are sinking again this morning the company has lost about 10%
of its value this week ceo mark zuckerberg delivered a mi mea culpa last night, vowing to change the company's practices >> going forward when we identify apps that are similarly doing sketchy things, we're going to make sure we tell people that's definitely something that looking back on this, you know, i regret that we didn't do at the time, and i think we got that wrong we're committed to getting that right going forward. >> joining us now at post nine, early facebook investor and adviser, also elevation partner's co-founder thanks for joining us. >> kelly, good to be here. >> you have some pretty pointed words. you say these self-inflicted wounds are killing facebook. they don't understand how much trouble they're in >> i think there's a huge trust issue with the users of facebook that's completely legitimate let's face it. in 2010 they created a tool that
allowed the harvest of people's friends list they sign a consent decree where they promise to have only informed consent and to protect the users from inappropriate use. they leave the tool in the market until 2014. so for three more years. tens of thousands of companies, and i have no idea how many apps, were still harvesting this we have no idea how many people have lost their privacy over this for mark to sit there and say as he did, well, we'll study it and fix it and create some tool to find out, that's not what you're supposed to do you're supposed to send a personal e-mail. you're supposed to put this at the top of everyone's feed until they've read it and checked off a box that says, hey, you were manipulated in the 2016 election or your stuff was taken by cambridge analytica. and this is what it means. and this is what you can do about it they can never get that data back it's gone. >> i guess they knew about the cambridge analytica issue initially in 2015 and of course only talked about it in the last
couple days. it feels like they've been reactive to when things have been wrong rather than proactive. are there other issues out there that they're also still failing to be practical on >> i think you have to assume there are. let's remember an important point. when they cite them in 2015, it was only because "the guardian" told them. then six months later, they have their own employees working inside the trump campaign alongside all the cambridge analytica people they had to know cambridge analytica was the most promotion promotional company in history >> even if there has been wrongdoing, whose wrongdoing is it as far as you can tell? >> clearly they're issues for facebook relative to the consent decree cambridge analytica as far as i can tell has broken every rule in the book. i don't know whether they're going to be federal election commissions issues there, maybe fraud issues there there's a lot -- >> so cambridge analytica will say, you know, this data was brought to us by a third party
we had access to it, then we didn't use it. >> i'm not sure i buy their story. it looks more like they set up the researcher, right. if you look at the timeline, look at all that, it would not be crazy to assume that they sent the researcher in to do that whole thing under false pretenses. from facebook's point of view, they were under a consent decree they should have been doing serious diligence on that researcher they should have been doing research immediately afterwards to see how the stuff was being used they bear some real responsibility for that. >> roger, even if facebook hasn't broken any laws or broken any of its own rules itself, have they broken a sort of moral trust they have with their consumers? >> they have with me i mean, i spent three months starting in october 2016 trying to say, guys, i think we have a systemic problem here. i think the damage, you know, before the election i didn't realize it was going to be on democracy, but afterwards i said you're killing democracy, and by
the way, if you don't fix this, you're going to lose the trust of your users and you're going to kill your business. >> do you own shares of facebook >> i still do. i've trimmed a bunch of it especially this week because i don't think they get it. i'm sitting there, you know -- i'm trying to say to investors, i don't know what's going to happen here. this is a great business i love the products still, but i don't like what the advertising business model creates in terms of incentives. >> you said they're going to lose the trust of the consumers. how quickly might that manifest? in the next quarterly earnings are we going to see average monthly users drop significantly? >> i don't know exactly. they have 2 billion users, most of whom are outside the u.s. in north america, usage decline in the fourth quarter for the first time in history. i suspect it'll be down again this quarter >> because of this or either way? >> well, doern't you think the news that's been building -- i say this as a stock analyst. the distrust has been building
for months if it started last year, it had to have gotten worse this entire quarter. i think you may see a change in actual user count, but i would suspect that would be going forward. and here we are at the tail end of march the news of this is going to affect the usage that much in the march quarter, but it might affect it a lot in the june quarter. >> there's a two-page spread on the delete facebook and whether under do it and people defending it i was going to ask you what you think the right response should be by management and by the board right now and whether this is going to come back to the issue about mark zuckerberg having so much control over this company. >> kelly, i think the hard part about this, the advice i gave in 2016, which i've given them ever since, is to look at what johnson & johnson did when somebody tampered with tylenol in the '80s. johnson & johnson didn't put the poison in the tylenol, but they took every bottle off the shelf until they could figure out tamper proof packaging we owe them for tamper proof
packaging. for facebook, it's a similar situation. they didn't do this stuff, but this is their platform and their users. they appear legitimately to have been callously indifferent to the privacy, security, and frankly the long-term interest of their users, and they need to change that like yesterday, not by talking but by doing stuff. >> the biggest area of growth and success for facebook over the last year or two has been instagram. is that affected by this as well consumers see the two as different. they think, oh, i might leave facebook, but i'm going to keep on instagram >> i don't know what consumers are going to do. if you're worried about privacy and data, instagram is every bit as big a problem as facebook is. and if you saw mueller's indictment, apparently the russians were using that in the election as well so if these issues bother you, they should bother you across the entire product family. i think the fix is really simple in the first analysis. they have to provide all the data to all the investigators.
stop pretending like they're worried about what foreigners would do dictators don't care what we do in this country. they force facebook to give them all the stuff. facebook needs to give our guys the stuff too. they also need to make an outreach they need to go directly in the face of every user who was touched, which is basically every voter in america, and say we were manipulated. because we were manipulated, you were manipulated this is what we're going to do about it >> and there's now calls for zuckerberg to resign and step down again, the decision is up to him. he has control of this company what do you think should happen from a management point of view? >> i mean, i believe these are really good people who have, for whatever reason, just lost the plot of what's going on here if i could sit down with them, i'd go, guys, you're better than this just step back you're billionaires. you've succeeded in every way you ever hoped to succeed. >> do they need to bring in a fresh face to do that? you know, put a fresh face out
in other words, do the eric schmidt thing at google. >> i don't know. it's a hard call mark totally controls it i would like to find a way for mark to succeed. he made the thing yesterday. it was almost like he was saying, gosh, i'm sorry, but i didn't grow up right? all the sudden you're affecting elections, like with 2 billion people, you didn't realize you were going to affect elections you're bragging 65% of the population is getting their political news from you. >> you said you're a shareholder but sold a bunch you sold a bunch after the share price fall >> i have somebody who managers this for me. i don't make the decisions myself after it got creamed, he actually sold some >> okay. roger, great to speak to you by the way, sheryl sandberg will be joining "closing bell" around 4:00 p.m. you won't want to miss what she has to say about thsh. stay with us
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dow losing ground. we're down more than 350 points. a moment ago down almost 400 it's been fluctuating this morning. the selling is intensifying. we'll have more in just a moment let's get to the cme group in chicago rick santelli joins us with "the santelli exchange. >> good morning. i'd like to welcome my day after fed decision guest robert heller thank you for taking the time, bob. >> pleasure. >> listen, yesterday jay powell's first press conference meeting, i personally was very impressed. what were your thoughts, bob zblfr i fully agree with you he's a very levelheaded person he was short to the point and precise. >> and to take this -- to me,
yesterday could open up a new chapter in many ways i'll tell what you i mean. it seems to me that most of the market activity with regard to the fed since the cycles began in tightening with respect to december 2015, how many are going to be this year? how many are going to be next year i understand it's important if you're a trader but i'm not sure that the fed or the dot plots their crystal ball is better than anybody else's s mr. jay powell trying to change that and put more emphasis on the here and now >> well, i think he's not an economist. sow dea so he deals with realities as they're in front of him. economists are more likely to forecast and sit there on the one hand on the other hand, so i think he brings a lot of reality to the scene at the present time. >> now, when you were a fed governor, bob, there's always got to be a plan in the committee's minds as to what
they think these days we memorialize it a lot more than we did back then i guess my final question is more difficult that is, when people look at the federal reserve and think we need to get rates to more normal level and fed dot plots have overnight rates 3 1/2. how much of that is suspect to change even though data dependentant the catch phrase anymore? i guess what i'm saying is if the economy changes, if the markets change, the fed's dot plots and the decisions are going to change. no plan is that firm, isn't that not correct? >> absolutely correct. you know, if the world changes, some major event happens, just think of 9/11. it was awhole new ball game. the tax bill was whole new ball game so the environment will clear lyn fluns t l influence the federal reserve. they have to get back to normal. >> and to me you just said this
is the key phrase. if i was still trading, that's what i'd pay attention to. what we do know is that they want rates higher. and we also know they have a plan of dot plots to prove it. in the end, what the gamble is about is the economy, is it not? >> absolutely. >> and final thought, yield curve flat ening, do you get nervous about it >> not excessively it means that some people assess the economy not to be as strong as it is otherwise the long end would be higher than we're seeing at the present time and actually i'm surprised that long end isn't higher. >> excellent bob, thank you for your thoughts we're going to go back to "squawk on the street. >> rick, thank you very much for that the market is down 4 1/2%. let's send it over to jon. >> emmitt sheer is going to join
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