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tv   Closing Bell  CNBC  March 22, 2018 3:00pm-5:00pm EDT

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multiple bo sfwlchzos. >> it's a bearish day so we wanted to end the day with bear cubs aren't they great? bears for a bearish day. >> here's our kind of cute why do we fear the bear? >> because they'll kill you. >> don't fear the bear. >> "closing bell" starts right now. >> that's true, check, please, is the best part of the day. >> that was a great check, please and a great "power lunch. live from the new york stock exchange, this is the "closing bell." i'm kelly efbs. >> i'm wilfred frost we're counting down to our exclusive interview with sheryl sandberg her response to the big scandal is coming up. >> in just about an hour we also had the president's announcement on china tariffs creating those fears of a trade war. look at the markets. we're live in wash with tington what that means for your money
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the dow is down 364 points we've been down at 500 at one point today. bob pisani is watching the action on the floor. >> we've had a lot of deals to issue with the market did rise briefly when it was announced around 12:15 eastern time that there would be a 30-day comment period on these chinese trade tariffs. people want that, hoping individuals and companies will be able to dilute the effects of the tariffs. we're moving back down we've been watching the global machinery names, caterpillars, that's 50 points in the dow jones industrial average it's been absolutely ugly day in the global steel and materials names in general we're seeing sometimes double-digit decline u.s. steel down 7% nucore down 9% they rose briefly on the tariffs a month ago but have been
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trending downward. then we have flight to safety concerns we have issues with companies like key core pnc because bonds have been moving up. we were moving towards 2.8% earlier today. we were moving towards 3% earlier. you see what's happened to a lot of the regional banks -- there's pnc. a lot of stuff down about 3% then issues with some of the big tech names, not just companies like facebook down, but we've seen chinese internet stocks down alibaba is down about 4% today all the stocks over in china are also weak on these general concerns about technology in general. you want to watch the big bellwether, that's micron reporting after the close today. >> thanks for that meantime, the nasdaq getting hit hard in today's session aztec stocks stumble the index is on track for third weekly decline in the past four weeks. bertha coombs joins us with a look at the big movers. >> of course, our big cap tech here is, again, leading the decline. facebook hitting a new low for
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the week off of those levels at this point. the nasdaq, of course, aid market cap weighted index. we're not finding anyplace to hide in terms of point impact, amazon, microsoft, alphabet are providing an even bigger drag on the index. i've been watching apple today it's looking to break a four-day losing streak. it actually moved to just above the even mark today. so, that will be worth watching to see if the nasdaq can get a little lift there and apple can close positively a number of tech hardware firms like apple face potential retaliation from china on tariff issues that could be an overhang. today it's really hitting the chinese e-commerce play areas like baozun and vipshops which have their adrs listed here. they're getting hit hard along
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with weibo and daidu. >> thank you. the president unveiled a new set of tariffs for punishing china for intellectual property theft. here's what the commerce secretary said when asked if the president's policies will spark a trade war. >> i don't think so at all i think what we're real starting is the prelude to a set of negotiations i think the market's concern is they just don't know all the details and markets hate uncertainty. i think there will be some ultimate retaliation but i don't think it's going to be the end of the earth. >> let's bring in kayla tausche. you've been following tariffs closer than anyone what is your take on how severe what we've seen announced is >> china said since we got this action it will not sit idly by the foreign ministry says it
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will take all safeguards to protect its interests. the white house is unphaseded. a spoke with a senior administration official moments ago that said what was announced today is the kickoff of a set of multiple actions targeting china and we could see follow-on investment restrictions on china in just the coming days. as for the policy unveiled today, it will levy 25% tariffs on up to $60 billion in chinese interest the office of the u.s. trade representative is going to be looking at aerospace, machinery, i.t. type imports from china theywant the innovation and high-tech type of innovation that china makes they feel they've been doing so at the expense of the united states, using united states intellectual property ustr will detail exactly what products will be in this bucket in the next two weeks. and as bob mentioned, there's going to be a 30-day period for industries, for various
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stakeholders, to weigh in on the impact here. it is the second tariff package the administration has unveiled in less than a month of course, the first one, that package of steel and aluminum tariffs came at the beginning of the month. critics at the time said the white house was simply protecting a dying industry and risking the global economy in the process. but today the white house and the president said that protecting intellectual property is about safeguarding america's future interests >> we're going to get it taken care of. frankly, it's going to make us a much stronger, much rich er nation the word is reciprocal that's the word i want everyone to remember. >> of course, this is the biggest and broadest investigation that the white house had undertaken since trump became president as the secretary said, this is, in their mind, a prelude to a set of negotiations. but we will see whether china
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and whether other nations decide to come to the table wilf, kelly? >> kayla, thank you very much for that another story out of washington, a lead lawyer for president trump is leaving eamon javers has the details on that one. >> that's right. the shakeup in the president's legal team, john dowd is out assist one of the president's personal attorneys working on the bob mueller probe. he says, i love the president. i wish him well. here's a statement from one of the other attorneys working on this case on behalf of the president of the united states sekulow saying, john dowd is a friend and has been a valuable member of our legal team we will continue our ongoing representation of the president and our cooperation with the special counsel. john dowd was seen as someone involved in a number of unusual incidents in recent years, including an incident just this weekend in which it appeared that he was signifying that he wanted to end the mueller probe all together and appeared he was speaking on behalf of the president. he suggested as much to a reporter and then later suggested he wasn't speaking on
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behalf of the president. earlier there was an incident involving a tweet from president trump which got a lot of attention. john dowd later came out and said, no, no, it wasn't president trump who wrote that it was john dowd who wrote the president's tweet. he took credit for that tweet. then there was an incident a number of years back in front of cnbc cameras when dowd was representing raj in that big case >> would you like to comment for cnbc >> get the [ bleep ] out of here okay that's what i got for cnbc >> that's what you call a no comment there in legalese. look, john dowd is leaving the implication here is that the trump team would like to get a little tougher or a lot tougher, maybe with the mueller probe the president was asked today if he would like to sit down with special counsel mueller. he said he would like to do that the question is whether this legal team, now with the
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addition of another lawyer the president's brought on in recent days, if this legal team wants the legal team to sit down with mueller. that could be an epic showdown if that interview ever does happen, guys. >> eamon, it could, indeed we'll discuss what all of this means for the markets. cnbc contributor peter costa, president of empire executions and art cashin, usb financial services are here. arthur, at the end of "power lunch" they showed the results of a twitter poll in terms of what was responsibility for today's selloff, like tariffs, fed, the president tariffs was in the lead. >> i thought i came on because of the high volatility but i realize i'm just an extension of the bozo the clown theme yes, the tariffs we started early in the morning. the bank of england announced they were going to leave rates steady part of what they said is with a looming trade war and the
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possible headwind that could bring up, they wanted to keep rates steady that cut the legs out from under the european market. they dropped sharply they went down more than we were on the opening that helped pull us down then we had an absolute stew of headlines throughout the day, including the thing about the lawyer dowd. down here we had a slightly different take than eamon did. dowd was long a proponent telling the president not to testify. at least in a formal manner. and the president was insistent and so the spin here was that the president restating that he wanted to testify may have been what let dowd out. >> and the market may be fearing he'll incriminate himself. >> well, you know, he -- he's got a wide range -- i won't say light with the truth, but he stretches some facts kashlgly. and you have to remember that one of the things in grand jury testimony and testimony before the fbi is that if you make a
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misstatement, you just recall martha stewart and scooter libby and all those other people all those things came up we are still back in mild anxiety. the early look at the market on closes is to the sell side, and somewhat heavily, and that's why we returned to the low. >> we are down 502 points now. what are you watching? >> one thing is the support level into the s&p 2665 to me was a pretty strong support level. it bounced off there twice today. you know, if it holds here, we're all right. if we break through this with the sell side -- >> 2664 now. >> yeah. if it does break through and closes below that level, we could be in for a rough ride for tomorrow and next week we are looking at s&p levels also about the trade, up -- potential trade war. i think that makes people very nervous. no one's ever won one. it's the only one that's never
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been won i think we have to be very, very careful about going forward. a lot of cool heads need to prevail on that because it could be disastrous. >> we talked about needing to see leadership from a sector to get the market going higher again. utilities is the only sector higher today which sector is likely -- or would be big enough to do that does it need to be tech to rebound? >> i would think given the circumstances around tech and telecoms would be the best, if they can resurrect themselves because they're thought to be, to some degree, victims in a tariff war china might go out of its way to affect those industries. so, if they can get themselves back in the game, i mean, utilities mean nothing they're a reflection of where rates are going. and with rates going where they are, with some people actually believing we've seen the high-end yields on the ten-year, then financials are not going to come back. i would plain taken it probably has to be the tech and the telecoms. >> thank you for joining us,
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arthur and peter. we've got about 48 minutes to go before the bell. as kelly just said, we're right near the lows of the day the low was 506 points we're at 502 points lower. full 2% lower on the dow. >> the nasdaq off 120 points we're seeing broad selling pressure "closing bell" is just getting started. >> announcer: still ahead, sheryl sandberg, live and exclusively only on the "closing bell." >> facebook testifies in congress regularly so what we try to do is send the person at facebook who will have the most knowledge about what congress is trying to ask. if that's me, then i'm happy to go. >> the head of the commerce committee says, it's the right thing. we'll hear from him next this is the "closing bell" with oslly evans and wilfred frt, live from the new york stock exchange it's all yours. wow! record time. at cognizant,
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bell." there is the big board we're just off the highs down 540 at the lows over 2% for the dow. the s&p and nasdaq are pushing close to 2% declines themselves right now. we'll keep an eye on that. we're also counting down to our exclusive interview with facebook coo sheryl sandberg she'll be sitting down with julia boorstin who joins us now. >> wilf, there are more calls for ceo mark zuckerberg to testify on capitol hill. today the house energy and commerce committee saying, quote, after committee staff received a briefing yesterday from facebook officials, we felt many questions were left unanswered this as advertiser nestle also says it has more questions saying, quote, we're encouraged by public announcements by facebook around strengthening data protection, however we asked facebook to clarify on what more it will do to ensure
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consumer protection associated with brands and advertising. all this comes on the heels of mark zuckerberg laying out his mran plans to prevent this from happening again. >> we're doing a set of things to restrict the amount of access that developers can get going forward. we need to mike sure there aren't any other cambridge analyticas out there or folks who have improperly accessed data >> cambridge analytica responding to this just recently, laying out a timeline in which it shows it complied with facebook, cooperating with them once it was revealed that data was improperly sold cambridge analytica saying it was acting in good faith we'll hear much more about what this means when i sit down with sheryl sandberg at the top of next hour. >> thank you for that. fascinating interview it will be facebook continues to be lower let's have a look, though, at
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the broader markets for you as well because facebook is not the only thing decline >> wow dow is down 575. >> s&p down a full 2%. nasdaq down 8% russell as well. we are at session lows right now. let's just look in on the financials as well because it's comfortably the worst performing sector it's down over 3% today. if you look at some bank movers, you'll see some healthy declines art cashin talking about the fact that the banks won't be the sector to lead the markets higher. >> we talked to bill gross who said he doesn't think there will be three or four rate hikes. he doesn't see the justification for it what happened in europe overnight, wilf, just again that kind of reassessment of the fed and what's going to happen this year rates are not behaving in accordance with what the bank bulls would like right now. >> interesting art cashin mentioned the europe factor as well there was the boe statement that was less encouraging than what people thought about the global picture. also that eurozone pmi which hit
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a 14-month low that just got us started on a bad day. europe closing down 1.6% or so just on the banks, i mentioned deutsche bank as well because the adr here in new york is down over 3% as we speak. its ipo of asset management business is priced a little lower than people expected so, maybe that's just added to - >> nothing is going right for them today, is it? >> there is the adr. it's down 4% actually now. that's also weighing on sentiment, i guess generally speaking, it's just the lows of the day down 2.3%. let's switch back to facebook and today we've hit the streets of times square to find out whether the data scandal has led users to use facebook less >> absolutely not. i love facebook. i love being on it it's allowed me to be in touch with friends that i've known
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since i was 15 years old >> it definitely makes me more cautious about what i'm doing on facebook things i'm clicking on. >> i would probably still use it because i don't think my information -- like, i don't have much personal information on facebook. >> it's a real bad thing now i don't know who got my information 37 can i trust my information with facebook? >> i never heard about these data breaches for facebook, which is weird >> i haven't deleted it and probably won't be deleting it. i don't see the point in using other social media they're pretty much the same. >> yesterday facebook ceo mark zuckerberg said, quote, he'd be happy to testify before congress he's about to get happy. a short while ago he was summoned to capitol hill by the house energy and commerce committee. >> joining us is greg walden, republican from oregon and chairman of the committee. thank you very much for joining us, representative walden. >> glad to be with you >> let's start with mr. zuckerberg what's your take on how he's handled this so far? what do you want to specifically
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ask him? >> we had a good briefing yesterday at the staff level but there were questions that the people who were there could not answer some preceded their involvement in the company look, this is a great american innovate tifr company. people love to use it. they also want to make sure they understand fully how their data are being used or manipulated or sold or whatever and i think we have to get to the bottom of that mr. zuckerberg was the only one who's been there, literally from the start. he created it. he's the biggest shareholder, i think, in terms of the "b" shares and i think he would do a wonderful job coming before the committee and laying out what happened and what didn't happen and letting americans know how they protect their data and what they do and don't. and how this happened. and what happened before, is this one incident the only one did it happen in prior campaigns? i mean, we got to get to the bottom of it that's our job at the energy and commerce committee this is a bipartisan request and we want to get to the facts. >> we'll see if he shows i'm just reading here that you spent more than two decades as a
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radio station owner and you're a licensed amateur radio operator. congressman, i ask because many are asking, where does facebook fit in the media landscape today? and how precisely should they be regulated? >> well, you know, it's a good question it's something that we're wrestling with as a culture and a country and a congress how does all this work when you think of the enormous amount of communications that occur over your facebook account, when you think about how it interconnects the world and then what happens to those data who owns your data and what kind of secrecy, privacy protection is there and are they following the rules they set up? i think people have a right to know i think we have an obligation to find out for them. that's our job but everything's changed in the media landscape between facebook and google and others. you look at the new platforms that didn't exist a decade or two ago are now -- are now superstars and have huge market share and influence not only here domestically but globally so, we want to look into it and
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say, are america's laws keeping pace can it self-regulate is more needed i don't think we have the answer to that question yet that's why we need to start at the top. mr. zuckerberg, i met him. he has data centers in my district they're great neighbors and partners but these are the issues of our day and it's our job to ask the person in charge. you know, the buck stops with him. and he's expressed an interest and willingness to come. we'll take him up on that. sooner rather than later you know, he knows everything about the company. again, he created it and has been there all the way through i think he's the right one to lay out for the american people and the world, frankly, what happened, what didn't, what should or shouldn't happen we can decide as policymakers the best course. look, i'm into light touch regulation, not heavy-handed government. >> congressman, of course, the main issue this week's been about data and whether it's been misused. but you just mentioned another issue that gets raised around facebook, and that's market share, which is pertinent on a
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week where the doj is hearing a case of whether at&t should be allowed to buy time warner is it fair on those traditional media companies that facebook has quite such the power it does have should that be looked at as well >> that's one of the questions i've noodled around on you look at market share for advertising, online advertising dollars. it's pretty well between two companies in america you look at how other, i'll call it, legacy industries are regulated. maybe there's no there there but we havage obligation to look at what's going on in the marketplace and decide does it regulate itself or is there a monopoly that requires some level of federal involvement. i don't have the answer to that yet. i want a vibrant innovative tech sector i've supported that all along. >> there's separate strands, the monopoly, size issue, market power is one, of course. the other is, are we talking
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about regulating facebook like a media platform which would involve a whole host of issues i'm sure the company doesn't want to get involved in. the third part is, well, how do you regulate a business in america whose business is selling your data? what questions are you going to ask facebook in order to figure out whether more protections are needed >> well, i think first of all, did they follow their user agreement? that's the first and foremost. because this is a contract between the user and facebook. i sign up. i agree to these conditions. i agree to certain things allowing my data to be used or not used did they follow their own agreement? was there a breach did they know? what happened in this particular case or has it happened in prior situations is this not the only one we need to get to the bottom of that fundamentally i want a competitive marketplace because i think that's what drives innovation and it benefits consumers. i want to put the consumer first. and you begin to wonder, is any company gets this big with this big of market share, do you
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still have a competitive marketplace? nobody can make that case better than sheryl sandberg and mark zuckerberg and they should do that before the committee. >> congressman, do you fear that the likes of the eu, the uk, will clamp down much harder than you're suggesting would be right on the likes of facebook because they're not a european company. >> well, and let's face it, just from this side of the pond, you have the sense that the europeans like to regulate more. they have less competition than sort of how we face some of these things it's part of why we innovate here, i would argue. i'm being a little aroquial here you think about the incredible companies that were born and raised and grew up in the silicon valley without virtually any government regulation. if you're an app designer, you didn't have to get a permit from some agency in washington first. you just innovated then you worked with others. we want that to continue but when you get as big as some of these companies are, i think it's fair for us to step in and
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say, is that still that environment of innovation competition or do you have somebody that's so dominant they basically have control of a whole sector and you have a monopoly forming because we don't want that to happen >> yeah. congressman, what's it like being a republican in oregon >> i'm protected by the endangered species act it's true. yeah, i'm the only one out there. but it's great i have a great district. oregon is a wonderful state. we actually have a lot of the data farms out there, the server farms. >> we'll see if mark zuckerberg himself shows up on capitol hill in response to your invitation. >> i hope he does. i think he'd do a great job explaining to the american people what was at stake here, what happened and what their proposals are to fix what went wrong if something went wrong. >> thanks for joining us >> you're welcome. >> representative greg walden of oregon. >> he's got a lot of invitations at the moment, mark zuckerberg. >> yes, he does, all over the world. let's check in on the markets because we are at session lows
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down 550 points on the dow, 2.3% bob pisani joins us with an update on what's moving us even lower. >> how many problems do we have? the biggest one we have is tariffs. i want to point out what the tariffs have done and how it's hurt the market and helped the market u.s. steel, the steel stocks are getting destroyed today. down 9, 10, 11%. u.s. steel back when the tariffs were announced, march 8th or 9th, u.s. steel went straight up for several days 34, went to something like $47 we moved dramatically to the upside and then back down to $35. if you look -- look at that. complete round trip for u.s. steel. this is happening with all of the big stocks that were involved here. nucore you heard lighthizer talking about the exemptions, brazil, in addition to mexico and canada. turns out the steel tariffs may not be so tough after all. steel, a complete round trip
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since march 8th. then it's gone straight down talking about caterpillar and boeing as proxies for the global trade war. boeing was, what, march 8th $355 what is it right now there's caterpillar down. >> caterpillar is down 5% now. >> that's right. and boeing is down - >> holy cow. >> boeing's down 30 points, almost 10%. >> you know what's fascinating about this you might have thought on a day when the trump administration comes out and says, we're going to impose tariffs on china and impose aerospace -- you think the american giants of those industries would be benefiting precisely the opposite is happening. >> the market is telling you there's far more negatives than positives to this global trade war. then we have the flight to safety with bonds. we were moving towards 3%. we're now moving towards 2.8%. this is killing the banks. if you look at -- again, look at march 8th. go to regents financial, any of the big banks. these stocks were all up march
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8th or 9th when tariffs were announced. now moving back down regents down to $18 and change that's probably 8%, 9% off where it used to be. regents financials moving to the downside the existential crisis with social media put up the f.a.n.g. names, please you can see nothing is helping at all with the various f.a.n.g. stocks not just facebook but f.a.n.g. names in general are down. most of the big names are 8%, 9%, 10% off their 52-week highs we saw recently. alphabet is 11% off its 52-week high netflix, 7% off its 52-week high no leadership from the tech stocks nothing is coming in, industrial industrials, banks, to take the place of new leadership. we've got bond yields moving down we've got the trade war issues still sticking around. i do want to note something a little unusual you would think there must be massive volume going on.
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there is not volume is generally moderate down here. what does that tell you? big downday moderate volume, it tells you there is no gigantic rush to sell massive amounts of stock but there's no buying interest that's what it tells you right now. there is one exception i want to point out. the qqq is the etf for the nasdaq we're seeing heavier than normal volume there that's about the sole exception. the other big etfs i watched, s&p 500, the russell 2000, the european etfs, the volume there is on the moderate side. i know that's quite a surprise, but that's what's going on right now. back to you. >> bob, as you're talking, we got new fresh lows nearly 600 points at one point down about 280 -- sorry, down 2.4%. >> here's another one for you. the steel etf is down 5% having one of its worst sessions we talked about century aluminum being down on a day when we're talking about u.s. imposing tariffs to supposedly help these
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industries. >> 606 was the low on the dow. significant declines and, clearly, the tariffs, as bob went through and as we discussed, the effect. we shouldn't move away from the effect the fed has had utilities is the only one in positive territory in fact, up a full 1%, which is pretty impressive given the declines we're seeing financials comfortably the worst performing sector down 3.3% the other thing that helped us coming into the last session was energy sector. it was up nicely because oil prices were up it's down as well today so we only have utilities to hold onto as the only sector in the green. >> your financials down more than 3%. not even tech doing much to help out today. we talked about the problems in facebook, but it's broader than that bertha coombs, what are you seeing at the nasdaq >> it is broader than that bob touched on the fact we're seeing volume in the nasdaq -- what people call the qs. it isn't spreading when you look at the etf, for example, of chip
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stocks, the smh, the semiconductor holders index. it's not transferring when you look at biotech either and when you look at the volume compared to when we saw the swoon back in february, february 9th, the week leading up to that, you're getting twice as big volume on those selloffs we are not seeing that here. in part because it appears people are sort of taking this with a little bit of a grain of salt the fact that we are getting these tariffs. they won't necessarily be the same after the 30-day period for comments and as the white house hears from more of sectors and more companies about how this could really impact their business if there were to be retaliatory tariffs coming from china. i will note, though, that the chinese adr, the stocks listed here in the u.s. are getting hit
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very hard. they are likely to be among those that suffer right along with our tech firms here if we start seeing some retaliatory tit for tat. >> you mentioned the chinese names. we saw earlier as well, some hard-hit names including baidu, the chinese consumer platforms, it's funny because amazon in the u.s. has been kind of bifurcated from the troubles in facebook and google, and yet its rivals, similar platforms in china are getting sucked into some of the worst performers of the day here. >> yeah. at, you know, one of the things you have to think about is amazon, like everyone else in tech, collecting an awful lot of our data you know, if you're like me and you've got an echo or two at home, you know, you wonder just how much data they're collecting and how much they store, those times when i actually do yell at alexa for getting it wrong but it's one of those things
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where if there were to be more regulation about data, it could have more far-reaching impact on all sorts of areas of commerce not just social. >> bertha, thank you very much for that i guess one slight bit of encouragement is that both bob and bertha point to the fact that volume isn't too high there's the vix index. it is higher by some 25% let's discuss all of this now with the "closing bell" exchange our guests are timothy anderson from t.j. investments, cooper abbott from carryon tower advisers and rick san stetelli t the cme in chicago rick, i'll start with you because the biggest moving sector are interest rate sectors. talk us through the overall reaction we've had today from yesterday's fed meeting and your take on it >> well, to me, that overreaction -- or that reaction
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is an overreaction now, maybe some of these moves are reflecting the notion that many believe interest rates are on thin ice with regards to moving lower that is possible i guess at the end of the day i would look at the, you know, the idea that this is the 20th day we're in a tight range 20th trading day since february 23rd tens have been closing in the 2.80s. it's like a jumping bean in a shoe box yes, we could look at all these moves. indeed it is moving but still contained at the close where everybody's margin, that's the most significant price but i do think there's a bit of nervousness out there in general. once again, i go to something very simple. it seems to me that the biggest story is being viewed as the tariffs. i understand that. even if it turns out well, it's going to be a nerve-racking process as you move through it because we never know how other countries will react at the end of the day, i really
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think the business model of social media monetizing into advertising dollars made the market skittish and nervous. again, pushing the tightening down the road. i think all of those issues helped create an environment where the tariff story just became kind of the push it over the edge scenario. with respect to interest rates, quite simply, there's an added tension because thinks like libor rates have been moving up. if you compare it to a to-year note yield chart for ten years, it's not that dissimilar if you're looking at the difference between two-year and six-month libor since the close of last year, there is an acceleration quite simply, a two-year note yield is up about 40 basis points on the year six-month libor is up close to 60 basis points. those 20 extra basis points
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figure into so many financing issues, like interest rate swaps that most likely it is part of the reason we're having a hard time actually bringing rates back under in ten-year that 2.80% benchmark. >> tim, it's another day where we'll have another 600-point selloff. we'll see what happens in the last 20 minutes. the headlines will key back to the president's tariff policies. a president who likes to see the stock market do well it's point out, the s&p peaked around the time trump first talked about china tariffs in davos this year. now that we're down 609, these are fresh session lows, do you think this makes him change course are the markets overreacting where do you think the real risks are? >> i think the market is overreacting at a handful of things casting a negative optic on the market today. but i still think that the china tariffs, similarly to the steel and aluminum tariffs the way they were a precursor for
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renegotiating nafta, i wouldn't be surprised at all if the timing of the announcement of these china tariffs are to set up the negotiations that he has planned with north korea for a couple of months from now. >> really? >> you don't really know what kind of conversations are going on behind the scenes and you don't really know how long these tariffs might be in effect and what grade of product they might be imposed on. part of that also is the market hates uncertainty. it can handle the bad news as long as everything was completely laid out for it. >> cooper, clearly the tariffs are one big story coming out of washington the other, of course, is the president's lawyer deciding to leave his team, raising prospects of the possibility of the president testifying to robert mueller and also a lot of people talking about the midterms and whether a democratic congress could mean tougher hearings is that something you fear or overall the people overreact to what's going on in washington?
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>> you're quite right about that remember, there's been a lot of news to digest we had rates going up. we had trouble with facebook, which is a large constituent, one of the f.a.n.g. stocks i guess the way we look at it is there's opportunity in complexity we think this is a very constructive setup for research-centric investment approaches we have equity-focused groups with eagle, scout and claravast. what we're seeing across the individual teams is very positive there's a lot of news to digest. in addition to the tariffs, trade wars, et cetera. ultimately understanding these individual companies is what drives the results over the longer term. i think when you have this much information for the market to try and digest, this is an opportunity where the fundamental factors driving these businesses -- these
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business models and their ability to execute really gets weighed in the market and has a chance to show >> cooper, everything about that sounds good except that you referred to my colleague as will, which is going to have its own repercussions. no, i'm kidding with you. >> it's nice to see you reunited. >> yeah. is there a name or two you think investors should own here real quickly? >> i wouldn't go into names. i would say in this environment it's important to know what you own but also important to know what you don't own and why and i think as we talk about f.a.n.g. and how weighted some index products are to these, there's a lot of opportunities out there in equity land and being able to find those that are less covered becomes very important >> and, tim, real quickly, we were down just about 650 points. the kinds of declines we're seeing, time after time this year, what does it add up to for you? >> i just think -- we talked about it before. i think it's the new normal of volatility and really we're not
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in a zero interest rate environment anymore. and that is -- takes away this total predictability of very, slowly grinding higher markets with low volatility, both for stocks and bonds we've -- look at today we don't have a lot of hysteria going on we're just down 650 on relatively light volume. >> that's the new normal. >> thank you very much the dow is down 623 at 24,055. it would have to be at 23,955. so about 50 points more and we would be in correction territory, down 10% from recent high. >> yesterday energy was one of the bright spots in the market today oil is lower and everyone else is being dragged lower. addly gamble just caught up with the saudi oil minister and she joins us now >> reporter: we got a chance to catch up on opec
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we talked about nuclear energy and that aramco ipo. we heard from the finance minister yesterday saying it was on track i asked the energy minister, what exactly does that mean. let's listen in. >> like i said, the timing and exact venue will be announced when we're ready. >> but you said you were ready. >> well, we're ready with the preparation. the company is 100% ready. the boardof directors of saudi aramco, which i chair, have reviewed in every meeting over the last two years the progress, including a couple of weeks ago we reviewed the 2017 financials, which have been prepared in accordance with international accounting standards and it's investor friendly. and the company is ready the government has also changed its appropriate tax laws and regulatory environment to accommodate a public listing and the government is ready from
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a regulatory standpoint. what remains is the selection of potential secondary venue and the timing like i said, we need to make sure the markets are ready for us to do that. we're ready to do it in the second half if we determine that the timing is optimal. but if we have to slip, we will slip i don't see 2018 as a necessary year to list unless it's optimum. >> reporter: so, the energy minister basically saying it's all about the optimal timing he also said not only was the company 100% ready, but also of course the markets as well there were a lot of questions about whether or not the company would be ready in such a short amount of time i asked him if he was disappointed it was taking so long to get this in order. he didn't seem that bothered and he said if it was going to happen in 2019, it would be okay i asked him about nuclear energy, something everyone in washington has their heads put
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together over. the reason they're so worried about it is because the saudi crown prince said they would obtain a nuclear weapon if iran does but he seems positive these deals with the united states are going to go forward. guys >> thank you very much for that. very interesting, that aspect of the ipo. we'll get back to the broader markets because we're just teetering on 700-point decline on the dow down almost 3%. >> some components, if you look at the blue chips, we can perhaps show the heat map. caterpillar down 5%. boeing down just about that much these are often traded as the companies most sensitive to some tariff tit for tat or trade war in china we had more on that. no components of the dow are positive right now there's caterpillar and boeing on the bottom right of your screen jpmorgan is down more than 4%. >> massive selloff for the banks. if we can have a look at sectors. utilities remarkably still holding onto positive territory.
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up about 0.5%. if we bring up the rest of the sectors, financials down some 4% almost. >> dow is down 725. >> industrials, materials, health care, all down around 3%. there is the sector performance, utilities just holding onto positive territory financials really affected by the way yields have slipped today, but also just a significant negativity out there. the dow down 734 now ist down 10% from the late january high. >> we'll see if we can get art cashin back here he said there was a lot to sell on the bell. we're down a couple hundred points from where we began the hour we've only got 13 minutes left to go in the trading session down nearly 750 points. >> coming into today, we just talked about saudi aramco, before today's move, only one sector was positive and that was energy energy was supported by oil prices rising the last couple of
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sessions oil is down today as well. all sectors are lower for the week as a whole. quite comfortably as well. oil is down 1.5% the dollar, as we look at things, is slipping significantly. down 0.6% against the yen as we stand. down 711 points. >> let's bring in ian weiner and ross gerber to talk about these markets and facebook and so much more that's happening. appreciate you joining us. ian, since you're usually in the middle of the act here, what are you hearing about this selloff and the way it's picking up speed? >> i mean, these things tend to intensify late in the day given a lot of derivative exposure and volatility trades that take place. at the end of the day, people don't like fear of trade wars and they don't like the unknown of what the chinese are going to do and, you know, ultimately that's what's taking the stock market down i'm want sure it's going to find footing until we get a little more clarity. >> ian, just to follow up as director of equity trading, i remember talking to people in
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similar positions as you a month or so ago when we were in the midst of that big selloff. it was a very clear point that once you start selling and selling starts picking up pace with the automated nature of trading these days, it can really pick up and get out of hand what's your view on whether that momentum trade can continue at the pace we're seeing today? >> i think there's -- this is the result of big index investing. when money comes out of these passive funds, which is where a lot of it is now, it feeds on itself and there's no idea of where valuation is for the same reason stocks continue to go up when there's money coming in, a lot of these names come down because it's not like an index fund cares what valuation amazon's trading at if they're looking to liquidate >> and the dow is down more than 700 points art cashin walked by saying there's $2 billion to sell on the bell that's partly why we're at the lows in other words, the orders to sell on the close are picking up steam. you think people might buy the
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dips, but apparently not so much anything you're buying >> no. i mean, we've been rotating out of stocks starting with facebook and lowering our exposure. bottom line is we had a wonderful run, much longer than i expected with the trump administration but their ignorance towards running the economy is starting to show with these kind of decisions that are ultimately detrimental to everybody in the global economy as we have this great economy and this perfect environment, they're just destroying it and where does this end? i don't see it ending well this isn't the way to trade with your partners. i don't -- it's negative. >> listen, and i was actually thinking it would be great to talk to larry kudlow right about now but i don't think he's been officially announced yet if there's a real injustice in terms of the trade out there that needs to be rectified when it comes to china, you know, are markets overreacting to what's going on here? ultimately we're talking about
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$60 billion in a trillions and trillions of economy and billions of trade between these two countries. do you think people are making too much of what's happening >> no. i think you just said it right now. you're talking about our biggest trading partner in the future, the fastest, biggest growing economy in the world we want to be friends with china, not fight china of course, there's a lot of unfair things that need to be addressesed but this is not the way to deal with the chinese, that's for sure. i mean, you know, it doesn't make any sense if this is the way the administration's going to implement policy in the future, we really have to question how effective that's going to be in the global economy and that's what we're seeing. we're starting to see the cracks in the bull market and this is a sign to dial down risk it's not like we're getting out of the stock market. it's just what risk level you're comfortable with i'm just comfortable with less right now. >> mike santoli has joined us around the desk. your take on this accelerating
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selloff? >> obviously, it's a compounding kind of effect here. it's really not just about the tariffs but i think it's leaving somebody who would be inclined to say, well, let's look on the bright side, without a lot to work with on a day when you have this sector of technology, the tech stocks were way overbought. the bank stocks are telling you it's not just about trade. they're down a lot more than the market it's signs there's financial stress -- it's not a major systemic problem but financial tightening is working through the market. >> how much could be keyed back to the fed yesterday all the notes this morning, jay powell nailed, it he did great and it's not because the ultimate yard stick is the market, mike, but was there something from yesterday's decision and discussion that is contributing to this big selloff? >> i think more just to the backdrop idea that this fed sees a long string of tightening events happening down the road
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they're not going to be overly sensitive, at least by his words and demeanor, to every twitch of the market they're not going to rely too much on intellectual framework about how this ought to go they think rates sh be going up in a relatively steady way that's just a backdrop factor right now. i think it's a reminder that policy along many fronts, monetary, trade, potentially even fiscal, are less friendly than hazardous at the moment again, this was a market that was kind of tempting the bottom end of the range it's been in for a long time right now. we've kind of broken through that level for the moment. people were looking to hold in the s&p. but it's not that much different in character from the correction that's been rolling through this market for over two months. >> kevin o'leary joins us as well good afternoon to you. what do you make of this selloff and would you be trying to get back into the market with these more attractive levels >> i have a slightly different
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view of what's happening here. i think earnings are intact and that's all that matters in the long run i think all the sectors are actually firing on all cylinders. all that's happening is, now that there's more risk and things like trade wars or, you know, risky policy, if you want to call it that -- i personally think this is a negotiating tactic so i'm not that worried about it, but -- >> would you be buying caterpillar and boeing here? they're down 5% today. caterpillar is down 15% from its recent highs >> yes, but you would do that if you thought there was an enhanced risk of trade war for sure but here's the way i look at it. i think you have to take a couple of turns off the pe multiple to allow the market to take some pressure off the risk that's now been brought in but if you're a long-term investor, to me this is a buying opportunity because i bet you in six months, by the time wilbur ross gets through working with the president and we go through with the actual attempt, which
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is to break down barriers of industries of products into other -- take automotive it's unfair you can't sell american cars in south korea without paying a ridiculous tariff that has to get fixed. >> that was ian weiner >> it will get fixed. >> go ahead, kevin >> my attitude is, look, there's new risks but in the end, you're going to be okay because the kudlow/ross/presidential knows what they're doing i make that assumption i give them the credit of the doubt. however, do i want to trade this -- and i'm going to say we're going to hit all of our earnings targets in every sector you're just going to pay less for them while we work this little, let's call it, negotiation out. >> kevin, i think -- >> real quickly. >> kevin, i think you're missing the political risk here. in six months the democrats might sweep the house and they might change the tax situation a lot of things could change the mueller investigation could
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move forward with impeachment. there's a lot of political risk out there that you can't deny. >> no, i do deny it. i think if you go to main street america right now, like i do every day, like i was yesterday in philadelphia, my companies are on fire. >> i agree. >> their paychecks have increased in some cases 20%. they're loving the policy here they don't care about the headline risk. i've become trained in a new direction when it comes to politics i don't listen to the news anymore. >> either do i. >> i talk to americans running businesses >> i agree with what you're saying, kevin. the economy is great right now and earnings are great but i'm talking about the future when we look out a year or two years, you know, this is how the '90s ended it ended with an impeachment when the economy was doing phenomenally well with dotcom. there are so many parallels. >> hang on, everybody. stay right there. >> i'm not an advocate for one party or another all i care about is policy
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what i see now is a negotiation that has been done in a different way than any other administration has ever attempted it they always wrang their hands in worry about trade tariffs. this administration is taking a different tactic what i'm keeping my eyes focused on is old-fashioned cash flow. and i see major increases in every investment i've got. >> that's true. >> guys, hang on we have to get to bertha coombs. stay right there we'll come back to you all we're just to squeeze in the closing bell bertha has an update >> we're continuing to watch tech sell off, at the nasdaq, nasdaq 100 in particular that we watch more closely here, not down as much as the dow on a percentage term. facebook, of course, very much a concern and the issues there in terms of leadership, in terms of the latest crisis involving cambridge analytica. we will be hearing exclusively from sheryl sandberg coming up in the 4:00 hour julia is going to be talking to
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her about that but watching tech overall, it's very interesting to see those big names that had gotten so oversold in the february swoon are not in quite as bad a position, except for alphabet, the parent company of google it, too, is now in correction right along with facebook. again, compared to the selloff we saw in february, we're not seeing the kind of volumes that we saw during those days, at least not yet. what's interesting here at the nasdaq, as we watch tech, wilf, is the fact we're anticipating dropbox pricing this afternoon and coming public here tomorrow. we'll see whether investors are going to be nervous here as they watch for that ipo >> thank you, bertha wilf is on the floor >> thanks very much. 90 seconds to go we are fractionally off the session lows down 700 points.
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we were down about 740 at the lows, so a significant decline over 2.5% for the dow. big moves down from the nasdaq and for the s&p as well. let's take a look at the s&p sectors. a fascinating story here only three of them aren't down more than 2% only utilities is fractionally higher we know how that's a defensive sector we talked about the trade tariffs. we mentioned interest rates a big factor that's why utilities are able to be higher and why financials are the most significant laggard today. some bank stocks down sharply. jpmorgan is down 4%. financials broadly down 3.6% let's have a look at the full 30 stocks in the dow. only five of them down less than 1% some big moves lower like caterpillar and boeing down some 5% or so bob, quick thought as we get the bell. >> you have trade wars, we've got bonds rallying, we've got techs faltering, lack of
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leadership nothing else moving into the market and social media itself in an existential crisis it's a lot for the markets to digest. >> volatility spiking as well. volumes not that high but clearly a big selloff day. the dow is down 720 points ringi ringing the bell, dons against cancer we're down 740 points on the dow. back to kelly. >> thank you, wilf welcome to the "closing bell," everybody. really ugly session on wall street with the dow dropping 723 points on the close. again, we'll see how things shake out. it might move around from here that puts the dow below 24,000 it's at 23,939 it's given back a lot of ground after we went through big numbers in january many sectors are down 10% from those late january highs nearly 3% drop for the dow
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s&p closing at 26434, a 68-point drop the nasdaq composite down to 7166 russell 2000 shedding 2.25% to 1543 volatility gauge above 23 at the close. the dow transports were down over 300 points. there's a lot to sort through here we'll also get you up to speed with what's happening to facebo facebook we'll hear from the coo sheryl sandberg in an exclusive interview coming up in a couple minutes' time. joining me on the panel to discuss all of this, we have michael santoli, charlie joins us and bill smeed. welcome to all of you. kevin o'leary, aaron weiner and ross gerber are standing by as well let's get down to bob pisani on the floor with more of the action bob, this is quite -- this last hour in particular pretty bad one. >> yeah. we're ending at the lows of the day. the market has a lot to digest,
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a lot of issues. let me show you the market problems four or five of them they're all battering various sectors around number one, most importantly, the trade war implications number two, techs are faltering. there is no leadership because tech is not doing anything nothing is moving to take its place. not industrials, not banks we have bonds in flight to safety that's creating big problems for banks. we have what i call an existential crisis in social media that's cluttering not just social media fluttering through to technology in general let's take a look at some sectors. look what happened to steel stocks today mr. lighthizer was talking about possibly exempting, brazil, south korea from all these steel and aluminum tariffs these stocks have done a complete round-trip, up march 8th talking about the tariffs. now back down to where they were trading before march 8th look at these double-digit declines
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boeing, caterpillar, ingersoll rand, proxies. caterpillar about 15% off its recent highs as well then we have that existential crisis in social media, which is extending not just to the social media stocks but f.a.n.g. stocks in general have been weak and topped out a little while. amazon, netflix and alphabet facebook tapped out earlier than everybody else but it's been leading the decline down about 15% from its recent highs. then the flight to safety for bonds. the same situation we were supposed -- we were moving towards 3% on the ten-year now moving towards 2.8%. that's created a big issue and all the big banks are down today. some are seven, eight, nine, 10% off recent highs here on the floor of the new york stock exchange, 900 million shares changing hands. that's heavier than normal but not titantic the big names, spdr, russell
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2000, for example, slightly higher than normal volume but not unbelievable the one exception i would point out, the qqqs, that did have heavier volume yet you would think there would be a little more sense of panic. what this tells me, guys, we're seeing buyers not interested in the market not necessarily avalanche of sellers coming in, but buyers who are not really interested. when you get a little selling, buyers not interested, prices drop fairly quickly. it's been a tough, tough day back to you. >> thank you very much shares of micron technology are also moving lower today. that was one of the worst performers during the session. down 3.5%. it's down about 7.5% after its earnings we have that to factor in -- or maybe it just reflects the kind of mood today pep is the headline -- wanted that it's final word, but is the headline going to be it's trump's fault? >> i think that's the proximate cause but i think there's already been things stacked on
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the market that is not necessarily showing you it's not up to the task i do think this trade -- look, if you were inclined to say that the steel and aluminum tariffs were the first move in this strategic chess game of negotiation about trade and how we're going to get a better deal, it's not seeming like that right now. we're exempting all these countries. china's about to retaliate and administration officials are saying, we're going to try to minimize the effect on consumers. >> people making the argument this is just a negotiating tactic - >> it might be but it's not an intricately designed one i think that's one element you want to put to the side. you also have the idea you can't seemingly hide for the moment in the very large tech stocks who are going to grow forever. >> look at steel and aluminum names up there u.s. steel was down 11%. >> that was a gambit that's not going to translate into better times because you're exempts all these countries. i think you have to leave that aside. f.a.n.g. stocks down more than the market
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yields coming in we had in january an accelerating economy and very loose financial conditions we have a decelerating, not sh ripging, but decelerating global economy in terms of the economic pace and somewhat tighter financial conditions in terms of short-term rates going up and all the rest of it the credit market today was a little soft. >> charlie, you had names like jpmorgan look almost as bad as caterpillar. and it's a lot harder to say jpmorgan will suffer as a result of this tit for tat on trade unless we take it all as a proxy on the economy, right? >> right i do think you're seeing names that are bigger weights in a given index will be hit harder because the indexes themselves were down more so, names like jpmorgan that are a big weight in some of the financial etfs are going to be down because of that i would agree -- >> do you think, charlie, that the selling in the financials today, is it because we're seeing softer economy, lower
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yields, you know, are they just being carried out with this -- with the poor sentiment in the marketplace? >> yeah, i actually as you know thought the financials, including jpmorgan were fully priced these were stocks that had been very, very cheap for the last five years and then have made a big move for the last year and a half what we had today was the tech stocks and some of the bigger banks were, frankly, we just dink thint were that cheap things that are still cheap are some of the industrials, some names that aren't in the indexes like kkr, and i think we'll see those names hold up better going forward. >> bill, what are your thoughts on this market >> well, we'd like to call this expensive fragility. you've talked, and bob talked a lot about things that had a lot of momentum. this has been a totally momen m momentum-driven market probably for the last 18 months to maybe even three years and the irony is in many ways,
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value is getting abused even more, but that's because value has been in a bear market here for about a year and a half. so, this might be the capitulation on value because normally cheap stocks with better dividends, high free cash flow and low pes outperform markets like today and that's not the case. people are still holding onto their momentum stocks and are going to pay a severe price when pe ratios get re-established. >> bill, this is obviously a completely valid way of looking at the market and saying, there are areas that went too hot and too far. are there fundamental changes that matter to you if you see people talking about china and the tariff and the trade issues or about the fed and the changes yesterday with them raising rates again, are those pertinent here or to you is it all about the momentum >> kelly, that's a great question you'll laugh when i say what i
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say. 2016 was the first year since 1940 that 30 to 35-year-old women had more babies than 25 to 30-year-old women, okay? the excitement of the next five years in our economy is going to be household formation having children. getting a life and it's not going to be figuring out how technology can cause you to have to do less with your life. >> you don't think -- look, it's a baby boom around here, i hear you. but you don't think that translates into stock market rallying and economic expansion in the near term and the way it matters over the next year relative to everything happening in washington and elsewhere? >> you're absolutely right, kelly. we have been going through a financial euphoria episode similar to all past major financial euphoria episodes. people sat there today with a stock like amazon at 300 times
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trailing earnings and felt more comfortable with that than they did owning comcast that provides the high-speed access to everything that these guys do. so, this market -- >> i would just add that if you came into this year and a lot of reasonable veteran investors did saying, you know what, market was up a lot last year, earnings are going to be great but probably going to have the multiple on those earnings come down some high fliers have to come back to earth. maybe the real economy outperforms the financial economy -- >> main street beats wall street. >> this is what it looks like. it looks like the s&p 500 down 1% year-to-date in late march. looks like it going sideways - >> he's right. >> we talked about how we started off this year. there was -- whoever was talking about the melt-up, we punched through so many thousand number marks on the dow that seems like a distant memory now, but isn't this in a way a healthier market >> yeah, it is a little bit.
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but there were an awful lot of good reasons the market went up. tax, deregulation. i think we can't ignore trade. all of the policies out of washington, whatever you think of the person that sits in the washington, most of the policies were good for the market these trade policies are the first exception. this is bad for business, bad for the market if we get more of this, that's a change in the tone. >> i mentioned a moment ago that micron, three big earnings we were looking for this afternoon, on top of everything else, including nike and kb home micron results are out let's bring josh lipton in with what's going on there. >> micron reporting eps of $2.80, the street was at $2.74 revenue, $7.35 billion micron preannounced results in early february at that point they were saying to look between $2.75 on revenue. as you mentioned, the street
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right now selling, at least initially in the after hours -- of course this symptom had been up more than 40% year-to-date heading into this print. on the call we want to hear a lot more about how the ceo sees those supply -- demand that call starts pretty soon here in about 20 minutes we'll be on it >> thank you micron has made a -- a big comeback down 7% and now down about 2.5%. >> as josh said, 40% year-to-date but 100% on the year it's basically 70% more volatility than the broad market you'll see it bounce around after markets. are we close to the end? if the answer is no, you might get reassurance there. >> charlie, anything you'd be nibbling on in tech right now? >> that's a tough one. the whole space has run so hard. a couple of names -- we like key
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sight which tests for wi-fi services around. i happen to personally think oracle is oversold and trading at a relatively low reasonable valuation. there's little picking >> bill, same question to you? >> well, not in tech, but, for example, the companies that have been getting slaughtered by f.a.n.g. affection, like walgreens, trading at the lowest pe ratio of the last 20 years, including the low in '09 and on a relative to the s&p basis also the cheapest it's been and that's where the bargains are. they are in old media, pharmacy, grocery. that's where the opportunities are in this market and as usual, as value buyers, you have to sit through some abuse to get to those golden nuggets. >> by the way, walgreens, one of the better performers in the
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market it was only down about two-thirds of 1% there was weakness in europe, rates moving higher globally what do we need to watch for now? >> i think you're right to point to europe, kelly, because they've been underperforming for a while. how many people loved europe coming into this year. we've been stuck on the story of the global synchronized recovery it was true six months ago it's kind of true now. but there's been a deceleration. european banks look pretty bad at the moment. so, i do think it's one of these kind of episodes we're testing again, whether in fact you have buyers coming in right at this level for the s&p 500. we've had a couple times this year and i don't know there's 234i one thing we're looking forward to say it's an all-clear or break the markets. >> it's taken a number of factors to get us down i mentioned this earlier, but it's point out that the s&p peaked around the time trump was in davos making his first comments about going after china on the trade front >> that is true.
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>> it seemed to turn the psychological tide, if nothing else. >> go ahead, bill. >> there's a little sentiment clue that i think is worth watching we're long duration owners but you watch the sentiment to get a feel for what everybody else is doing. there's not much enthusiasm in the sentiment surveys on individual investors but the professional investors have not given up their bullish position if you want this to be a correction, you have to watch the professional sentiment and see if they will buckle. if the professional sentiment buckl buckles, this could be a correction if it doesn't, there's more pain to come. >> you're revealing the day trading side of you, bill, and i like it. charlie, what do you think is most important to watch? >> i hate to go back to a theme i've had, but i think inflation is going to really matter. i mean, it started to perk up, people started to get focused on it, but in my opinion, not enough we have factors around the world, including countries
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competing with each other to devalue their currencies and inflation is starting to show signs it's already above the official 2% people got excited because wages only grew 2.6% instead of 2.9% we start getting a whiff of inflation, you'll have materials companies do better than the rest of the market. >> well, how -- that's an interesting point because look at general mills yesterday a horrible performance that whole sector dealing with freight costs moving higher, different food costs and supply costs moving higher. people are staying away from that you think the beneficiary could be materials names >> i think materials names, stuff in the ground, energy names which have underperformed for so long. we have some wonderful supply/demand data yesterday from the energy sector i think energy could be poised to have a really nice run here energy tends to do well in a higher inflationary environment. >> bill, your favorite place >> well, we like the things associated with home building because when you think about individual households, the number one way a household can
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insulate themselves from inflation is owning their home and, therefore, capping the rent we like the home builders. we're underbuilt on home charlie's right. materials people will gain higher prices. the beauty is, you'll pass that through because when you get a couple of babies going, people buy the house regardless of the materials cost and regardless of what the interest rate is. >> kb home is one of the names we're expecting to report its earnings this hour guys, thank you very much. shares of facebook today were still lower. it's really the damage this whole week the company's shares down 10%. as social media giant deals with a privacy scandal. julia boorstin joins us with facebook chief operating officer sheryl sandberg in a cnbc exclusive. julia? >> thanks for joining us. sheryl, thank you for joining us we're here today because so many people, your users, facebook investors are shocked by this scandal and what it says about data privacy issues, personal
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data, data that is crucial to the way your business model and advertising works. does this data scandal show that your business model is broken? >> this was a huge breach of trust. people come to facebook every day and they depend upon us to protect their data and i am so sorry that we let so many people down we spent the last few days trying to get to the bottom of what happened. cambridge analytica never should have had this data they told us they deleted it but it is our mistake that we did not verify that. years ago we changed platforms so apps get much less data but that really wasn't enough. we needed to go back and verify that the apps that had the data used it well so, mark announced very strong steps yesterday. he announced we'll be investigating oe auditing apps. we announced we'll be further shutting down platforms so apps get much less data and is that people on facebook will have very easy ways to see and controlish we'll put that front
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and center, the apps julia, this is about trust and earning the trust of the people who use our service is the most important thing we do. and we are very committed to earning it >> but, sheryl, facebook investors have really shrugged off past crises and there have been many, including this russian manipulation of the election this time seems different. the stock is down. people are tweetin tweeting #deletefacebook why are -- especially investors -- taking this so much more seriously what's so different this time? >> well, this goes to the core of our service and to data we made the changes to make this data not available years ago but that wasn't enough we needed to do more to verify and notify you asked about the business model. we provide a free service and that's an ad-based business model. in order to do that, we do not sell your data we are able to show targeted d advertising that's relative to people we're able to give advertised v
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aggregate anoun mounymous sourcs we can provide a free service around the world and protect people's data but we have to earn that trust. >> one of your early investors said on cnbc today that the incentives around advertising when it comes to data collection and how data is used makes data -- the business fundamentally stacked against user privacy are you concerned about that you're saying you don't sell data but you need that user data to sell ads. >> i believe we're very aligned with the people that use facebook the most important thing we can do for running this company is protect people's data. we've never run our company for the short run or for the stock price. we never will. we are incentive-aligned with people because when they share data with us, we need to deliver a great service and we need to protect that data and that is the long-run health of our
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business and community. >> but in terms of long-run health, it sounds like there could be other shoes to drop with you guarantee there won't be other issues around apps that have already collected data or around manipulation of the midterm elections? >> we built a platform used for a lot of good all around the world, but there will always be bad actors who have tried to use the platform we are now going back and we're going to investigate apps. if we find anything, we'll tell people their data was potentially misused. we are going to continue to work hard to earn trust, to build products, and as there are bad actors who try to use it, it's our job to prevent that and disclose that. >> but the last several months have been peppered by these headlines. russian manipulation of the election, fake news, now this. how many more shoes are there left to drop what have you already seen indications of that we don't know about yet >> well, we know, again, there are always going to be bad actors we are taking very aggressive steps. we are making things much more transparent.
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we already have a tool live in canada that will show people every ad that's running from any page now, when that tool goes up, you're going to find bad ads that's the point the transparency of the tool will enable us to find the bad actors and kick them off the platform fast. >> there's -- i'm sorry. >> go ahead. >> there are these underlying questions. i'm sorry to interrupt you there are underlying questions about the speed to which facebook has responded to things in the past. when it came to russian manipulation of the election, a lot of people -- it was revealed that you knew about issues before you reported them, before you disclosed to consumers here you knew about these issues in 2015. and a lot of people are asking whether you've known about these issues and chosen not to disclose them or if you didn't realize the gravity of these issues sooner? which is it? >> we definitely didn't realize the gravity of this issue sooner the commitment we made yesterday is to investigate, to audit and to make it transparent to users to tell users if their data --
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if their data was used. >> what about the issues around the russian manipulation of the election there have been widespread reports that your chief information security officer advocated for faster investigation, more avid investigation and faster disclosure to consumers about what was going on and that you and mark zuckerberg pushed back and tried to slow that down. is that true >> absolutely not true he had said that publicly. those reports were false. >> why didn't you disclose everything sooner? whether it was with the russian manipulation of the election or realizing back in 2015 that you should have told consumers >> we did disclose on the russian manipulation, we did disclose we gave the information to congress we made it clear to people if they had seen those pages, there's a place you can go we -- every situation we worked to get to the bottom of this we want to disclose. sometimes, and i would say certainly this past week, we speak too slowly if i could live this past week again, i would have definitely had mark and myself out speaking
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earlier, but we were trying to get to the bottom of this and make sure we could take strong action our commitment is clear. we know this is an issue of trust. we know this is a critical moment for our company, for the service we provide we are going to do everything we can. there will always be bad actors but we'll do everything we can to find bad actors we're going to open tools transparently so people can help us find the bad actors on our platform he'll notify users and shut them down as fast as we can. >> some of your earliest investors, shawn parker, roger mcthatmy have raised red flags about the company and the role it's playing right now questioning whether you and mark zuckerberg should still be running the company. saying, facebook is committing malpractice. as a shareholder, i'm terrified. how do you respond to him when i says that and the fact he's even questioning whether you and
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zuckerberg should still be in charge >> what i would say is we have a job to do every day. mark and i come in here, our teams come in here we have dedicated teams around the world. we have the responsibility to build great products we have the responsibility to treat people's data carefully. we have the responsibility to disclose to people when problems occurred we have an enormously large platform with that size and scope comes real responsibility. i am not going to sit here and say there won't be future bad actors there's no way for anyone to say that on our platform or any others what i'm going to say is we are committed to preventing them, to finding them when they act, to telling people what happened and to disclosing that and getting them off as soon as possible >> the changes you're making to your business model to better protect data, how much is that going to damage your ability to serve advertisers the way you have been? the fact regulation is likely to come in, is that going to hurt your business as well? >> we run this company for the
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protection of our community. that's not how we look at it we don't look at these tradeoffs like, oh it's going to hurt our business in the long run and in the immediate term, people's trust is the most important thing we have and that is how we make those decisions. on regulation, mark has said, it's not a question of if regulation, it's a question of what type. right now, we are not even waiting for regulation the most likely legislation is around ads we've gone ahead and built transparency tools ourselves and we're putting them out so people can see and people can help us find the bad ads people can see what's happening and help us take it down. >> it sounds like you almost would welcome regulation are you asking for regulation? >> we're open to regulation. we work with lawmakers all over the world. >> looking at all the crises you've had to deal with in the past couple years of your management, the fake news, the mismeasurement of the ads, this data harvesting. people streaming murders live on facebook, all these different issues do you worry the company has grown too fast and out of your and mark zuckerberg's control?
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>> we have a big platform. we have billions of people who use the service. that means there are always going to be people trying to do bad. it means we're going to have to react quickly. it also means there's a lot of good done on that platform now, that good depends upon trust and depends upon us earning it so, at this critical moment, we know that we need to establish trust. we're not going to say that we are not going to have issues we know that there will always be bad actors on our platform, but we are going to work as quickly as we can to prevent those problems, to disclose those problems and to prevent anything going forward. >> are there going to be more investments, more investments that will further impact profitability, as you've already announced you'll be hiring many more people to review videos and the like >> we already said we're going to impact our profitability. we mean it if we need to do more, we will do more. we're massively ramping hiring we'll hire more people we are massively investing in
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machine learning and automation that can help find some of these things there are areas where we've had great success. we take down 99% of isis or that kind of terrorist content before it even hits the platform. machines make that possible. our commitment is clear. what matters is our community. what matters is the safety and security of people who use facebook and we will make any investment we need to make to do as much as we can. >> sheryl sandberg, i appreciate you taking the time with us today. i hope you'll come back and give us updates on your progress on all these issues back over to you >> julia, thank you very much. julia boorstin speaking with facebook coo sheryl sandberg let's put up facebook share prices not too much of a reaction maybe a little to the downside kevin o'leary is with us, adam is on set with us, chair of the columbia business school management welcome to you both. kevin, what did you think? >> i thought that was a pretty
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good interview for facebook. what i learned from that is they are laser focused on addressing the issues long before the regulator gets involved and tries to interpret a fix that they understand that this is an issue of trust and they breached it. i think if we think a little bit about what this means to the platform, because here's the sobering reality about facebook, for me as an investor and also a user when i look across 40 companies i have an investment in now that are small and mid-cap companies, their number one digital spend is on facebook and the instagram platform they have found a competitive weapon in that platform. they don't want it changed they're able to geo-target when they sell product. one last night accelerated 60% by doing a television feed on top of facebook. they had never seen sales like that let's be careful in america, this platform has made small and midcap businesses
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much more productive than many other countries are able to do if want a startup in america, you need facebook. i don't want to see this company get regulated out of its productivity it would be very bad for the economy. and that's what we're talking about. in the frenzy of this media, we have politicians saying, i'm going to shut these guys down. the very same politicians that geo-lock their fund-raising in the states where they actually have to fund-raise that's hypocritical. >> by the way, facebook shares down 2.5% in the session, down 10% this week. and the decline today at least was swept up in this broader market selloff where we saw the dow close lower 724 points the nasdaq down more than 100 points declines of about 2.5%, as you can see across all of the major averages that's the backdrop, again, against which sheryl sandberg
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just gave this interview to julia boorstin the first thing she said right off the bat was, i'm so sorry. >> right they, mark and sheryl sandberg, are in damage control right now. they're in crisis management mode there's four key elements of crisis management that i've studied. i call it how do you put a cork back into a crisis you got to be quick, you got to be open, you got to be repentant and have change. his apology yesterday and her apology today were great on almost all those dimensions except - >> quick. >> -- speed. they could have been open two years ago. the steps they're taking now are, i think, the right steps but they're kind of like an alcoholic in the dumpster at this point they're desperate and finally dealing with the problem, the crisis management problem. i want to say one thing i did not like about her interview she used the word bad actor over and over again that's taking responsibility off
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the company, saying this is the responsibility of evil people out there rather than saying that this was preordained in the way they set up their system they are the ones that created those bad actors or gave them the channel to tunnel in. >> she tried to position it that way. she said cambridge analytica never should have had the data we're going to change the rules. we're going to investigate, audit them, give and create user controls trying to paint this as a, we were invaded and taken advantage of kind of situation. >> in a sense managing expectations for exactly how successful these efforts can be. it's going to be an ongoing kind of give and take a constant spy versus spy of those who want to penetrate and facebook pushing back. i think she needs to emphasize in her mind, just because of reality, we have 2 billion users posting billions of pieces of content every moment of the day. let's be realistic about how much we can mediate. >> same issue facing google.
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sheryl sandberg just reiterated forcefully, we are going significantly impact productivity in other words, they're going to ramp up hiring, she said, of even more people for investors, they may not like this they liked the idea, mike, and you put it well, these were platforms that sort of ran themselves very hands-off. >> magical frictionless machine for auctioning eyeballs. that's not what it is anymore. in the sense of inviting regulation, which zuckerberg and sandberg said, first of all, if you see it coming, you might as well act like you're open to it. also, if anybody can deal with a newly regulated industry, facebook with resources -- >> billions and billions of dollars, exactly what are the ripple effects from this >> i think people -- she used the word that's one of the most important words in the economy in general, in consumers' minds is the word trust. and trust has been broken. and i think people are going to take a long, hard look how much
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they want to deal with facebook, how much they want to reveal on facebook, how much they want to interact with facebook you used an important phrase, hands-off. they were preordained. they decided to let a system run, not get involved, collect the profits along the way. and i think they should have known this in advance. i think -- i study apologies, i study crisis management. we saw this with equifax, we've seen this with facebook. apologies are no longer going to be acceptable. you need to start doing things in advance to prevent these things from happening or the entire system's going to be obliterated. >> kevin, you mentioned the good you think facebook does for a lot of small businesses and so forth. but do you think that they're a less attractive investment now because they have to ramp up this hiring, because they're going to pour billions into machine learning and take it on the chin in terms of their margins? >> no, not at all. the tool itself is an actual living organism. it changes all the times the algorithms change.
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the feature sets change. this will pass they will build the tools that allow you to -- that this won't occur again. will there always be some leakage? yes. i go back to something very fundamental. outside of all this hysteria and media focus, where can i as a business in america get access to 2 billion customers that i can focus on, that i can actually decide specifically i want to talk to, communicate with and have a dialogue with and create a bond with my customer there is no other place. so, if you tell me there's another facebook around the corner that's -- that will be a more attractive platform that somehow has better tools, i'll change my investment thesis. this whole thing - >> kevin, this - >> the craziness - >> this is an important point. this is good sheryl sandberg also tried to make this important distinction in the interview she said, we do not sell your data we do targeted advertising we aggregate anonymous reports
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and that's the information they hand over. is that model, which is what you're describing, is that imperilled by regulation potentially or by their steps to try to put even more distance between user data and the companies it's serving >> no. i looked at the -- i looked at our budgets for the next two quarters and our spend it's going up 30%. all of this doesn't change anything about the tool we need. we want to sell product to people in america in different states at different prices sometimes. there is no tool i can use to do that with except for facebook. that's not going to change no matter how focused the story gets and i bet in two months, after all this blows over, their cash flows will be up, not down, because there's nowhere else to go it's that simple. >> kevin, thank you for joining us adam, appreciate your time as well, guys reacting there to sheryl sandberg's comments with julia boorstin we'll come back to this. i want to bring you up to speed
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on this huge market day as well. the dow down 725 points. how about the nasdaq, down 178 points yes, facebook was part of that how much a part, let's bring back bill smead and charlie. any comments on what we just heard from facebook as it regards the market because tech, as we said, has been the leadership group for so long >> yeah, first, sheryl sandberg is very impressive it's wonderful that facebook has done -- one of the few companies to have a founder that sticks around and brings in a good operating manager like miss sandberg i find her very impressive i think the fundamental fact here is that they still are going to be able to utilize -- when i "like" a bicycle post, then that is very valuable to all the bicycle manufacturers out there to send me a bicycle ad they don't have to have my birth date they don't have to have my political affiliation.
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every time i "like" something on facebook, that is extremely valuable to advertisers and it's going to continue to be valuable to advertisers secondly, the network effects have not gone away i'm not going to be on three facebooks. i'm on one and it's facebook the fundamentals of the business is still very good the valuation was crazy before now it's coming down it's a lot more reasonable >> charlie, that being the case, what do you think it means for tech because if this to you is sort of this too shall pass moment, does that mean this leadership group reasserts itself >> so, the one thing i still say on this space is, i am very afraid, particularly for other names like amazon, about anti-trust regulation. let's not forget that the government went after ibm in the '60s and '70s because of their monopoly positions ibm, who we all feel sorry for these days, the government went after. the government went after
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general motors for their monopoly position. and amazon has a lot bigger monopoly than ibm or general motors ever did. i am worried about anti-trust regulation for some of the big names. not so much facebook but more for google and amazon. >> bill, speaking from the market's point of view, i know as an investor you're not so hot on these names, but, you know, do we have to get past this to regain some footing here >> here's what i love, kelly if you polled 10,000 american working adults and you -- and if you ask them if it was okay that the united states government track everything there is to know about them, i think you'd find 80% of them would say, i don't want that. that would be george orwell. it would be terrible. >> i don't know. >> right there's -- >> i don't know. i -- we actually went out and polled people in the streets about this the last couple of days
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you know, and it's an ean ekt doelgts and you wouldn't be surprised who said, i know they have my data and but it's useful and i like it. >> here's my point my point is, all these things that are going on with these companies, first of all, allow them to have more power than the united states government and the history of governing people is that is not going to be allowed to go on very long. secondly, the scat galloway argument is very valid kevin loves it look, if you own the monopoly company that's squelching everything else. we haven't spoken about how much facebook has stolen from professional journalists the third most popular on facebook is a link to local affiliate tv station news. you know how much they paid them for that
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diddley squat. she talking about productivity that's just one example. but people are taking a device into their house to let amazon hear everything that goes on in their house. crazy. it's just -- it's -- they will wake up. they're dumb sheep right now there's a politician out there that wants this action charlie's right. >> thank you >> yeah, thank you. >> bill and charlie. let's bring in wilf frost. he's talking about the banks, one of the hardest hit parts of the market it's one thing when you have caterpillar and industrials hurt by the trade but we had jpmorgan and those likes down a lot, too. >> the kbw bank index down 2.4%. wells fargo, citi, morgan stanley down more than 4%. gold man sanctigoldman sachs do. if we broaden out and look at the full week, it's only down a little more for the bank index
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i.e., this is a big, bad move for banks today as opposed to being the sector that has led markets lower all week, for example, tech or teleco. they had a good day yesterday because yields rose. bad day today because yields fell two-year yesterday closed at 2.3% today, 2.7%. ten-year yesterday closed at 2.8% 30-year yesterday, 3.11, today 3.06 why are yields lower today clearly a reinterpretation of the fed meeting as has been discussesed and also risk off sentiment leading to buying of bonds thanks to the tariffs pushing yields lower and i just want to end on deutsche bank because that is a bank standing out as having declined steadily all week not just today i bring it in, because as we discussed, european trade more broadly got us off to a bad start. we never recovered from it it's something to keep an eye on in terms of overnight action if markets are low. >> are you going to be tweeting following it tonight, maybe live tweeting
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>> don't know about that maybe early tomorrow for now, i think i'll check out for a few hours. >> exactly clear your head. wilf, thank you. all the f.a.n.g. names were the big decliners this week. not even apple has been spared the tech giant suffering as well should traders pare down let's bring in our "fast money" guys guy adami, tim seymour to talk more about this. look, in a way it's oddly specific but at the same time it's still apple we're talking about. guy, what does it tell you that it's done so poorly? >> tells me when the market is down 700 dow points there's no place to hide. you'll have collateral damage. that's what you're seeing in apple. i don't think anything changed in the apple story over the last couple of weeks. frankly, their position is probably stronger than it's been in quite some time pete talks about this all the time, tim brought this up as well, but their services revenue continues to grow. as it gets into the high teens, low 20s, the multiple they don't get now, they will get going forward. i'm not going to say apple's
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stopping here tomorrow because i have no idea what tomorrow brings but in terms of the story, nothing has changed at all. >> if you think about how apple behaved in the last drawdown six weeks ago somewhere around 157 found an interesting place to buy and then got back up to new highs. the irony is that apple might be indirectly at the center of a lot of this because a lot of iphones are manufactured in china. and we're talking about trade surplus with china whether that's right or wrong. >> i saw the story as well today that there is some glitch where if you ask siri to show you your notifications even though you haven't unlocked your phone, she'll read them >> you lost me >> guy talks to her all the time. >> i just zoned after that. >> i don't know if it's just for the new phones the x or ten or whatever, but i think you're right you know, anywhere that user privacy is an issue, these companies, right, they're going to be under more scrutiny than ever. >> they're definitely -- there's no question they'll be in the crosshairs tim was addressing the tariffs and who's the big loser. in our world it's probable
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technologies, at the absolute epicenter, and who could potentially lose down the road could be apple suppliers and apple. i don't know that will happen. i think this is a lot of bluster right now. as they say, in terms of the apple story, this too shall pass. >> tim, you know, obviously, outperformed today, down just 1.4% other things i'm looking at in terms of whether it was a little lower intensity selloff than the ones we saw, you know, back in early february, you know, the vix didn't get to 30 it's only, what, at 23 or something like that. so, do you think people aren't scared enough or is this showing you that this is just another tremor >> i think the vix gathered itself and rebuilt good momentum here we got above the 50 a couple days ago on the vix. this has been the longest period of extended volatility, mike, since the first quarter of 2016. i don't see anything in washington, i don't see -- you know, listening to secretary ross today, i think there's a lot of confidence in the white house they're doing exactly the right thing. i think there are other issues to focus on that don't let the market off the hook. it's not just the fed. it's not just trade wars
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it's not just what may or may not be happening within that cabinet. i think valuations look different at a 3% ten-year and volatility at 22 so, i think that's something - >> it's all of the above all right, guys, thank you. >> that would be my answer all the time because i never really knew the answer, so, "d," all of the above. >> i hated that answer it was like, man, i feel like i could pick one of three but now you say all of them, i don't know. >> guy does that at the restaurant, stoo. >> give me the left side of the menu. >> we'll see you in 14 minutes' time on "fast money. now, sheryl sandberg just commented on the privacy scandal at facebook. speaking to julia boorstin take a listen. >> this was a huge breach of trust. people come to facebook every day and they depend upon us to protect their data and i am so sorry that we let so many people down we spent the last few days trying to get to the bottom of what happened. cambridge analytica never should have had this data they told us they deleted it but it is our mistake that we department verify that
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years ago we changed platforms so apps get much less data but that really wasn't enough. >> back with us now, our facebook shareholders ross gerber and ian weiner. s ross, we'll start with you the other day you were pretty unhappy with this and selling your shares. what did you think about sheryl sandberg's comments this afternoon? >> you know, i'm just as unhappy. it's so insincere. i get everybody buying the pr lines she's running. like they're the, oh, we knew and we should sh done and we didn't do and we're sorry. you know, this is causing deaths in kenya you know, 91 people died in the election in kenya over subversive ads run by cambridge analytica. this is not some minor, oh, we're going to fix our app and hire people. and the assumption that young people are dumb is a mistake young people get what's going on here and, you know, you have to ask yourself every time you post now, is this really what i want everybody in the world to see
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and analyze and judge me by because -- >> would there have been a response of hers that you would have preferred or you're just saying, this is -- this is the core problem with the company, there's nothing anyone can do to solve it, just walk away >> well, i think there could have been a better response. like a specific list of actions that facebook's taking today you know, they're sort of like, oh, we're going to hire more people and make sure this and that this could have happened two days ago, it would have been great. maybe two days ago when this first happened you know, the bottom line is they just don't have a handle on the business. >> mark zuckerberg came out with - >> that's ridiculous. >> -- the six points we'll talk about all the ways to shore up the platform ian, what were you going to say? >> i mean, that's just ridiculous. >> what? >> it's irresponsible to say that facebook killed 91 people in kenya. >> no, cambridge analytica used facebook to create - >> whatever. that is ridiculous >> do you follow the situation >> you want to talk about -- >> hang on, guys let's not make this too -- all
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right, ian, go ahead >> i'm more than happy to talk about reasons to buy facebook. i want to talk about reasons to buy facebook and not talk about cambridge analytica killing 91 people. >> give us those reasons, then. >> great >> it's called responsibility. it's called responsibility of being an owner and as an owner, i don't want to be responsible for that. you want to be responsible for that >> can you let me speak? i've had a lot more responsibility in my life than you. let me speak here's the reality the stock has turned over 25% of its flow already in the last 23 days the fundamental business, the fact 2 billion people still use this service, where else are advertisers going to go? this reminds me about that quote that time is a flat circle i've seen this over and over again. i saw is it with equifax, bp, volkswagen everybody comes out and says it's the end and sure as heck a couple months later, it turns out it wasn't. all the people that sold that stock are going to look to get back in. >> ross, anything you'd like to say in response?
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>> you know, i -- i have a certain belief that with technology things change very quickly. i believe that social media has peaked daily active users in the north american region in facebook will decline this klein this quarterl continue to decline. and the fact that they have instagram is the only thing saving them right now. about but the bottom line is when you say the only place that advertisers have to go is facebook means it is a monopoly, and it is a matter of time until the regulars come in and more competitors sprout up. things are going to change maybe even anti-trust stuff. we might close our eyes to the potential fallout here but remember what happened to microsoft when they became a monopoly and the decade it took for the stock to go up. >> now it's trading at all time highs again. >> call me in a decade, buddy. >> ian winer and ross gerber thank you. let's bring kate rogers in to talk about the restaurant stocks one of the areas of the market that suffered a quite a
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lot today. not many areas were spared >> looking at the restaurant stocks it is a sea of red along with the broader market. biggest names in the sector, mcdonald's and star buck closed down more than 1%. restaurant brands, owner of burger king and pop aye's down 1.5% darden restaurant the biggest loser, they fell more than 7% after a mixed earnings report. in addition, the xly is down nearly 2%. one name bucking the trend, chipotle up half a percent >> there you go, the company that manages to do the opposite of the market for the last while. kate thank you. >> for those looking for wage growth, the restaurants know where to find it that's one of the issues hanging over that group. >> that's true. headlines from reuter's crossing the wires via the chinese embassy in crash china is strongly disappointed and strongly opposed trump's
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tariff plans regarding chinese imports. saying china will quote fight to the end in all necessary measures in a trade war with the u.s. on that note, joining us allen townsend and matt gold welcome to you both, allen, pointed rhetoric out of china. many people said they are surprised china hasn't done more in response to everything the u.s. announced does this verbiage j represent an escalation? >> on one hand it sointed i want po on the other hand it was as vague as it was pointed. we've seen so far no indication of any really serious chinese intent to retaliate in any significant way. i have to assume that beijing understands very well how
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heavily dependent it is for adequate growth and for adequate job creation on retaining some access to the u.s. market, which means it really doesn't want to start a trade war with its very best customer. >> matt, let's keep those steel stocks up there so you can see u.s. steel down 11% today. some of the others suffering equally. the aluminum names were hit hard, too. why do you think that is what is it that, especially with the broader market down so much, the concern is when it comes to trade with china. >> the big concern was chinese retaliation and further downward spiral that could be caused by chinese retaliation. the memorandum president trump signed today was finally publ h published. it has a procedure in it that would slow the retaliation down three or four years until it's imposed and it would follow wto
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rules. because that's in there and there is a possibility i think the china now are going to step back and see whether we follow the proper rules which would definitely quiet town the rhetoric >> allen, $100 billion reduction in the trade deficit is what the president has put out there presumably there are actually people who work in the white house trying to get to that number. is there any way to that point obviously -- i mean, a recession might do imt but beyond that could get you anywhere close >> it all depends on your time frame. one thing that's absolutely certain is that the united states will never ever get there in any foreseeable future by relying mainly on china opening its markets further to american exports. china has made manifestly clear it has absolutely no interest in purchasing from the rest of the world anything that it already
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makes by itself. so we would be talking about serious trade restrictions on the american side. and like i said, it all depend on what the trump administration's time line is. but certainly, many of the products that we do buy from china, especially labor-intensive products r widely available throughout the third world. >> well, i'm sure we are going to be more aware of that now than ever. allen andth ma, thank guys, reacting to it reacting to the headlines out of the chinese embassy. >> let's bring in leslie picker she has been out this talking to hedge funds about the selloff. >> hedge funds the, allocators, prime brokerage desks trying to get a sense of today's sell off, how it compares to what we saw in early february. there are clear distinctions in february we saw unwinding by al goes. we saw ctas getting crushed in the market today it didn't appear to be the case volume was very low. hedge fund selling in particular
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according to some of the prime brokerage desks which do counter-party dealings with hedge funds say hedge funds made up a smaller proportion of the selling today than they have in the fast and it was actually more on the mutual fund side that's anecdotal but something they think is significant for today's selling. they saw today's markets as more of a buying opportunity. not a sustainable downturn in the market it will be interesting what we hear from these guys tomorrow morning. >> if bill smeed was with us he would say they are not bearish yet. they are still big leslie picker thank you. a couple of corporate stories. we shaw shares of drop box price their ipo at $1 above the 18 to $20 change inc. i don't think the company reached a 10 billion valuation
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>> there is not much upside. >> we have had some earnings this hour as well. let's bring in jim beian co, president of beyanko research and peter book var as well to talk about the setup as we turn our attention to tomorrow and digest everything that happened. jim how much of this to you is about tariffs and trade wars and how much is about other things. >> i think it's a lot about other things there is a old saying that price drives news. we've been in this market now for two months first it was derivatives then it was the administration then was gary cohn, and kudlow then porn stars. now chinese trade tariffs. beyond all of that i think what is happening is that the federal reserve says they are going to raise rates six times by the end of next year there is a fear inflation is coming notice we don't have a risk off rally. the ten year is stuck in the same ten basis point range it has been in the last 20 days
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rates are going higher and i think that's bothering everybody right now. we are not ready for it. >> peter, is that pretty much the story to you, the big picture of you, about rates? or is there anything else in more of a proximate cause here i'm thinking specifically a lot of attention on libor taking flight, the bank stocks being down so much today i don't know if the market is trying to sniff anything out beyond the trend in rates? >> i agree with jim and it relies on libor, the cost of capital is going up, libor has doubled over the past year when you get deeper into a tightening cycle things become more fragile, look at the history of fed tightening cycles since world war ii ten out of 13 eventually put us into recession. we are about to intensify that tighten as if fed's balance sheet is going to go from a $60 billion quarterly run rate of shrinkage to $90 billion
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it was only $30 billion in q 4 of last year that matters on top of the rise in interest rates. six months away from the ecb ending qe. d.o.j. officials getting defensive. the bank raising rates that will changes the dynamic of asset prices when the cost of money goes higher. >> both of you seem more hot under the collar than what is happening with central bank policy than what is happening in washington and trade and trade wars is that fair. >> the analogy i made years ago is qe puts beer goggles on investors. it makes everything look good and sweeps issues under the rug. now we have the reverse. other issues like tariffs and facebook becomes more glaring, words start to become more pattern. >> jim you get five seconds on that. >> price drives news if you are in an environment
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where things are going south, then everything is a problem that is what we've seen. we need to understand what's making things go south i think it's rates driving up. >> thank you guys. >> price drives news. >> we will leave it right there. >> we'll follow it. >> we will see you in the morning michael. thank you. that does it for "closing bell," everybody. facebook starts right now. >> live from the nasdaq market site overlooking new york city's new york scare pete najarian, steve grasso and guy adami. tonight, an interview with cnbc about the challenges the social network faces. is redemption a relate for the tech join. john scully joins us to sign in on the scandal and weigh in on the tech wreck first, the dow got crushed today. sinking more than 700 points, closing near the lows of the

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