one-fourth of what they import to us. most of what we send them is grains >> we don't have a huge export business to china. >> that's what trade's all about, right you do what you're good at. >> grains? thanks for watching "power lunch. >> "closing bell" starts right now. >> hi, everybody, live from the new york stock exchange, this is the "closing bell. i'm kelly evans. >> i'm wilford frost in for bill griffeth the dow off sinking more than 580 points at the low. >> we'll show them to you again, but check out those steel and aluminum stocks right now. they're moving to the upside niece are the beneficiaries of the big tariff news today. nucor, u.s. steel, ak steel, ken trial century aluminum

we start with bob pisani on the floor here with more on this big market move. >> we started out the day. everybody thought jerome powell's testimony would be the story. it was early on but it shifted quickly. let me show you an intraday chart of the s&p 500 here's the important thing mr. powell came out and said, the economy isn't overheating, wages are not as strong as everybody thinks they are and the economy lifted, you see it moving to the highs. around 12:30 in the afternoon, anoubsmentes were made that the tariffs were back on steel may be up, but look at the rest of the market it's generally down. particularly the big global industrial names names like cummins or lockheed martin, for example, or caterpillar or some of the other big names out there in the global industrial space. cummins put up the industrials and they're notably to the downside the market overall is having a very tough time with the whole tariff story

now, why exactly is that why are tariffs having a hard time why is the stock market having a hard time with tariffs overall traders fear tariffs because they believe it's potentially inflationary less competition means higher prices which equals inflation. that's what the market is worried about right now. the big issue right now is how big is the inflationary risk overall? we don't know. one thing that is important is if you look at the market reaction, the stock market thinks this is a really dangerous threat to profit and inflation. if you look at the ten-year yield, which is what i look at when i'm worried about inflation, the ten-year yield did not go up on this. we drifted lower the bond market and the stock market seem to be saying different things about the potential inflationary effect of tariffs. final lishgs a quick note, retail stocks are having a tough time and we've had some earnings l brands came out, very disappointing. jcpenney tomorrow.

retailers having a tough time. >> look at the declines for jcpenney and l brands. it's been a wild day for steel stocks and also for the broader market after the white house initially said it would announce new tariffs on foreign steel and aluminum, then it said it wouldn't have an announcement and then we got a statement from the president that tariffs will be instituted next week. kayla is here to unpack everything that's just gone down >> that policy debate, the back and forth between advisers on different sides of this argument reaching a crescendo in the last 24 hours the president this morning deciding to override his advisers so he told them to hold off until the paperwork was finished, the fine print and ink was dry. that was the first question posed to the press secretary in a briefing still ongoing, about why he decided to make that announcement today >> the president is announcing his intent to sign those actions next week. we're not going to get into any more details until those details

are finalized. that's what he intends to do next week. he was making that announcement. >> as for details of the tariffs, they're tougher than what the commerce department recommended. we spoke to a person in the room who told us the prospect of targeted tariffs on specific countries did not come up. the president said the decision has been made. he decided quotas are ineffective, they lead to cheating he says exemptions will create conduits in which other countries will still continue dumping that product and you can't have that. he said in terms of any increased cost to the consumer, whether it's cans of soda or automobiles, he said that's a small price to pay in the long run. that was in response to an argument made by gary cohn, director of economic council who was talking about this idea that tariffs would ultimately be bad for the consumer and the broader economy. the president in response to that, according to this person, said that's not the real world effectively shutting down that

argument from cohn, who has been one of the fiercest advocates for the free trade camp within the white house. clearly the president is comfortable going head to head with his advisers but the criticism has been very loud this afternoon you had gop senators like the influential finance chairman in the senate, orrin hatch, who called this attacks against the american people. then you have the world trade organization saying this goes against wto rules and would be illegal under it's bylaws. we'll see how the white house response to that and then you have the market, which the president likes to hang his hat on. he likes to see the market go up when he makes announce want like this this is a market ride today that will not sit well with the president. there's a lot of time between now and late next week when he's expected to make this announcement we'll see if his mind changes between now and then >> thank you for that. the new tariffs will pretty much guarantee higher prices. how does that illuminate the steel and aluminum industry?

>> scott, your clients are seeing their shares go up on this news, but the customers' share prices are falling what happens if your industry loses customers as a result of this >> that's a good question. i take a longer view let's see what things look like in two weeks there's a lot going on with the markets today. we honestly don't know, as kayla just said, what precisely the remedies are going to be or how that's going to play out i also - >> you acknowledge that the market's reactions here is assuming, okay, 10% higher, 25% higher cost is going to hurt american manufacturers who use those inputs, if that's how this comes down the pike. >> people have focused what happened last time we had steel tariffs on the report said only about 50% of steel consumers faced higher prices it was mostly felt in their

profit says, not in terms of jobs or passing along price inflation to consumers, the overall impact on the economy was negligible meanwhile, it brought the steel industry back to life. i have no reason to believe that this time won't be any different. we're in a very strong economy and the market's been understand trending down for a couple of weeks. let's revisit this again in two weeks, see where we settle things out at the same time, there is no question there's been an imbalance between steel producers and steel producers over the last decade or two and that the overcapacity in the steel industry has been an enormous gift to steel consumers but one that has had an extraordinary cost for steel producers, particularly in the united states. i think it's something the president realizes and understands you have to restore some sanity to the steel market if the gloel business is unwilling or unable to do it and i don't believe it is.

he says, let's not sacrifice the steel community at the alter of multilateralism. we need to take action and hopefully others will press the chinese government and other mercantilists so they're operating according to market norms. >> we already had a comment from the eu who says he strongly regrets the u.s. restriction clearly, there's other big producers around the world from china, japan, india. we're seeing u.s. markets sell off broadly in reaction to this other than the steel stocks. can you understand that selloff in fear of retaliation in some form >> let's see how things settle out in a couple of weeks rather than the instance. we don't even have the policy yet. i would add we should have seen this for a long time coming. the president has telegraphed this action since june of 2016 he talked about it frequently

for the last year. this should not come as a surprise to anybody who has been monitoring this, whether they are a steel consumer or a foreign government and i think the message the president is trying to send through his comments and hopefully through this action next week is that the era of trade surrender for the united states is over he's going to look out for our interests and our allies should be aware of that there be an adjustment period but it's long overdue. >> he has the world's attention for now, that's for sure scotts, we will join back in with you thank you for joining us. >> joining us now to talk about today's huge market selloff, we've got art cashin from ubs financial services, cnbc senior commentator mike santoli and steve liesman. steve, let's start with you. news from the fed. >> we understand managing director of pimco, ph.d. in economics from harvard is the

front-runner for the vice chairman's position. as we previously reported, the white house is specific in wanting somebody who has a strong grounding in economics. cleveland fed president was also in the running but we understand now that rich clarida is the front-runner at the president has not officially signed off on the appointment. >> just to switch back to the discussion we were having in terms of the steel tariffs >> i think if these just remain steel tariffs and that's all there is to it, no retaliation, i think the overall effect is in moderation i think one way to think about it, though, is the steel in a car is am toreized -- the price of the steel is am toreized over the 100,000 miles of a car

the steel in a plane is amortized over the 20-year life of the plane it doesn't have an immediate impact i think what the market is worried about is the overall mood right now when it comes to global trade i think the market is also worried about, who are the folks whispering right now in the president's ear? are they people who are free trade or protectionists? it's already been lumber now we have steel and aluminum what's next? that's why you get an outside market reaction to what is a small component of gdp. >> would you echo that >> i would scott saying, this shouldn't be a surprise to anybody, but it looks like it was a close call based on lots of internal disagreements and it seems like a little bit of a haphazard, sushgsd capricious type move by the president if this is the way it's going to go and i think the market has to say, okay, what's the framework? this isn't based on some larger strategy, some kind of intellectual framework we've put out there and kind of gotten

everybody comfortable with i think that's an issue. i would also say, this market was kind of -- it was at a fulcrum point anyway earlier and it just got tipped to it the downside by all this news. >> arthur, steve mention the lumber beforehand. we had some tariffs on solar panels and washing machines. they didn't spook the market too much is spike in aluminum more? >> yes, it's the timing. the market's worried about the capricious nature of what happened today didn't look like they were organized and thought it out number two, the worry was this was kind of a slap at mr. cohn and he might think about resigning. the market is worried about that, too. i think if you look at a particular worry among the market players, aluminum more than steel because it involves canada right at the time it looks like the nafta talks are falling apart. and that is given a great deal

of concern down here and i think it's probably 30 to 35% of the selloff. >> aluminum is mixed century up 7% but arconic is lower by 7%, alcoa as well there's a lot to grapple with as they try to figure out, what exactly are the prices we're paying for raw materials and perhaps exporting. are we going to lose our competitive edge >> but i think it's more the potential for poisoning relationships between major trading partners and that's got them upset. >> steve, what were you going to say? >> here's a factoid from our crack team at cnbc this was about an hour ago about 16 steel stocks in this particular etf, their market cap is up by 1.2 billion while the rest of the s&p is down by 400 billion in market cap. i think that's a good metric i don't know if it's true about the potential fallout if trade goes south

a lot of the s&p, their earnings are foreign. a lot rely on imported goods to make, essentially value-added material i think that's where the concern is here and the gain you get from steel -- to the steel companies is really minimal. >> by the way, the fact that, as steve points out, it really is the big multinationals that have been taking it on the chin today. the breadth of the market is not that awful, considering how badly the it's suffering so, it seems as if this isn't exactly a comprehensive washout in the market. it's obviously taking some out of that sort of internationally exposed sector of the economy. >> when we talk about potential trade wars, normally we're talking about china or nafta negotiations we have to remember, steel production vovlsdzdz a lot of oe nations. india, japan, the eu. >> globally produced, globally

consumed and everybody feels they have a steel industry to protect and exports to defend. i think that's a big part of the issue here i don't know if you want to go to the point of trade war but it lends itself to this attitude of, we thought policy was kind of at our backs. if you're an investor, if you're looking at how the economy will go from here now we have to think about something kind of restraining the economy, perhaps >> great point thanks, guys art cashin, mike santoli and steve liesman. 45 minutes to go dow down 355 we were down about 580. >> 586, yeah. >> we're looking here, still pretty deep selloffs the russell fractionally lower wait until you hear what larry kudlow has to say about the tariff policy. he spoke to the president about it not too long ago. that's coming up next. >> as kelly said, we're down 1.5% on the dow. much more on the markets when we come back. most etfs only track a benchmark. flexshares etfs are built around the way investors think.

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fidelity. it's "you've never gamed with speeds like this" internet. it's "all your teenagers streaming at once" internet. it's "i can get up to one, two, three, four, five mobile lines included?" internet! it's internet from xfinity that makes your life simple, easy, awesome. see how you can save by adding xfinity mobile to your internet. plus, save even more when you sign up for internet, tv and voice together. click, call, or visit an xfinity store today. welcome back triple digit declines for the dow. we're down about 580 at the lows, 1.5% for the dow which was a difficult session to close out the month of february.

today we begin march shedding 1%, at the russell down a point. >> let's send is it back to kate rogers at hq. >> we're keeping an eyre on the broader markets. about 314 of the s&p 500 members are at correction levels 93 of the 314 are at bear market levels, 20% or beyond from their 52-week highs. energy, utilities, retail names are dominating market levels along with ulta, l brands, chipotle, alaska air, merck, lennar and more. a rye meender, you said the dow and s&p 500 are negative for the year thanks to bigger losses we've seen this afternoon, they're both on pace for their worst day of the month in september 2015 the nasdaq on pace for its worst first day of the month since

january of 2016. back over to you guys. >> 40 minutes to go. we'll see how things tally up. thank you, kate. we're down 327 on the dow. an exclusive interview with the new ceo of csx heuses steel on the tracks, on the trains, his cao.rg his take on the tariffs coming up here on the "closing bell."

welcome back to the "closing bell." let's clek in on the sector

performance today. somewhat surprising. you've got energy at the top only down two basis points oil is slipping and energy is the worst performing sector in february if we look at the financials, the laggards, financials were an immediate response to the steel tariffs. financials slipped to the bottom we have seen bond yields fall. financials at the bottom broader market between 1% and 1% the dow is down at the moment, 1.38 the dow plunged more than 550 points as trump promised steel and aluminum tariffs some republican lawmakers are voicing their opposition to that decision senator ben sasse of nebraska saying, let's be clear the president is proposing a massive tax increase on american families protectionism is weak, not strong you expect a policy this bad from a leftist administration, not a supposedly republican one. another republican senate finance committee chair orrin

hatch said, tear triariffs on am are a tax hike on american people they can't afford. >> is this going to unwind all the good work the administration has just given public when it comes to tax issues? >> no, it won't unwind it but it's a bad omen. he's so good on taxes. he's so good on tax cuts he's so good on de regulation, infrastructure i even like him on immigration he's never been good on trade. this is a long, ongoing conversation he and i have had, steve moore -- >> did you know these tariffs were coming? >> well, i heard from somebody close to it that they were coming and once he called the meeting of steel makers, you could see it, handwriting on the wall he took a harsh side, 25%. 25 and 10 on aluminum. you know what's a killer here, let's look at this there's 200,000 -- more or less, 200,000 steel and ironworkers in america and aluminum

there's 5.5 million employed by businesses that use steel. >> like the automakers and others. >> auto, energy, infrastructure. >> the -- >> cars, planes, diet pepsi and diet coke. i don't want to give everyone free time, but that's what you're getting here's another number. >> did you tell him that, did you make that argument to him directly >> yes i and others have made that. in the reagan years we used to call the free traders white hats and the protectionists the black hats the black hats won this time around i'm sorry because it will damage the economy to some extent there's 154 million americans who work that's the bigger number they are going to be affected by steel price hikes. in 2003 george bush used tariff protection on steel and prices went up a lot. >> for a coke drinker who gets a

coke can or someone that buys a car, the steel is in the car, it doesn't make a difference to the end consumer it will make a big difference to the steel worker >> look, employment, by the way, on that last point, employment with the bush steel tariff did not go up. it did not go up look, if it's $50 higher, if it's $100 higher, that can hurt. that can hurt a family bunl. it can be more than that in theory, if you raise the tariff by 25%, the price can go up by 25%. you may not get all that steel makers have been profitable aen while their size is falling down. this wartime baloney, if we have a full out -- do you think canada won't sell steel? are you kidding, canada? >> it depends how bad it gets with nafta. >> that's a key point. the nafta hook here, which may have affected the stock market

and there may be more coming canadabiggest steel importer you'll annoy them. mexico, we'll annoy them we're hanging by a toenail on nafta. if we have to walk out of nafta or those negotiations totally break down, then this steel thing turns in from a minor irritant to a major calamity for our economy and our stock market make no doubt about that nafta going down, which could come after this, will be terrible thing for our economy >> we've seen some various members of staff of the white house decide to leave. take us back to when you spoke to president trump about this specific issue and do you belief the way he may be disagreeing with members of staff, does that play into advisers leaving because they're not getting their voice heard? >> well, i don't know. i think there's a paper flow messaging issue. i'm not there day to day

i do visit occasionally with the president, who i still support, by the way, at we're going to disagree on trade. the guy who was in charge of that paper stuff, messaging, get everybody, was rob porter. so he ran into all these allegations about prior divorces and so forth i don't know anything about those allegations -- >> his boss is still john kelly, right? >> but porter was really good at it yes, he does report to general kelly. some think general kelly wasn't ready for this i don't know i know porter-- hope hicks is little different story she wouldn't be involved in cabinet -- >> he's elevated peter thnavarr. art cashin said this means gary cohn lost. maybe gary cohn leaves with him kind of walks that free market, free trade premise you're talking about >> it's a risk look, i'm not going to give away conversations as i said.

earlier this week i was in touch with a lot of senior guys. the handwriting was on the wall. do i think gary cohn is going to leave because of this? no, i don't i think actually i personally want him to stay. i think he's done the president a great job. stude steve mnuchin is fighting like hell to stop this protectionism. a lot of outside advisers. apparently we'll have some kind of meeting with the president about our views. everybody is talking their book inside you know, you mentioned peter navarro. he's an awful good guy he used to be a guest on my show regularly. he doesn't like china. neither do i, much but he's a straight protectionist up and down the line peter is an economics teacher in california this is disappointing to me. it's not the end of the world but disappointing. what the market did today is a harbinger. if we stay on this path,

protectionism, if we walk out of nafta, you'll get -- the stock market will do very badly. >> the one thing we know, his advisers may come and go, whoever might be in the favorite seat at the moment, but the president listens to the stock market is this maybe the best thing that could have happened if you want him to say, maybe larry kudlow is right, we were down almost 600 in the dow, they're blaming me, maybe i don't want to do this. sorry, steel and aluminum guys, maybe this isn't a bright idea is this possibly the message he'll heed >> can you play that back just as you said it including me just as you said it. i couldn't have said it better myself and i'll probably say it to him again but i must say, you know, the president has his opinions he and i have agreed to disagree about trade. the trouble is, tariffs are taxes. again, the users of steel/aluminum products, they're getting taxed. >> if you listen to the association equipment manufacturers, they use the steel, they get hit by this, they said 30% of the equipment

we make is for export. you'll hurt that our competitors in china, india and mexico will get a free pass because they can use cheaper stuff. if you want to boost steel production, do infrastructure. >> by the way, we just slashed the corporate tax rate for aluminum and everybody else. isn't that enough? now they want another 25%. there is a consequence a lot of these carmakers and others will move offshore. they will move offshore and then they may sell their goods back in indirectly, but they'll produce -- >> are you saying you think general motors -- there are new rules about their sourcing so, if they're in the u.s., they have to do a lot -- are you saying they would leave the country over this? >> they won't leave the country. but at the margin, they may do more offshore. look, no matter how you slice it, i'm a free trader, i want the rust belt workers to do as well as they can i think we're in the front end of a 20-year business boon in

front of us. i think the economy is doing well i think the company will do better their training will do better because of after-tax returns to the company. all of this is good. we don't need tariffs. we've slashed tax rates on businesses we've given them 100% expensing and an easy way to brick overseas cash home that's a lot on top of that, they want tariffs. i think that's wrong we've given them a lot don't get greedy remember, 5.5 million people are at stake on the business users and another is 155 americans work, civilian labor force they'll get slammed by this, too. it's bad economics and i think internationally it will be bad politics if it mroes up nafta. that's a big risk. >> talking you back to that conversation you had with president trump when you warned him not to do this, was he just considering steel and aluminum at that time or other sectors and -- >> actually, it was a different topic. the 25% was the same

it was on a different issue, a different matter i cannot tell you that because -- >> do you fear, therefore, that issue -- >> inever divulge private conversations. >> do you fear there could be other areas that could be hit by tariffs as well? >> yes, i do. >> as significant as steel and aluminum >> i do. i think at the end of this debate, he was itching to do something big to get attention on this issue. he felt like he wasn't helping his base or the swing states in the rust belt. i'm an economic growth guy what he did on taxes and regulations is so enormously positive for the rest belt and everybody else in this country we don't need these tariffs to compete. we are now super competitive and you can see signs of it everywhere the stock market is a leading indicator and it gave us a pretty good warning today of what could come. >> ironically on the day where we got the best reading on the manufacturing gauge -- >> phenomenal, phenomenal. >> -- in seven years.

best reading since 2011. right before this happened. >> and the pipelines are full. >> backlogs. >> yes, thank you. >> it was -- >> we have a great situation. >> jobless claims, 210,000, the lowest since the 1960s. >> it was a great morning. >> hats off to businesses and entrepreneurs but i give hats off to the president, his leadership on taxes and regulation is fine this is not fine shall we say, not so good? the others were good, this is not so good. i'm going to try to talk him out of it again. i'm not the only guy, by the way. >> larry, thanks very much excellent content. i would love to know what the other sector he was discussing is -- >> we'll revisit that. it made resurface. >> larry kudlow. just about 25 minutes to go before the close here's a check in on the markets. we're down again closer to the lows down 1.7% on the dow or 415 points the low was 586, between 1% and

1.5% for major indices let's get to sue herera for a news update. >> hello, everyone the pentagon reacting to russian president putin that moscow has new weapons that cannot be intercepted. >> here's dana white. >> we're not surprised by the statement. and the american people should rest assured we're fully prepared. >> lemur group recalling children's sleepwear sold in sizes 2 through 7. the consumer product safety commission says the clothing fails to meet the federal flammability levels for children's sleepwear they were sold october last year through last month. hall of famer quarterback jim kelly says he's once again, unfortunately, battling cancer he released a statement saying tests have shown his oral cancer has returned he underwent surgery in 2013 and

received chemo and radiation in 2014 before being declared cancer-free at that time back to you and wilf. >> sue herera back at headquarters. 25 minutes to go let's talk to our closing bell exchange about all that has happened kenny from o'neill securities and rick santelli at the cme welcome to all of you. rick, i want to start with you just what do you make of everything that's happened today of this policy and what it means for the markets and the economy? >> i don't know know ma maybe i'm the only person other than the president but i'm happy. i remember a month before the election, reading a wall street article, they showed a picture of all this aluminum and the headline was, chinese billionaire linked to giant aluminum stockpile in mexican

desert this stockpile was worth roughly $2 million it represented 6 the% of the world's inventory. now, why exactly would a chinese billionaire hide it in mexico? well, we have the ceo of nucor, or former, and he said if it's there, we could most likely funnel it in through nafta the point is, steel prices like gasoline, like oil, like central bank stomaimulus is all fungible i think it's about time that somebody attempted to actually get us a better deal with china and many who take advantage of this is it going to be easy no is it going to hurt? no -- yes. i think it's like the credit crisis you could do maybe the wrong thing and make it less painful and relegated to more moderate growth or take a stand take the pain and look at the bigger picture. >> let me ask you. i'm glad you brought up this

history. this is not a done deal. it will be announced next week it's still an open question. is it a blanketed tariff or targeted one would you be okay if he said, i'm going to do this tariff and only on china? >> if it's only on china it won't work you'll find another stockpile of aluminum and steel in another country that will come in. and it's the government as well. you know, we have all these issues where things like so easy how could we not want to do this or that? the conductor of the orchestra is a federal government and bureaucracies. i know that in certain areas we really need them but just like the former ceo of nucor said, when you look at the government's numbers on how much we get in steel and aluminum from china, it doesn't look threatening because they're not accurate and i really think in this case, we don't know how it's going to turn out but i do think that this president has the type of temperament, which many don't like, that is really the perfect man at the perfect time to try to do this

listen, there's no pure capitalism and there's no pure globalism. i'm a big proponent of globalism but not a big proponent of being suckered into thinking we're getting a good deal when we're not. >> so there could be positives to come out of this in the long term cleary, the market net/net is down significantly lots of factors at play there. the question of what's going on in the white house, the question of inflation, the question of retaliation. which of those afactors is most concerning >> i don't think you can separate them. i think today they're all concerning jay powell with his second day of testimony he's talking about how great the economy is but he drew the line in the sand tuesday saying he's not beholden to the market throwing a temp tantrum. he's going to do what's right for the countries. then you throw in this whole issue today with president trump. i got to tell you something. yes, it's concerning it's causing some consternation. the market is telling you that i'd be surprised if he makes

that announcement. i don't think he's going to wake up tomorrow and say, oh, geez, the market was down 400 points all because i'm going to impose these tariffs so, therefore, maybe i won't impose them and the market will go back up and everyone will love me. i agree with rick. i think he'll take a stand i think it is what it is i think the market has to adjust as a result and i think the market will adjust may be ugly, may not feel good but i think that's what's going to happen. >> how are you thinking through this, the market impact? >> it's definitely difficult look, tariffs -- the bush administration tried this. it was supposed to be a three-year tariff. they had to cut it after one year i understand the dilemma of, look, we need to take a hard stance but tariffs like this, incapacitating trade, in the long term haven't worked if we get in a long-run tit for tat argument, that will be detrimental to growth, essentially here in had the u.s.

we have tried this before. it hasn't worked out in the long term as a long-term investor we want to separate the noise from the facts. we haven't seen a lot of the facts. we have a lot of noise in the marketplace. let's take a breath right here the market is a leading indicator and we to want make sure we're doing the right thing over the long term. >> we've been focused on the market selloff but we've seen a significant move in yields today. >> we had a really narrow range since valentine's day with regard to closing prices and yields ten-year. today we're below levels we haven't closed at since before valentine's day several sessions it isn't really, in my opinion, about powell today it's about the equity market we had strong data this morning. what happens it's almost like we're back to the we're acting on previous equity drops

i think unless notes go below 2.63, it should be a focus that all setbacks are temporary and we'll move higher in rates >> and we were just down -- or we are down about 500 points right now. about 20 minutes to go final minutes. we don't have to do the whole policy debate but what what happened with them funneling through through mexico >> you look at wto, you look at all the ways you can protest this story is from september of '16. the president is doing what will address this i think you have to make a stand sometimes as uncomfortable as it may be i think jumping at the notion that all these countries are retaliate is childish. necessity have more to lose than we do in the grand scheme of global trade. >> thank you, all. rick santelli, kenny, teague

sanders with the dow down about 500 points one company that could be impacted by this tariffs is rail operator csx they are holding an investor day. morgan brennan is there now. joined by that ceo of csx, jim foote. morgan >> thank you, that's right jim, thank you for joining us today. the dow is down almost 500 points after president trump unveiled these tariffs on imported steel and aluminum. csx moves these commodities. you move a lot of the manufactured goods that move these commodities. you consume steel, you put steel on the ground for your tracks. is this bad for business >> it's got a mix -- well, first, thank you so much for coming out and meeting with us this is amazing. it's got implications on both sides so we'll have to wait and see what this all means. as you said, we're a consumer.

but the news is, this could be good for some of our domestic shippers we'll wait and see what the fallout is >> and in terms of -- one of the things playing out in the market, are we on the precipice of a greater trade war under this trump administration? are we on the precipice of a greater trade war when you see things like tariffs rolled out >> there's been a discussion of tariffs for a long time, since the president took office. so, the implications on csx would be more along the lines of how nafta works out and whether or not there would be any kind of a material impact on the imports we bring in through the containers, through the sea ports. but again, this is noise that's been around for a while and it hasn't moved much of our business one way or the other. >> officials are renegotiating nafta. do you think that stays or do you think there's a genuine risk, especially looking at the

news today that that could go away >> well, we're certainly followinging it because the auto imports play a big part for the rail industry. we're lucky in terms of mexican import traffic that wouldn't impact csx as much is some of the western railroads. our business partners are -- our manufacturers are located more on our territory it's something we're watching. yes, i think they'll probably be modifications both to trade flows with mexico and canada and we'll just have to see what happens. >> and taking a look at csx shares, they have been bucking this broader trend they have been up today. i think they're up now about 2% coming into the close here one of the things investors and analysts have been looking to see, i think from you and the team you've been assembling, you came into csx in october by christmas you were ceo. there's been a lot of focus on precision railroading, turn-around at csx how is that going so far >> so far, so good it's been a wild 120 days, let

me tell you that we are very excited to be here today, me and the team, and roll out what it is we're implementing in terms of changing the business model to schedule railroading, improving the efficiency, improving the performance of the company, growing our earnings i think the team did an extremely great job today in prepting the story to the financial community. we're targeting a 60 operating ratio in three years, which puts us in the leadership with the railroads. so, it's going well. very, very excited and i think the -- obviously in the market of today, like the story. >> and i believe kelly has a question for you. >> thank you i just want to be clear on this point. how much steel do you guys use how much steel and aluminum? >> how much steel and aluminum again, the primary places where we would be using steel, obviously, would be in our rail.

and as as well as most of the heavy -- heavy equipment that we move around, rail cars and locomotives, et cetera, are a large component of that would be steel. so in terms of consumption, those would be the principle places where we would be buying. >> i'm guessing that's a fair amount if you're talking rail tracks the cost of steel goes up 25%. does that mean your profits will get hit by 25% or are you going to pass that along in terms of cost increases to your consumers? >> over time, you know, obviously we would absorb the initial cost as we went forward with our capital programs and that, but over time that cost, like everything, gets passed on. >> do you have a view in terms of what nation produces the best quality steel?

given this will likely lead to fewer imports of steel are there those that produce better steel at the moment >> right now, i mean, the products we're talking about consuming right now, rail, spikes, railroad equipment, we use primarily good old u.s. steel. u.s. manufactured steel. >> i just want to touch on safety as well because the other thing that's sort of going on in d.c. today has been ail hearing on positive train control. that's the testimony tech that railroads such as yours have to have in place by the end of the year and how that progress is going. certainly it's been in focus given the deadly crashes we've seen, unfortunately one on csx tracks that involved an amtrak train. how far along are you in the process of implementing that is that going to be done this year >> in terms of the installation

of the equipment that's necessary to support that, yes, we'll have just about the entire railroad up and equipped under the current legislative environment, the intent was that we would have some time over the next year or two to make sure we implemented, turned it on, so to speak, and tested it to make sure it was working okay and work out the bugs. but in terms of having everything in place and ready to go, we'll be there 99.9% by the end of this year >> great we have to leave it there. thank you for joining us today jim foote, the ceo of csx. >> thank you our thanks to jim foote. there's a lot happening for a ceo on his first investor day with these surprise tariffs today. we have news on auto sales it's also the first of the month. we have that to hit with phil lebeau who has a roundup for us. >> the sales rate for the month of february coming in a little

better than expected 17.08 million vehicles that's the pace of sales for the month of february. most were expecting to be around 16.8 so a little better than expected in terms of the individual automakers, this is a low volume month. take a look at the big three muss toyota. toyota being the only one who was positive fiat chrysler, gm and ford all negative for the month of february it's a low volume month, so don't get too excited about it the bottom line is this, we head into the spring sales season with the industry doing just a little better than some were expecting, but still we'll be down this year relative to last year back to you. >> before we get to the interview you have coming for us, a quick question in terms of we all take on these tariffs coming in. i presume while it can lead to inflation of auto prices, there will be quite a significant time delay when it comes to cars, given the sort of cycle -- the life cycle of a car. >> right also, they're locked into contracts in terms of how much

steel and how much aluminum they use for their various vehicles we reached out to all the automakers, general motors along with ford, fiat chrysler, toyota, all say the same thing look, 90% of the steel and aluminum that's put into an automobile is sourcesed here domestically having said that, i talked with a number of people who work with the automakers, who are either consultants or work with suppliers and they all say the same thing this is a global market. if you push up the price overseas, you're going to ultimately push up the price here in the united states. that's the concern that's what's weighing on the auto stocks today. >> and take it away, you have a special guest with us as well. >> well, instead of hearing my thoughts on these proposed tariffs, let's bring in mark royce, the head of product development for general motors he joins us from michigan, where they just unveiled the new gmc sierra denali pickup truck

your stock is getting hammered today and people are saying, general motors is ultimately going to have to pay more to produce their cars and trucks. wh what. >> you said it, phil the 90% of that material is here le and long-term contracts so you're right on. i would also say, and the truck right behind me here is a great example of that. as we take weight and mass out of our vehicles, we're using a mix material strategy. things like carbon fiber, certainly aluminum and high strength steel which can take mass out of the vehicle. so that's a great leverage point on any one material, that approach so, we're deep into that and we take that very seriously so i would also say i have purchasing as well the purchasing and engineering piece of this in our department is very disciplined around

offsetting commodity spikes or otherwise. we'll entertain that discipline and that approach to offset for our customer any fluctuation in those prices we're very disciplined and very committed to that. >> but is it possible, mark, we could see ultimately some of the cost increases let's say these tariffs go into effect and they stay there for a while. ultimately, will that have to be passed onto the consumer >> again, i'm not sure that we would pass dollar for dollar, those price increases onto our consumer because we're here to offset any of those material cost increases or approaches that's what good engineering and great manufacturing, that's what we do. we're vet committed to that. i wouldn't say that's a given. and i was listening to some of the other program. i would not say from a general motor xler and product standpoint, that's a given. >> larry kudlow was on air earlier and he speculated, pur speculation, that general motors at the fringe might ultimately

move some of its production out of the united states if you see a trade war erupt. is there any possibility of that >> i guess i'm not the right person to speculate on any of that, so i won't we've added billions of dollars and billions of manufacturing facilities since the financial crisis in the '08-'09 time frame. those are long-term investments. things like new paint shops in places like flint, michigan. those are hundreds of millions of dollars we're in for the long haul we would really have to see how something like that developed, if it developed. i'm not here to speculate on that we're very committed to having a lot of our production where we sell one of those places in one of the biggest places is right here in america >> mark royce, head of product development and also in charge of performing for general motors joining us from michigan today, where they unveiled the new gmc denali pickup truck, a high-end pickup truck there's demand for those

vehicles but the story people are focused on when it comes to gm and automakers today, what's happening with potential behind the steel and aluminum tariffs back to you. >> great stuff thank you both for joining us. appreciate that very much. five minutes to go here. we're down a little less than 400 points at the lows we were down about 580 it's not just those tariff-relate stocks, though the users of the materials, which are getting hit, tech is also having a tough session. bertha coombs is at the nasdaq with more. >> it's very much a large cap tech story, as it has been when things move and the market goes south. you can take a look, the russell 2000 small caps not affected as much by today's downturn chips are mock it is sectors getting hit the hardest. when you think about tariffs, so far we have seen these tariffs on solar panels, washing machines, steel now potentially

coming next week what could be next a lot of the chip manufacturers, a lot of the tech manufacturers do their manufacturing in china. they use a lot of imports in asia could that impact them would that impact the prices we would ultimately see on a lot of technology we all prosecute much these are the questions people are starting to think down the line if you take a look at chips, they've been getting hit hard. nvidia, one of the biggest decliners in the nasdaq 100, dragging things lower. along with them are apple and google, google parent alphabet as well as amazon as well. apple in particular has a lot of exposure to asia and manufacturing. so you have to wonder if we see more of these tariffs coming on bit by bit by bit, how the tech industry is going to be impacted as well. wilf

>> thank you very much for that. tech stocks those not doing well let's have a look at the int intraday on the dow. a story of a good morning be and bad afternoon. we had some data coming out, manufacturing data was good, inflation wasn't too strong. that allowed some gains of the stock. we have a high of 156 points midmorning very clear, though, that selloff coming as we heard news of those tariffs and it's proceed liv rated since then the low was 586 on the low, and now down 352 between 1% or 1.5% for most of the major indices. it's good news for some of the steel and aluminum stocks. decent gains not as much as we had at some point in the afternoon, the likes of nucor, u.s. steel up 5.7% as we approach the close. look at the actual commodities not huge moves aluminum down aid percent or so. worth having a quick look at what wti oil is doing.

it's down only 0.5% but it was the worst performing sector in the month of february. if we switch to sector performance today, somewhat of a surprise there in that energy isn't one of the underperformers. unsurprising to see industrials one of the worst performers, of course, one of the sectors that will be using that higher priced steel and aluminum interesting that financials is the worst. we heard about tech from bertha. financials is the worst. why is that? quite a slippage in the bonds. that's hurt financials bob, it's really been a story of these tariffs. >> here's the question, how wide will this tariff be? will it expand beyond steel and aluminum the market's acting like they're worried about even bigger things will there be retaliation? i think that's a bigger issue. will china retaliate will we see a ban on or restrictions on bourbon being imported mcconnell would worry about

that, for sure the market is acting like it's a big issue. if you look at some of the big industrial names, big exporters, your cat pirls of the world, they're all down several percent on the day the defense names are all down rather notably the declines on the global industrials, defense names, similar space, obviously, they're down the automobile companies are all to it the downside what i find a little puzzling and maybe you can help me out on this, i understand the idea of worries about it could be inflationary and hurt business but i don't see it in the bond market i don't see big selloff. i don't see big moves there. >> i think what we've seen, obviously, that big fall in yields but that's buying bonds people are scared we'll have some broader retaliation >> the retaliation is interesting. a, we heard larry kudlow say the president is considering another sector for tariffs that's concerning. as rick santelli said, trade is a percentage of a country's gdp.

outside the u.s. it tends to be a lot bigger it's a bigger hit to them if, potentially, like china they have a surplus - >> watch the chinese response. >> we're hitting the close low 425 points for the dow down over 1.5% new york road runners ringing at the new york stock exchange. that's the first hour of the "closing bell. kelly has the second thank you, wilf. welcome to the "closing bell." i'm kelly evans. dow going out with a decline of more than 430 points at the lows we were down 586 after we started with a triple digit rally. some big swings on that point. the volatility gauge, 22.5, call it, roughly, for that vix. how about the s&p 500? down to 2676 that means we're almost in the red for the s&p for the year we are in the red for the dow for the year

dow down 1.3% to 7180. russell 2000s, relative outperformer, only down 0.3% to sa 07. the dollar weakened, too the big story is the trump administration announcing tariffs on steel of 25%, aluminum of 10% that will be detailed next week joining us on the panel to discuss all this, stephanie link, u.s. equities manager, courtney gibson, and mike santoli, our senior markets commentator. the big winner in the dow was verizon. we can call it that on a day like that. the biggest loser was und technologies after a strong session yesterday on that big ackerman investment. the biggest winner was vision health care and biggest loser was patterson companies. mike, what do you make of the market action? ed it looks like it was spurred by the tariff announcement we talked about the implications >> i think that was definitely

an accelerant. i want to stop on the news and say, that's really not what was going on, but it really was. it really was something that pushed the market further in the direction it might have gone anyway what was happening beforehand, though, is a market that was very uneasy and on edge and not sure if it needed to pull back more into the lower end of its recent range or not. i do think it sent the general message, a tariff move of i guess we don't know exactly how economic policy will be executed from that point out because it was kind of -- you know, it was definitely not going to be a done deal hours after it was announced. the idea policy might become less friendly and a little more hostile just on the margins. i will say, though, the market action underneath was not terrible >> what was going on with the russell? >> the russell was firm. basically rotation internally and you didn't have a tremendous advance decline washout type thing. i think it's one of these things

where the multinationals got hit hard the leaders got taken out for a little more downside overall, it was not that devastating. >> the other thing that happened is interest rates were falling the ten-year yield rate, we were talking about 3, more than 3, back at 2.8, something in that range. so it felt like it was taking this decline seriously what do you make of it all >> the first big correction we had was we were nervous rates were going up too fast this was a little different. it's the uncertainty, quite frankly. the market doesn't like surprises and uncertainties. in terms of policy, yeah, sure, this is going to hurt some companies, some industries and on the margin, some consumers for sure don't forget, we just had a huge tax cut. we have all this cash repatriation companies are actually in the marketplace right now buying back tons of stock at record

levels i don't think this is the fundamental, the long-term fundamental -- >> we talk about ford and general motors, the oil and gas industry was upset, the beer companies. for anybody whose stock price declined on this tariff news, are you a buyer? are there any opportunities because people think the impact is going to be overdone? you mentioned -- we still have tax reform coming down the pike. i think you want to let the dust settle i think it was logical of which stocks anything related to china, we don't know how that's going to escalate or not. however, that being said, these companies aren't just china. they truly are global companies. and they're doing a lot of great things and the u.s. is quite strong i would pick at some of the multinationals i didn't do much today because i want the dust to settle but then i would circle back to the financials circle back to some consumer discretionary, which are having good earnings and falling because expectations are high.

i think you can pick your spot. >> some of these parts of the market, health care, consumer staples are down 10% from their recent highs volatility gauge still high. the selloff is still there, especially in particular areas are you seeing opportunities here or does all this tariff talk have you concerned about what's coming down the pike? >> i think everyone will be concerned about what's coming down the pike but ultimately, we have a message the trump trade is back on if you look at the russell 2000 being the indices down the least amount, it's back again by usa how is it that you put yourself, if you took yourself out of it, take yourself back into that trump trade, think about those small cap stocks in it the u.s., being more overweight u.s. names in your portfolio. i'm not personally adjusting my strategy at this juncture and our clients are now picking up on names, whether they're global multinationals or those kind of small cap u.s.-centric names

being hit. they are picking up names they think are good buys for the long term right now whether it is, stephanie, like you were speaking about, some of those global multinational names being crushed today, but that for the long term, you think are going to continue to fare well or whether it's kind of some of those small cap names you thought maybe weren't going to get that trump trade boost going forward, i think there are some very interesting opportunities in the marketplace if you high conviction around those names, they're off 4%, 5%. >> right cummins is down 4% caterpillar down 3%. honeywell, the same. is the trump trade back? is it a different kind of trade we've seen in the past you don't think about it on days when we're down 400. >> i don't know if every piece will shorten i think it's kind of interesting. i was pointing out this morning that exactly one year ago, march 1st, in my opinion is when trump

trade 1.0 peaked that was a day after the president had that teleprompter speak. it was all cylinder's firing small caps peaked for months bond yields went down for the next seven months. essentially this rotation into f.a.n.g. and growth for the rest of the year. it has picked up since then but i don't know that it's going to be a flip of the switch type move here. especially not on this tariff measure. i do think there's a chance we could see these kind of churnings underneath the surface. but, you know, we're already talking about higher yields. that was one element of it the dollar was down today, not up that didn't follow the script. >> before today, i was thinking about which companies have the most pricing power because especially in the industrials and materials and energy companies. but even in consumer as well. >> inflationary environment. >> now you have to think, okay, i started thinking that way.

if this is a little more to that point, i have -- >> by the way, i have been dying to buy boeing. if that fell another $10, i'd be all over it. >> exactly >> that's one of the only industrials i don't own. i'm really looking for opportunity, especially where i feel confident in the price structure. whether they get pricing next quarter to catch up to higher inflation, they may not -- >> but there's something worth explaining it's important to find the companies with the pricing power at the same time interest rates are falling. in other words, the quandary for these companies is, wait a minute, all my costs are going up and i can't pass that along is that why it's important to find companies who can or the ones who can otherwise offset. >> i'll tell you who can't the consumer staples companies they're having a hard time we hear about package food costs, freight costs you want to own a freight company that is able to charge higher prices to get those goods

elsewhere. there's plenty of them i wouldn't shy away from the multinationals that got hit today. i think let them settle because they're up a lot over the last year i think you can pick your spots. >> obviously, stephanie, i'm in 100% agreement with you. we're back in a stock picker's market at this juncture. i don't care if you're a small cap portfolio manager or large cap portfolio manager, this is now the time where you cannot buy just the index at this juncture you're putting that index to balance out a portfolio but you're taking your fundamental managers and saying, okay, i'm putting you out here tell me where you can find me good names to buy in this point and for the long term that will help us make money over time and it's not just buying we're seeing it in retail. we saw it with the names reported today there is a divergence between those names and every single sector it's up to these fantastic port foal managers, such as you, stephanie, on that panel there,

to go in and carve out your niche and create some value for investors here. >> real quickly, exxon said that these tariffs could impact the refinery expansion plans we have petroleum institute saying this will raise costs for oil and gas sectors. sure, we can talk about maybe these aren't the biggest increases in the world, but it's pretty interesting to see some of those industries which were also considered trump beneficiaries coming out and saying, we don't like this i wonder if investors need to tb wary. >> actually, the sector was one of the better sectors, which was surprising but that's been hit very, very hard. i think it's about risk/reward, where expectations are for sure and they're quite low. >> net importer will almost everything and net consumer of steel and aluminum versus a producer of it all those things would tell you that on balance it's not going to be -- >> we have more reaction from

lawmakers to the president's announcement >> some predictable backlash from the republican party on the announcement the president made today. two members of congress coming out and touting the benefits of tax reform saying what the president is proposing to do would potentially undue tax reform first is pat roberts he calls the tariffs a paradox of enormous irony and they amount to a tax on consumers he says that they have the potential to wipe out the significant benefits individual and businesses have received from the historic tax reform packa package. we need a trade policy that is stable and beneficial to all industries the announcement today is terribly unproductive. a similar message from kevin brady, chairman of the ways and means committee. he put out a statement a few moments ago saying the tax cuts energized the economy and that the president is right to target unfair trade, but that blanket

tariffs that sweep up fairly traded steel and aluminum can backfire and harm our businesses and workers. he thinks president trump should choose a mortar getted approach. these two statements are just the latest in a chorus of republican lawmakers who have criticized the president's move. the white house has been hosing lawmakers here multiple times a week to try to listen to them and hear where they're coming from on this clearly, there is a big divide between where the president wants to be on this and where the rest of the republican party is >> yeah, thank you so, where does that leave this announcement, mike is there a chance he walks it on back or is is there a chance he's emboldened because the president likes to be that guy who is doing everything you say -- >> i think it's hard to handicap whether he walks it back for that very reason i think when you have big companies and other republicans coming out and trying to raise a flag saying this is want a good idea, not a direction to go, it could raise the chance this is, as somebody else called it, a

tariff tantrum it's a market industrial tantrum that causes people to maybe rethink the thing that got the tantrum started in the first place. we'll see. i don't know how that plays. >> he hasn't signed anything either we also know he's very focused on the stock market so you have a few days of this in a row, it might hit home. >> courtney? >> you know what's interesting, this morning you had powell, who i think did an absolutely phenomenal job, stabilizing the market, clearing up uncertainty, being clear and concise at the hearings today but what mr. trump came in and said, look, my iron first is still alive and well at this juncture. whether anything actually happens or not, cease saying, i'm coming in here and this is what i'm going to say. unfortunately the markets, as stephanie highlighted, do not like uncertainty and that's what it's caused today. >> meantime, we have some nordstrom earnings out we have a bunch from this hour there's so much news to otherwise get to courtney reagan, how did they

do >> okay, so nordstrom for the fourth quarter putting up mixed quarter. missing on earnings, putting up $1.20. the street was looking for $1.24. revenue slightly better at $4.7 billion. consensus was for $4.62 billion. strong comparable sales, up 2.6% according to thomson reuters, the consensus was up over 1% again, the rack division is what led that charge. those comps were higher than the full line nordstrom stores though both were nicely positive if you look at the full year guidance, it's mixed full year guidance is above consensus but the revenue is light. shares of nordstrom are down 4% right now. no mention so far in the press release of anything about trying to take the company private. the conference call starts in a little bit >> thank you stakes are pretty high for nordstrom here to get better financing if they want to get this done and take the company private. >> as courtney says, if they

didn't mention it, there's no update on that, you're in march right now, if you're a retailer, you know what holiday did, you have guidance that's okay and not great. therefore, you back off after a good run in the stock. >> margins, margins, margins my suspicion -- maybe they're a little less bad. i think people think, well, if they don't think things are that great, are they having challenges on the private sdmrags. $55 a share is where people come out on the privatization it's 48 and change that makes sense to me >> nordstrom down 3%, a little more, after hours. we also have returns from american outdoor brands. how did they do? >> not good. the reason we're talking about outdoor brands, small companies, because they were known as smith and wesson given the recent news, the recent outcry, we will report these numbers for you.

american outdoor brands, eps of one penny better than expected but that's not the story the story is in sales. courtney reported nordstrom was a little better but this company missed estimates by nearly 10% the estimate for revenue, only a couple analysts cover smith & wesson but thet missed it by 10%. the estimate was for 172 they came in under 158 their guidance was absolutely dismal their guidance, guys, was for eps this quarter of 9 to 11 cents. the estimate was for 38 cents. we have seen a recent downticks for fbi requests we have seen that turned down. the ceo addressing that in the brief announcement coming out and saying, we believe the new lower levels of consumer firearm brands were reflected in the january nics numbers we'll continue for some time american outdoor brands not commenting on the recent

shooting in parkland, florida. not commenting on some of the moves by walmart and dick's sporting goods we'll monitor that 5:00 p.m. eastern conference call. the stock rose it's halted right now. based on that guidance, i would not be surprised if we saw a big downtick for aobc when it resumes trading. back to you. >> the only thing i would say on that, we were talking about this a day or so ago, when it sounds like the president might crack down and the shares of these companies fall, as they have, it's perhaps because the investors think crackdown, lower demand levels is really going to happen this time it's not just going to be a threat that spurs, for example, a stockpiling of guns as we've seen in the past. >> you're exactly right. in the past we have seen, whenever we had some of this, gun control talk, people rush out and they buy more guns or new guns here's the difference now. 2016, maybe because of the election, according to some analysts, was so strong that perhaps all the demand was

absorbed into 2016 that's really the story here there's the chart. that's sturm ruger that is american outdoor brands', i would say, biggest competitors. i don't know if vista outdoor is also trading these are makers of weapons. also the ar-style rifle, american outdoor brands is better known by its smith & wesson brands. sturm ruger down aobc not trading when it does, i have a sneaking suspicion you'll see it on cnbc. just a hunch back to you. >> thank you for keeping us posted there brian sullivan covering that courtney, thank you for covering these markets. we were just down 420 on the dow. we'll continue to digest the tariff news out of the white house. we have more breaking news from that white house eamon javers, what now >> that's right. nbc news is reporting the white house is preparing to replace h.r. mcmaster as national security adviser at the white house. h.r. mcmaster is the second

national security adviser here replacing michael flynn lasts year mack master and the president have not seen eye to eye the relationship has been rocky. the white house is taking steps to rethe place him in that role. the leading candidate, nbc news is reporting, is steven began, an vice president of governmental affairs for ford. it would be expected it would take him some time to wrap up his affairs there before he would start at the white house not clear when this change could be implemented i just talked to a white house official who said the building officially has no comment, no official reaction and no personnel announcements at this time the people in the west wing are not surprised to hear this news breaking a few moments ago given the president's relationship with h.r. mcmaster has been rocky one of the flashpoints has been a speech in which mcmaster said proof of russian meddling in the

u.s. election was incontrovertible and the president said there was nothing to match the results just one of the feuds the president has been having with officials here now nbc news reporting h.r. mcmaster is soon to leave the white house. back over to you >> it is interesting who's reportedly going to step in, if it's this ford executive not that i would remember offhand, but is it unusual to have them take on an nha role? >> this is a person who has experience under the obama administration but nobody i know well so i can't speak to his breadth of experience. national security adviser tends to be somebody out of the military intelligence, diplomatic worlds, but i'm sure if you look back in history, there have been some executives in that role as well. >> there was a secretary of defense who had been a ceo of ford motor company, robert

mcnamara in the '60s >> there you go. >> we'll see how they feel about the tariffs. >> a lot going on here. >> eamon, thank you. very busy day at the white house and another shakeup reportedly with h.r. mcmaster out as nsa adviser. we're watching the transports closely. see what message that sector is sending to investors on a day like this. plus, big caps versus the small. small did okay today and the amazing phone call bill ackman made to carl icahn. it's coming up before the break. today's biggest dow losers "closing bell" is back in two. each day our planet awakens with signs of opportunity. but with opportunity comes risk. and to manage this risk, the world turns to cme group. we help farmers lock in future prices, banks manage interest rate changes and airlines hedge fuel costs. all so they can manage their risks and move forward. it's simply a matter of following the signs.

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at what they do is indispensable, and i couldn't ask for a better partner. welcome back more earnings coming her way on gap this time, courtney reagan, how did they look? >> shares of gap are up after hours because it was a beat across the board for gap's fourth quarter earnings at 61 cents analysts were looking for 58 cents. revenue stronger than expected for gap at $4.78 billion the street was looking for $4.67 billion. comps up 5%. analyst consensus was up 1.7%. all of the major divisions, banana republic, old navy and gap outperformed expectations.

old navy continues to be the standout those comps up 9% for the quarter. gap increasing dividend 5% to 97 cents. they note margin expansion in the fourth quarter i know that was a concern with some of these retailers during the holiday and also appears the full-year earnings guidance is stronger than the street expected gap up almost 9% so far. >> not a bad pop for court fli how about steel stock. steel producers rallied after president trump announced the u.s. plans to institute tariffs on steel and aluminum. joining us for more are sandy, co-portfolio manager of the vilory balanced fund and victor jones, director of trading at td ameritrade kind of a wild session here. a lot of the steel names are small and mid-cap names. what should investors do on the

heels of this anounouncement >> you'll certainly see some major issues, if you will. i think what we're focused on is some smaller company companies will do better this is the trump trade. this is protectionism. this these are all the things that he's kind of stood for. if i have an opportunity to buy a steel company like nucore growing at 2%, i want to avoid companies like that and focus on bottom-up, fundamental stock picking. i think stock picking is back. that's the focus we have here at villere and company. >> we understand all the focus, we've had this focus, too, on the tariff move and how it seemed to push the market down in the afternoon but dialing back a little bit, looking at a bigger picture, where does this market sit it still seems it's trying to figure out how this corrective phase is going to go does it need to retest the lows? it's trying to find out the right value to place so i wonder where you see the general feel of the market

>> you take a look at volatility it remains in the marketplace. vix jumped another 13% today it touched 25. i think there's a general sense of optimism here and i actually think our clients have been much more cautious they looked last week on an abbreviated trading week light market volume heading into a big data week this week. they really worked on removing or pulling back on a lot of their exposure as the markets continue to be choppy. this is the third straight day -- second day in a row, by the way, yields are moving lower and you're continuing to see catalysts or reasons investors are looking to pull back for exposure i think our investors are cautious and very aware of the fact that when volatility spikes, correlations amongst all those sectors increased. take a look at the s&p 500 there weren't many prices to hide when you see a fairly weak market i think our clients are aware of that when you talk about rotating in small versus large cap names on a day like today, small cap only

lost less money than some of those larger cap high beta, high multiple cap names >> meanwhile, the chip space has been doing nicely here i don't know if they'll be much affected i guess if trade disputes got really bad, they could is that a space you like >> it's been good. you've seen it up about 35% in the last 12 months it's obviously been good we want to be very stock-specific we love a company called ciper semiconductors these guys are selling chips into the amazon exco and the apple home pod and nintendo switch and all the things that go along with the internet of things or the connectivity of the home as well as electric vehicles like tesla. we think you have to be very specific when you're choosing stocks in this kind of market. >> victor, do you think that could become leadership?

we talked a moment ago about how it was around this time last year that the tech trade turned on and the trump trade came off a little bit what do you think about the leadership now >> i think it's easy -- when you look at, let's say, low beta, high yielding stocks that those stocks become a little less attractive you also have to remember that a rising rate environment doesn't do many favors for bond principle either for that reason alone, i think if you take a look at some of those bond proxies, you know, telecom, you just mentioned earlier in the show that verizon held up fairly well today. some of those bond proxies made continue to be or may be attractive and hold up in a rising rate environment here just given the overall nature of the bond principle and what's happening in rising rate environments >> we'll see if that continues or not a lot of moving parts. victor jones, sandy, thank you both for joining us. >> thanks. >> some ideas there in terms have how to play this one out.

it was a volatile day against for the market let's take a look back at our rapid recap. >> good morning. for the bulls, good riddance to february >> this is not an easy economic outlook because there are too many variables, which we haven't seen in recent decades. >> we're moments away from the fed chair semiannual monetary report to the senate. >> to prolong the recovery, the committee's view is we should continue on this gradual path of the rate increases, which balances lower inflation and low wages against the need to make sure we don't run too far past the natural rate of unemployment. >> the president of the united states has said he is going to institute tariffs on imported steel and aluminum as soon as next week. >> when it comes to a time when our country can't make aluminum and steel, and somebody said it before and i will tell you, you almost don't have much of a

country. >> i'm not that much concerned about a trade war but i am somewhat, as i've said before, somewhat concerned about the overall market >> we are watching a big selloff in the market. the dow was up as much as 156 points earlier today right now down 350 points. >> dow going out with a decline of more than 430 points on the bell at the lows we were down 586 today. this after we started with a triple-digit rally >> dow is down 420, red for the year breaking news with kate rogers. >> we have a new statement from the business roundtable, an association that represents a wide cross-section of american businesses jamie dimon is currently the chairman of the business roundtable this is from their president and ceo, joshua bolton saying, quote, we strongly disagree with today's announcement because it will hurt the u.s. economy and american companies, workers and

consumers by raising prices and resulting in foreign retaliation against u.s. exporters using, quote, national security tools to implement tariffs would embolden other countries to impose national security tariffs on u.s. exporters or otherwise restrict u.s. goods and services sold to their markets. business roundtable shares the president's goal of addressing global overcapacity of steel and aluminum we urge the president to pursue other approaches that target unfair traders without putting various parts of the economy at such high risk such as strongly enforcing u.s. unfair trade laws. once again, that's a statement from the business roundtable back over to you let's get to more big stories. time for a news update with sue herera. >> we begin with ohio's governor, john kasich, who is backing an advisory panel's recommendation related to guns and background checks. that recommendation would include a ban on armor-piercing

ammunition and stricter compliance about entering data into the national background check system >> i'm very hopeful we can do this it will serve the people of the great state of ohio and if, in fact, we can carry this off, it also can be a significant model to other people in other countries. >> higher growing yields in tobacco is leading to a 12% growth rate there and almost $500 million in revenue. it's one of the few bright spots in that island's struggling economy. one of new york's most popular tourist destination will charge tourists more than have more than locals the metropolitan museum of art was suggesting a donation of $25 but most weren't paying it so now starting today those that don't live in new york state will be the 25 bucks suggested donation for new

yorkers will be $12. back to you. >> sue, thank you very much. null sue herera. president trump's tariff announcement sending investors running for the hills. up next, jim grant tells us how he thinks those tariffs could impact the market and the economy and whether he thinks the fed is behind the curve when it comes to raising interest rates right after this today, a focus on innovation in the southern tier is helping build the new new york. starting with advanced manufacturing that brings big ideas to life. and cutting-edge transportation development to connect those ideas to the world. along with urban redevelopment projects worthy of the world's top talent. all across new york state, we're building the new new york. to grow your business with us in new york state visit esd.ny.gov. to grow your business with us in new york state stay with me, mr. parker. when a critical patient is far from the hospital, the hospital must come to the patient.

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but prevagen helps your brain with an ingredient originally discovered... in jellyfish. in clinical trials, prevagen has been shown to improve short-term memory. prevagen. the name to remember. welcome back to "closing bell." i'm brian sullivan american outdoor brands, better

known by smith & wesson, has resumed trading after guidance showed a big drop in sales for firearms and that stock opened up down 20%. their guidance was for full year sales of $600 million. keep that in perspective two fiscal years ago, the election year, they did sales of just over $900 million so they're looking at a decline in sales of two years from $900 to about $600 million. a drop of 33% for american outdoor brand. that stock was over $30 a share a couple of years ago. now in the $7 and change range so, aobc, smith & wesson, down 20% after hours. demand for fire arms has simply declined dramatically over the last couple of weeks and month summer rug sturm ruger, its competitor, down 10% as well the firearm sales coming off a huge election year two years ago continued to decline in america. >> yeah, and declining demand.

thank you. american outdoor down about 23% now. a wild day on wall street as the president's proposed steel and aluminum tariff sent stocks lower no one seems to remember jay powell's testimony joining us to discuss us is jim grant. women come to you. you are the perfect person to have you're an economic and financial historian. tell us the significance of 25% steel, 10% aluminum tariffs would be. >> tariffs are bearish i think the preliminaries, at least a glance, what preceded the past month or so was the following -- boom time equity valuations, depression level interest rates and graveyard levels of volatility and that trio was not meant to be eternal so, i'm not sure that -- that the tariffs themselves were the

precipitating cause. i think there's been an aaccumulation of distortion that is principally visible in the interest rate markets. >> one question i have, though, is in that period of time when the market seemed a little out of whack, the economic funds were getting stronger. they appeared that way the data point toward strength and looked better than it had in a couple of years. do the tariffs undermine that? we're not talking about smoot hally, but the market is taking it as a significant step >> i think the market sees it as preliminary to more of the same. but, you know, to me, my publication is called interest rate observer, so -- i'm talking my book, as an example of where the world is mispricing interest rates. look to italy, which is having a big influence. not a certainty but possibility of populous change in italy. the italian ten-year sovereign is at 195, last time i looked,

and there is a speculative italian security -- telecom -- italian telecom. the 5.25 are trading at 0.61 that's a -- it's a junk bond with zero handle >> wow. >> so, that -- that's in euros, but these values or unvalues are communicated across the world through arbitrage. so, you know, the bond markets worldwide are living in their own hall of mirrors. interest rates are integral to the pricing of all capital assets these distortions preceded the rate uplift in all asset values and, perhaps, the culmination or the manifestation of the -- of the effects of these distortions. now are responsible in an important way for what we're seeing in markets. >> that arrangement you started

talking about, low volatility, high equity, low interest rates, have been disturbed, not up-ended, but how does it proceed from here? there's a lot of talk even among those who say this 35-year bull market in bonds is surely over but it need not be disorderly. if you look back to the 1940s, it was a very slow - >> in fact, it took ten years for the long data treasury to move from low of 1946 of 2.25 to 3.25 in 1956. >> ten years. >> ten basis points a year that was before risk parity, which is a new-fangled technique. before a lot of leverage now in the bond market for a lot of financial engineering. i expect the bear market will be faster than it was in 1946 through '56. that's a rank, of course, yes. >> if the equity markets looked like they had gotten ahead of themselves, out of whack, melt-up, whatever you want to call it, to start the year off,

where does that leave us now then is this a correction that puts us on a healthier trajectory or emblematic of, no, now there's more problems in fundamental issues we need to worry about? >> you have to ask, what was the error it's correcting? to me the error was misguided investment that takes the shape of white elephants in the corporate world. the persistence of zom businebi much of this because of very cheap price credit these are some of the excesses that preceded the correction this to me is the beginning of a value restoration project. this is for a value investor, this is a thank goodness, at least the possibility of some restoration of a margin of safety but in the bond market, you're nowhere near -- for example, the ten-year u.s. treasury, haven't been paying close attention today, let's call it 2.90.

>> 2.81. >> okay. if the rate of inflation is 2, that's 81 basis points, 0.8 a percentage point of real or adjusted rate yield. the average real rate over 50 years is 2-point something or other. so, there's very little value in the u.s. treasury. there is very little -- there's negative value in a lot of the bonds that mario draghi has been buying at copious quantities. >> does that mean -- final point here, but does that mean you think u.s. equities are one of the few places investors can safely go? >> i don't mean that at all. i simply don't know about the equity market. i don't know about a lot of markets, kelly but i don't think -- >> cash, gold, bitcoin >> not bitcoin and not ethereum. >> thank you especially on a day like this, jim grant. as we said, volatility is back in a big way.

we're back above 22 on that gauge. "fast money" traders dan nathan and guy adami are here to talk more about this. guys, good to see you. dan, start us off here with just some thoughts on, what is 2 i2. on the vix say to you? >> for years after the financial crisis we got very used to a vix that was in and around 20. long-term average of the vix before the last couple of years was about 20 so, here we are now, up from high single digits a month ago to now a range somewhere in the midteens to mid20s here. what that means is the markets it's measuring are going to move around 2 to 3% on a daily basis. for traders who will tune into "fast money" in a little bit, they like that volatility. for the first time it's giving them the opportunity to help pick stocks again, look at catalysts and kind of move around more on a short-term basis. for investors, if we get a sustained selloff, it gives them the opportunity to average into some of these great stories that

have been massive outperformers the last couple of years i think the volatility will present opportunity after a very low vol period which is very hard for stock pickers, in my opinion. >> guy, do you welcome it? people will look at it and go, you know what, it's turmoil in washington it's, you know, the tariffs are going to hurt the economy, it's the gdp number looks like it's 1.7% it's ate litany of problems. do you think we have those problems >> trade the markets you have, not the one you want which means doesn't matter if i welcome it or not. it was a week ago, if you recall, who was sitting next to you? it was me. that was the day the market spiked higher on the back of fed comments and closed significantly lower on the day i said to you, vol is too cheap and vol is here to stay. you said really? i said, really here we are 15% to 20% higher. what does it mean?

that was before this whole tariff stuff i think vol is here to stay. doesn't matter if i want it to be or not. it's here and you have to embrace it i think the downside will still be tested. that's something i said a week ago and something i state to you once again right now >> how do you say volatility in french >> it's don't know >> kind of sounds like a french word >> voila. >> with an "e" instead of a "y"? >> you know the best volatility traders in the world are french. >> what? >> yes. >> i know there are some derivative traders in french banks that diplomat do so well we can get to that later. >> much more to come, as they said, beginning of next hour that's the sum total of any french i know. 5:00 p.m. tonight, "fast money." kate rogers joins us. >> we have quite a few earnings alerts here. we'll kick it off for splunk, reporting eps and revenue. the stock is higher by over 6%

right now. semiconductor company ambarella beat on top and bottom lines, higher by 4% and pure storage for the fourth quarter, the cloud company, also beat on the top and bottom lines. they're taking a big step lower. down now more than 9%. trying to figure out why this is their first profitable quarter they also had guidance in line barron's has a blog out and they're not sure why they have a conference call later today and we'll bring it back to you. >> i love a goods mystery. much more on the big market selloff on wall street today withhe d tow down 420 when we come back. most etfs only track a benchmark. flexshares etfs are built around the way investors think. with objectives like building capital for the future, managing portfolio risk and liquidity and generating income. that's real etf innovation. flexshares. built by investors, for investors.

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welcome back a down day for broad markets but an up day for the steel stocks after the president proposed 25% tariff on steel and 20% on aluminum. jackie deangles is here with a look >> that's right, a big question. the market was reacting to the news of tariffs imposed on imports of the steel and aluminum throughout the day. where do the majority of these materials come from currently internationally? from the pie chart the most recent figures we have ihs global trade atlas have canada, brazil and south korea have the top three sources for steel imports. mexico, russia, turkey and japan are key as well.

surprisingly china was 11. so it didn't make this pie specifically but also is still significant. remember the steel issue came into focus when president trump mandated steel for domestic pipelines be made here in the united states. now that grade of steel has been source aid broad for years there have been questions whether it is even possible to make here and in volumes needed. and aluminum according to the u.s. geological survey canada, russia, the uae and china are the sources. >> that goes to show again why kudlow earlier was emphasizing why this could be a nafta issues thank you jackie deangles. builders and more when we come back. since i added futures, i have access to the oil markets and gold markets.

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welcome back and it is time for our takeaway today. by begin with the bye back boom. companies have announced more than 200 billion, upwards of $210 billion now in share buybacks just the past three months thanks in large part to the trump corporate tax cuts they have done this despite heavy criticism of using the tax cut proceeds in this way now i'm surprised just because share prices are still so high and they keep buying but for the markets, will there buyback behavior continue to support prices even after if selloffs we're seeing? >> i think it is one piece of the bull case. i don't think it is a linnier effect of those stocks go up or the whole market goes up i also it is logical just standard operating procedures right now despite the criticism. >> if it doesn't go higher, is that a risk for the markets?

>> that number doesn't go up i don't think it is a great risk actually we were off peak last year in terms of the buy back volume. next lumber costs have been soaring too. not just supply being tight. tariffs between u.s. and canada have effected prices and exacerbated shortages. lum futures are at 50, 50 percent in 14 months i imagine it is not helping the housing market. >> it is not helping home builders for sure. lumber goes do on guide swings but i had been a trade spat which remember the u.s. accused canada of kind of improperly subsidizing the lumber industry and the rest of it i think it is a little bit of ab issue. also know people who said look how the home building stocks have taken a huge hit. lumber also should follow it down. >> so it is just that general anxiety. >> the volume.

>> and we'll see by the way, again, u.s. does this on steel and aluminum does canada say fine we make it worse for lumber these questions remain to be answered up next check on earnings after hours and what to look for as those calls get urntd way. pictur in the eastern united states supported by innovative packaging that extends the shelf life of foods and infrastructure upgrades that help us share our produce with the world. all across new york state, we're building the new new york. to grow your business with us in new york state, visit esd.ny.gov directv gives you more for your thing. your top-rated thing. that five stars, two thumbs up, 12-out-of-10, would recommend thing. because if you only want the best thing, you get the #1 thing.

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welcome back let's get another check on names moving on earns after hours. nordstrom down about 4%. gap up more than 8%. american outdoor down 17%. ambarella, pure storage and spelunk. ordinarily i might say okay. retailers are they going to set the tone for tomorrow, etc given everything that's happened today. what do you think is most important for tomorrow going forward? >>ness hi. we'll see if there are any reports characterizing this tariff move. whether the prospects of it actually happen and come out in the morning. >> watering it down a little. >> that's one. two the market and its done dynamics trading on its own ebb and flow and technicals not to much the headlines. >> and graham said the same thing. what tells us if things have gone through the collective process? >> nothing specifically.

when you put enough distance between the lows and new trend but i do think the processes play you will out over weeks and months typically. >> do does the vix have to get back down. >> it would have to go get down say we're on a glide path that is more comfortable. >> that does it for "closing bell" today. "fast money" begins right now. we have the big aluminum companies in the united states and they have been very unfairly treated by bad policy. by bad trade deals by other countries they have been horribly treated by other countries and they have not been properly represented. so we're going to build our steel industry back, and we're going to build our aluminum industry back. ♪ >> all right those were the words that took down the market today. the dow sinking more than 400 points at one point it was down nearly 600 at the lows.