easier to the deregulation side, but a lot of things that took this economy where it is were already in place i think he's getting the benefit of that, which is fine he's going to take credit for it i think that's fine. the fact that the economy is doing well ends up being extremely positive for people, because that's all everybody is looking at. >> good to have you here we'll do final trades on twitter. we'll send those out "power lunch" begins right now. and facebook under fire yet again. that stock is taking a hit the likes of which it hasn't seen in many a moon. ceo mark zuckerberg facing his biggest test ever on new concerns on how data is being

mined. is regulation coming to big, and i mean the biggest of the big tech names morningstar planning to launch its own line of mutual funds to compete with the funds it rates. "power lunch" starts right now all major averages sliding the dow had been down by thor man 390 points at the session low. we're down by for 37 right now the nasdaq down the moth facebook is down in correction levels the stock below the 50, 100 and

200-day moving averages. we're watching the bond market yields on the two-year hitting the highest levels we're seeing a continuation of a flattening of the yield curve, pulling financials down in today asession the vix crossing 20. i'm michelle caruso-cabrera. thanks, melissa. uber reportedly halting ought ton mustn't cass tests in all cities after a fatality. more on this developeding story straight ahead walmart rolling out of installation services in its stores and twitter pledging to ban cryptocurrenciy ads. melissa? let's get straight to the broad sell-off

take a look at inferring energy dropped big in february, and frankly has never really covered the xle. return they popped, well, not recently generally thedown draft continues here with most of the material names down. banks were the last leadership to go. once inflation concerns went away bank had been down for the last week down about 2%. i don't mean just facebook if you look at pandora, groupon, snap, they're all feeling concerns generically what's it all about? social media in general is under scrutiny you can hear it from congressmen. more regulation.

just nose they are kneeal holders. four companies control 20% of facebook i contacted all four of them none of them had any coms, though there is an etf for that it was a big market leader it's started turning down. guys, back to you. >> thank you, bob. facebook shares moving much lower into correction levels yulia boston has more.

>> facebook shares are down about 7%'s lawmakers call for mark zuckerberg to testify and raise the specter of regulation, and announced an investigation into the potential vile into privacy laws. the developer illegally sold the data to cambridge annual lit could. this weekend's report say that the data is still out there and note that facebook failed for alert consumers whose data was harvested. facebook says we're in the process of conducting a

comprehensive review to determine the accuracy of the claims cambridge analytica, and another indication of systemic problems at fay fay, though the company's businesses woman be meaningfully impacted for now and now two former ftc officials who created the consent decree gonching the terms say the sharing of that harvested data may have violated that decree and could lead to? heavy fines. so, guys, the story seems to just be getting started. >> julia, thank you. what now for facebook and for ceo mark zuckerberg. could this lead to a wave of regulation joins joins -- isty, i'll start it off with you for what they could say to

potential regulators, what would it be? as far as they're concerned, they had done everything they could according to your reporting, s.c to ensure that the data would not be used improperly. >> exactly i think the first defense will be, look, as soon as we realized this was a problem, we shut it down they shut down the loophole that was allowing people to hoover up everyone's friends data. not only is your data exposed, but your friends' data was also exposed. final think they closed the loophole in 2015, about you what he won't have as clears as answer for, is facebook is still selling user data to any client that wants it. they have no way of auditing the clients. >> jimmy, what do you think the political will is to regulate the likes of a facebook. in europe it seems the wheel has already been there, right? germany's cartel office in december had issues about how

facebook actually used user data and whether or not users knowly consented. so is the will there here in the united states? >> i think it is i think the age of light, like internet and technology regulation is over i think it's only a matter of time before you do see more regulation i don't know if it would be as onerous as this general data protection regulation? europe, which would really move the power from companies to consumers. consumers would have to sort of opt in for the data to be used this is not a left or right issue, there are significant segments for different reasons that want to regulate these companies, and i think that's coming >> issie, talk about the possibilities in term of wort-care scenarios. jimmy brings up what europe is

doing, which would make it harder for facebook to monetize data >> i don't think we have the political will in terms of data protection, but i think it's going to take a public outcry. you see what's happening to the other social media stocks. it is google, twitter, all of these companies, and what doubleal advertising is reg hear consumers data we started uses they tools, because we thought they were valuable to us, but the upside is so much greater, so that political pressure i think will have to come from the -- >> this is not a simple story. they're hard to unpack, but the simple question is, is this foib eye jim achipotle moment, when

people realize the food ain't good there's a fundamental thing that's going to keep them from going back in the story? >> if it was the first thing, i would say absolutely not, but the fact it's come after the russian meddling issue, i think that might be a little over, but not by much. i think people like going on facebook people haven't seen too concerned about privacy, because they like what they're going i think he may want to stay in the trump hotel when he wants to here, but zuckerberg needs to give persuasive testimony. he needs to do it, and he better mate a good case if it's not exist inchally, is it a severely brand damaging moment >> i think this is a huge moment people have seen the warning

signs that data price sit was out of the chronic, but a lot of time that was suppose about in marketing. now i think peeker waking up to the fact that the same data check is fluent democracy, and i think the purpose is waking up to that. >> it raises the stakes tremendously. >> all right, guys, thank you. good 206 you on. >> thank you. coming up, much more on this top story. people really going to stop

using it facebook isn't the only thing sending stocks lower today, though what also is bothers the market as we see it lower by almost 2%. power is going to be right back.

taking abig hit primarily today because of facebook's drop caterpillar the biggest loser in the dow. it's of note that the s&p 500 is down 1.9%. for the year we have erased a lot of our gains some winners in today's sell-off, yes and signet jewelers leading s&p 500 right now. so regulation fears on names like notice foib, google, getting the lion's share of the blame, could wall street also be fearing the bigger role the fed is about to play in this market? let's bring in david and nancy good to have you here, nancy, everybody is pointing to facebook, thebig silloff in f.a.n.g. is that just an excuse to take profits in a late stage of the rally >> i think it's a bit of both.

thanks for having me volatility rules that's the new rule, the dominant factor we need to face. i think this is a time for active investors to sign that said, fed uncertainties, d.c. in the short term, not long term but short term. no other big news except for the fed and the worries about wage pressure and inflation, though those seems to be bouncing around, and retail in an up trend, though choppy, have investors on edge. don't forget that stocks have deconnected from yields. they're moving in the opposite direction. that has happened for a long time, and the market is trying to make an adjustment, i think. >> david, we're watching that judgment the industrials' intercession are at the lows of the session -- recovered a bit a 1 mountain 75% for the dow industrials. what do you think is going on here as nancy points out, one big

concern may by jay powell's first big meeting and what he'll say at the first news conference david? >> persons, whether it's greenspan, volcker, bernanke, they've all been tested. that's likely the case i think the market is waking up there would be four rate hikes, not three. as a result of midday, the average stop in the s&p 500 is off 12% from its 52-week high. it's a natural retest of what we saw in the month of february it's likely to continue, but i think 2015 still ends up being a pretty solid year for stocks in this mini-gut check. >> what's a solid year, david? >> if you go backto what's the critical factor, it's cash flow, free cash flow margin still better than 10%, companies are still quite sensible in their

use or allocation. that's still very positive even on a rising interest rate environment, the real interest rates are the after-tax cost to capital. that's all a pretty good backdrop that makes stocks look good. >> well, i was just going to ask nancy, where would you be putting money? you think it's time for active management and having someone actively doing it. why do you say that and then follow it through, and tell me where you would be putting money? >> they have gotten very low, and as historic lows, which argues for active management

in addition, as value managers we've been ability to outperform the index -- actually over the last five with regularity. we look for valuation, for dividend growth and for management teams that are responsible in the redeployment of capital we are overweight technology, we're overweight in old tech, as you've heard me talk about while we have owned some of the associate media stocks, over-vail worries. where you see -- are you concerned about the impact the etfs are having? a lot of stocks you own, you may not own fang, but some of these are being dragged down by heavy weighting on the qs which are confidely owned. >> yes, i am i think etfs have been untested,

and when we have tested them, they haven't performed well. that does bother me as a stock-specific investor, but it's a short-term phenomenon typically, or we expect it to be so we use it as an opportunity to upgrade the quality of our holdings and places where we want to be exposed this is a time for us to get --sh. >> are either of you. >> no. >> no. >> not that it doesn't have a great long-term secular story, but not a buying point today even on a 7% sell-off. both nancy and i are active managers we get up every day trying to beat the index be way of active managers who say it's a great stock pickers' market, but i think active management does have a tailwind in an environment where they'll give you compound returns. the active manager has a much

better chance to add value. >> tell me why facebook is a no. >> i own it, just not as much. we reduced our holdings from one of the largest down to a modest holdings if it gets another 5% or 20% feat terr, with you would step our toeing back in, just like we did with apple. >> thank you >> thank you. a big sell-off on wall street today, as you can see right there, what apple is reportedly doing some secrets that's sdienng some shares sharply lower, and more, next on "power lunch." run your business at cloud speed. and do more with systems you have in place. the ibm cloud. the cloud for smarter business.

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masters championship julia "hurricane" hawkins setting a new report in the 60-meter dash. she's 102 years old. men's division look at orville. >> wow, amazing. >> faster than me. >> 60 meters in 19 seconds way to go. >>. testimony to moving year body. coming up morning did not star has been the gold standard, but now the value of that rating has been called into question because of a big move that they are made this we have an exclusive interview with the head of morningstar. and we're all over today's market sell-off. the dow plunging, now down 433 points goldman sachs, 3m and cleslointhr are leadg e

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hello, everyone, i'm sue herera after a fourth bomb rocked austin in the last month, authorities are asking for the public's help in catching what they say is a serial bomber in that city. the latest explosion injured two men sunday night >> the belief we are dealing with someone who is using trip wires shows a higher level of sophistication, a higher level of skill so now we are implore the community, if you see any suspicious object or item that looks out of place, do not even approach it, but instead call 911. russian president putin says russia will seek constructive tying with other countries and will not speed up some kind of arms race. he was speaking this morning to his rivals in the russian presidential election, which he won by a landslide the s.e.c. announcing the highest ever dodd/frank whistle

blew monetary awards two will share $50 million while a third $33 million. the previous high award was back in 2014. we're seeing a broad sell-off we're down by 450 points, s&p 500 is down by almost 2%. nasdaq is the biggest loser, down 2.5%. it is of note that all 11 s&p sectors are in the red, even the utilities, though they are the best so far. for a very long time morningstar has been the destination, the gold standard for millions of investors trying to decide where to po you their money in mutual funds and etfs now it launches its own etf

mutual fund. a lot to balance for the new ceo of morningstar mr. kapur. welcome. good to have you with us. >> thanks for having me. >> let's talk about your new brand of mutual funds. i think a lot of people who are family with morningstar don't even know you have a money management business that is quite significant to you tell us about it and what percent of your total revenues it represents. >> we've been managing money through advisers for more than a decade now, and it's a

significant portion of our business we have continued to look at ways to reduce costs there, so the move is fundamentally about lowering costs, and, you know, really trying to continue to meet the demand that investors have, and our mission of making sure we deliver a great outcome to them. >> as a percentage of revenues, how often is that? >> we're not at liberty to discuss that yet, but certainly it's one of the top areas we are investing in today >> let mess understand how this new line of funds will operate as i understand it for those financial advisers who choose to put a portion of their money with morningstar, instead of you have going out and picking third-party mutual funds

or etfs to put money in, that money will now go into morningstar managed funds, where you pick the individual manager, so you cut out a layer of fees, but where do you find those individual managers? will they be exclusive to you? do they work for wellton or capital research fidelity tell mu about it >> today we ute lies they are-party mutual funds, many of the names you were referencing going forward we'll look at the universe, so you can expect some of the managers will translate over to our funds as well, but i think the opportunity for us is to go to managers who maybe don't have mutual funds and may be managing money separately as well

certainly many of the managers who are well known -- >> so some of the managers you will employ will be existing mutual funds managers who work for some of the brands that we're aware of others may be money managers who we're not so familiar with the let me cut to the question of, your big, the core of it has been publishing data and rating mutual funds how are you going to walk that fine line between rating other people's funds and morningstar's funds? >> what i would say is we've been managing money over a decade already, and if you look at the way we kind of manage the wall between our research analysts and our investment management operation, it's a pretty tough wall to penetrate we intend to keep it that way.

certainly it's the case that our investment management folks use our research analyst work just like any other investor, but we keep those two things separate you'll see our analysts don't hesitate to say what's on their mind. >> so will you be rating the funds that you offer >> so there's two ways of thinking about this. one is we have a quantitative star rating on all funds, so certainly where there's no human input involved and straight methodology, we'll absolutely include it to that way, but to the extent there's an analyst rating involved, it will nod have a rating. we absolutely do not provide a rating on morningstar itself

if you go to your website and see morningstar fund, you will rate it? >> we will do a quantitative star rating, but not a qualitative from our analysts. >> why wouldn't i as a use of of your website historically not think, hmm, i wonder how honest a rating could be? >> good question a quantitative rating is devoid of any human input, so there's no input on the side of anybody that could change the methodology >> so it's, what, performance? what are those inputs, i assume? >> basically risk and return that are the two primary drivers of the star rating. >> if i turn to the page ultimately when they things go to the s.e.c. and turn to the page for morningstar, whatever

it is, active groult fund, i will see a rating when they get old enough to request of for that. >> that's right, three years, but there will not be the classic analysts write-up where that fund is southboundtively evaluated, am i understanding correctly? >> that's right. >> so you'll have a chinese wall or separation of church and state, right >> yes that's what we've had for a long time now we just plan to continue that. >> what hack the reaction of your competitors >> i think the and want to be in the funds, and certainly everybody would like us to have success certainly the advisers

that we works with are very, very excite d. >> let's go back with the question of the morningstar owned and operated funds let's go back to the controversy last fall. it does stash some controversy, the "wall street journal's" artic article, 9 thesis of which was the star ratings that you innovated and are used by financial advisers and consumers to try to narrow down the funds were not predictive insofar as they were backward-looking here's the cores -- they were especially stark of those that merited the five star badge, a mere 10% earned five stars for their performance over the following three years, only 7% merited five stars for the following five years, and 6%

did for ten years. for the all the measures periods, a five start domestic equity fund was more likely to turn into a one-star performer than repeat. how do you respond to that >> so, tyler, i think, as you had may be aware, we responded by basically a cut of the data ourselves, the way we looked at it the journalist from our per spect timp cherry picked certainly points to make the story they wanted to write we feel comfortable with the -- we've published all the data on our site, and provided the appropriate context. the -- >> how did they cherry pick it explain that to me. >> they picked certain investment types and periods that essentially, you know, made the story in the way they wanted to portray it, but fundamentally if you looked across the universes and the time periods

that are pertinent to investors, the story is quite different at the end of 9 day, one of most important things to remember is one of the factors that tends to drive the star rating is experiences. we all really know that expenses are pretty predictive of what the outcomes end up being, so it's difficult to argue that the data they picket together actually works. whether a five start fund repeats or whatever, would you say that the five-star funds if subsequently are more inclined on outperform their peers or underperform their peers >> our data tended to show that the ratings were predictive in concert with other data point that we publish. if you now even look at our qualitative star rating -- or qualitative ratings, which is done by or analysts, it lines up

nicely in terms of the peretziveness of the highest rated funds, our gold rated funds. >> i'll tell you kunal, what i look at at the morningstar page -- >> let him get the earpiece in >> i don't pay as much attention to the star ratings, because i view them as an amalgam of the sharp ratio, volatility and performance. i look at the percentile rate. if i can find a fund that is in the top 10%, top 20 and top 40, 1, 3, 5 and 10 years, i think i've got a fund that is going to more likely outperform. >> i think those are good ways

of looking at it i personally also like to look at the bear mark performance we've got in a bull market for a while now, so it's always good to go back and do a reality check. >> kunal, thank you very much. >> absolutely. thank you for having me. we appreciate it down to chicago, where rick santelli is striking the action. hey, ricks terr. >> hey, everything was focus odd the two-year yield, it almost tided at 2.32, but you can see it's given up. look at one week of tens we're spending an awful lot of time in the low part of this range, but it is still the 17th day being in the range let's look overseas. if you look at a year to date of the french note, it's only up only four basis points

ten-year u.s. treasuries are up ten, it's basketly down. it settled an 202. and finally look at the mexican ten-year, closed lastyear at 7.65, hovering around 7.64 there's a lot of pressure in 2018 on rates, but unlike 18, it's starting to come down michelle, back to you. thank you so much. back to the stock market it's a broad-based sell-off 89 the nasdaq with the biggest drop, led by facebook, in correction territory there's one green. >> barely up we're going to head live to the nasdaq for a check of the

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let's get to bertha coombs at the nasdaq. >> in a sense ground zero today, after closed at a fresh record high one week ago today, now down more than 4% from the intraday high, though we are trading at moderate volume, not the case for facebook, seeing its worth single-day decline in four years, one of the top ten worst days since it's gone public that's having a big effect on

tech overall the mega-cap names, when you think about amazon, apple, alphabet, all having designs on the $3 trillion health care market, how they handle data low pressure nickingly a bigger, bigger question, as far as any stocks here, on the nasdaq, tough to find anything in the green, all of the major tech sectors are moving lower, sort of a double whammy with news that apple may be he developing its over -- but one stock -- orbitech for 4.3 billion $seriously bucking the trend, up about 6%. >> thank you, birth that. let's get more, kenny polcari is a cnbc contributor. also kevin car ron, at

washington crossing advisers kenny, i'll start it out with you. is it orderly? >> it's orderly, not by any stretch panicky. the volume is only 345 million on the floor, which is not a lot kerr the extend of the sell-off, but to be honest with you, i think a lot of people have been having the market test lower, where we had the disaster six weeks ago. i don't think people really believed that it was going to hold in fact, i think this is playing out a lot of expectations, which is why i don't think you're getting the panicking feel the problem is last week investors thought it was a buying opportunity, because we saw inflows reach record highs that doesn't set us up for a buy the dip sort of mentality. >> if you think about where we are. we've had a lot of really good

things going on. in fact the stock market has rallied strongly over the last couple years a lot of it has been justified by fundamentals. you've seen earnings forecast rise to about 160 there's, looking for the s&p 500 from about 130 in 2017. when you look at investor appear tide, you're seeing the same things significantly after the tax that is since the market bottomed those spreads have widened, so you're getting some contradictory signals, and i think this was a market looking to figure out what happens next after good things have -- >> we could just get used to 400-point moves, right this is the way it's going to be >> that's what it feels like but it's about time.

all of 2017 we really didn't do anything, so there's more volatility coming back, but like you just said, i think you have to expect the market will test lower, and make sure -- and we'll start to move ahead, but why i'm not so sure that anyone should be panicky about it >> kevin, in a couple days, will we get sort of an all clear? don't a lot of the jitters surround the fact jay powell is going to have his first news conference as fed chair and the last time he testified in front of congress, we had a market tantrum. he sounded hawkish and we had a tantrum. are we in for the same so by the end of the week this will be like a distant memory? >> yeah, i think we're going to see -- i think we're going to see a rate increase on wednesday, but a lot of that has been very well discounted into the cash markets already, the market is really expecting to see a move but beyond that, it's going to be a lot about what is said

about the future path for interest rates everyone knows that rates are moving higher, so it's a question of how fast and if they're moving higher because the economy is doing better, that's one thing if they're moving higher because inflation is picking up, and really pushing those, the fed to move more rapidly than the market is expecting, that could be a problem >> kenny, if jay powell telegraphs four hikes this year, does it matter in investors' view that day whether it's for a good reason or bad reason or just four hikes and that's too many >> i think four hikes is going to be viewed as more bearish so i think the market will suffer a little bit. it certainly is expecting three. i think four, they're on the edge a little bit. >> going to leave it there thanks >> thank you all right, we have news coming out of the white house related to venezuela eamon javers has the news alert. >> hi, michelle. 12:13 p.m. eastern daylite time is the time stamp on the new

executive order from president trump blocking u.s. persons from engaging in transaction involving cryptocurrency issued by the venezuelan government the president issuing that executive order at 12:15 thereafter, all of those transactions will be prohibited. the white house not putting out a lot of detail on exactly why they took this step. obviously, there are concerns here that cryptocurrency issued by that government could be used to do an end run around sanctions in place by the united states as a way for the venezuelan regime to raise capital. we'll see what the administration says through the afternoon, but 12:15 and beyond, you can't engage in transactions if you're in the u.s. and you're a u.s. person in that cryptocurrency >> that ico is supposed to happen tomorrow. treasury had already given some verbiage on this suggesting that to be involved would be some kind of violation of the sanctions not being able to lend money to the venezuelan government, for example, and seeing perhaps the purchase of this as being a way to give them money. i suppose this executive order kind of like makes it very

clear. >> hammers home the point. >> it does thank you, eamon >> you bet >> stocks are picking up their losses since power lunch began the dow dropping more than 480 points at its lows we have bounced off those lows just a bit we're down by about 399 right now. >> apple and tez law both down today along with the broader markets. what analysts are saying about re me mi uinndorcongp stet talk. 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. before investing consider the fund's investment objectives, risks, charges and expenses. go to flexshares.com for a prospectus containing this information. read it carefully. when it comes to travel, i sweat the details. late checkout... ...down-alternative pillows...

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analyst recommendations on the stocks you need to know about. we kick it off with tesla. reiterating the sell rating. data suggests the first quarter deliveries will be disappointing. the firm says it believes tesla is tracking below the 2018 model. the analyst goes on to say while monthly model redeliveries are showing improvement, they estimate they will fall short of expectations the price target remains $250. >> they weren't distracted by the rocket launches? guess not. okay, third stock is apple, numura instunet loweringilities iphone forecast to only 221 million, down from 226 million that's about 3 million units below consensus estimates.

it shows little improvement in iphone demand in 2018. it suggests iphone expectations have yet to bottom and at&t pulled its buy one get one free promo for the iphone x after only two weeks rating maintaining its $175 price target, which is about 70 cents higher than where it is now. >> tyler >> thank you very much coming up, tech under fire the latest data disaster inviting even more d.c. meddling will facebook and the rest of big tech be hurt by this latest news or will they be like taylor swift and shake it off >> and we're all over the selloff. don't go anywhere. the secondouofpor" hr "we go begins after this short break.

i'm melissa lee. here's what's on inmenu. a big selloff to start what could be the most important week for your money so far this year. the fed getting ready to release its rate decision on wednesday investors expecting a hike the question is how many more hikes this year? should you change your strategy

or stay the course social showdown. facebook shares sinking over concerns over potential government regulation. is this a buying opportunity or is the company's business model at risk? >> and wide open spaces. toys "r" us just the latest in a string of bankruptcies and foreclosures what happens to all the empty space and what's the impact to its neighboring stores "power lunch" starts right now >> and indeed, welcome to hour number two of "power lunch." glad you could join us today the markets in selloff mode as tech stocks drag on the major indexes and right now, as you see there, the dow down 367 points s&p 500 off about 43 points and nasdaq is off 160. let me look here have to make sure my eyes are off. 165 points better than 2.21%, and a lot, a lot, a lot of the damage is in

tech it is also in energy it is also health care all 11 of the s&p 500 sectors are lower. all 30 stocks in the dow are in the red right now. caterpillar, dupont, goldman sachs, j & j leading lower facebook, the big loser of the day, as you probably know. now on pace for its worst day since 2012 the rest of the fang names also seeing red right now semi stocks taking a hit the smh and soxx are both on pace for their worst day in a month. the volatility index is spiking. crossing 20 for the first time since back on march 7th, michelle >> thank you i'm michelle caruso-cabrera. and here's what else is happening at this hour twitter planning to ban cryptocurrency ads from its platform following similar moves by facebook and google the ban expected to be announced soon newal brands says it will appoint carl icahn's four nominees to its board.

icahn will back the rest of their board at the meeting >> and according to reports, volkswagen will spend $340 million to build a new su vurx at a tennessee plant the announcement is expected to come this week melissa, over to you >> let's get back to the markets. a down day on wall street joined by tech. mike and bob join us from the floor of the exchange. mike, you were talking about the nervous neutral state of the markets, looks like the markets got tweaked here >> a little more nervous, less neutral than 8:00 a.m., although i will say with the s&p at the 2700, the 2700 mag level has been a magnet for both sides it's also about halfway between the january highs, up 170 points, and the lows of february, down 170 into the intra day lows it's still oscillating around this area, but obviously, the market had no good answer for the severe weakness in the big tech stocks today.

the banks didn't take up the slack, so now it's a risk. >> it's a bit of a problem because this whole thing is not really about facebook. we had this culmination of a debate about the impact of social media for a year, when everyone is now finally realizing they're not so much the customers. they're the product. all of the social media are weak, and the concern here is how much regulation are we going to see not only here but europe and how is that going to impact growth that's the big issue secondarily, you look at the broader markets, showing them earlier. energy hasn't been bouncing at all. never recovered from the february lows. we have the material names bounce briefly on the tariff issues and now all the steel stocks are been coming back down we have other sectors nat aren't doing anything like banks as well once the ten-years stop going up after the cpi report, we are been stuck there's no new leadership groups coming forward to take up the slack. >> at the same time, when do we start getting concerned either mike or bob, about a lot of the funds that were designed around low volatility, the risk parity

funds. we see volatility spikes like today, like we have seen in recent weeks, do you start getting worried, mike? >> i would say a day like today is a good test, right? you have the vix up a pretty big percentage move, which is kind of what some of the inverse funds were keyed off of. we're not necessarily, i don't think, seeing people brace for anything too violent at the close or after the close, but this will be a test for something like that. we're not seeing rates go up a lot. you don't have all the ingredients of people having to back off from both sides of the portfolio, but i do think we're still on alert for these things. >> still only one inverse fund really left of any size at this point. i think the broader concerns here, if you look at the market and the volume we're seeing, nobody is really heading to the exits in large numbers the volume is on the moderate side nobody is buying either. so the bids have evaporated. nobody is trying to rush in. we're sort of in this odd equilibrium where the markets drifted lower on no panic but no interest on buying on the dips

a strange equilibrium. >> feels like a day where the volume will pick up in the last half hour of it trading session. we'll check in with you again. thanks so much >> let's get more on today's selloff and what investors should be doing as we count down to the fed decision this wednesday in one day, 24 hours, 54 minutes, and 2 seconds. david kelly is chief global strategist with jpmorgan funds, and james norman is portfolio manager with qs investors. welcome to both of you david, let me go back to a question that melissa or michelle asked which hour, i can't remember which one of you, forgive me where are you on whether there will be three interest rate hikes this year or four, and if there are four, will it really matter to the markets? >> well, i think the problem is the uncertainty matters to markets. i tried to figure it out over the weekend. i went through all the dots and tried to assign different fed members it, and it's really a knife edge on wednesday as to whether they go three or four in

terms of the projection. my guess is they'll probably say three, actually. if i had to guess, i would say three. maybe they'll give us four, but i think it's the uncertainty hurting the markets. there's nothing really wrong with four rate hikes you have uncertainty about tariffs, uncertainty about interest rates, uncertainty about politics that's what's weighing on the market >> james, does it matter whether it's three or four and is there an argument that the fed should move faster, not gradually >> alt the end of the day, i don't think it really does matter whether it's three or four it really will be data dependent. what i think is important to see is what is the impact to the markets. we saw certainly today, with technoc stocks, they really got hurt today it was fears of expectations of growth can they keep greeing so fast snathat's the concern in the markets generally about the fed. if they tighten either three or four, is that really going to slow things down with the other uncertainty that david talked about, which is political uncertainty, around tariffs and

other things really, it's more how do you position yourself to deal with that type of uncertainty and what are the opportunities >> how do you position yourself right now, particularly, you brought them up, all these te technology stocks. facebook is a prime example. people are worried about whethe they're going to bring in enough revenue. that's because of fear of potential regulation, correct? >> correct how do you do that, especially when you think of how narrow the market has been. last year, five stocks generated about 25% of the returns in the s&p 500. year to date, it's been 40% from five stocks. a very narrow growth market. growth has outperforms value >> doesn't that happen late in the cycle when you see that very narrow breadth, doesn't it make you nervous, and where do you come down on a stock like facebook >> after we have seen this growth outperform value, you want to move towards more value stocks we would say less of the traditional value stocks which can be more volatile you really want to focus on more

defensive equity income stocks the stocks that will do well when there's more volatility and growth is challenged more because the extra income, the stability of income, adds to the total return >> such as what, dividend paying stocks >> absolutely. something where they become much cheaper than they were, let's say six to 12 months ago you want the sustainable dividend payers. you can get 4% yield without that much difficulty in a diversified portfolio. >> david, is there a case to be less gradualist and more sort of aggressive >> no, there's certainly a case they should have moved a long time ago at this point, we're not that far away from neutral in this economy. i think it's fine if they move three or four times this year. and i think the markets will do okay under that, but i do think i agree that i would rather be overweight value rather than growth in this environment the other thing i would rather be overweight international still. i think there's more valuation opportunity there. so overall, i don't think the u.s. market's in that much

trouble, but there are better opportunities overseas >> what about fixed income what do i do if i'm a bond fund holder >> you need it in there because something could go wrong but it's not as good an insurance policy as it used to be i will still say be relatively short duration rising rates in general, if we get the three or four rate hikes. it's going to push long-term rates up it's a dream to say long-term rates won't move up. that will move up, it will hurt high-quality long duration bonds. i would be short duration. i still like high yield a little bit here i like local currency emerging market debt. over all, you have to take your lumps and have fixed income in a portfolio. just be a little underweight to where you would be >> thanks. appreciate you being here. >> here's what else is coming up on "power lunch. when retailers like toys "r" us, radio shacks, and circuit city close their doors, what happens to the malls where they used to be retail's problem with dead space straight ahead plus, as we mentioned, facebook shares are falling after reports that cambridge

analytica mined the data of over 50 million users without facebook and without the user's permission is that a buying opportunity plus, much more on the market selloff when "power lunch" returns here's a look at the s&p 500 sector heat map. you can see, every single seconder in the red with technology the worst performer, down 2.4%. ♪ ♪ fight security threats 60 times faster with ai that sees threats coming. the ibm cloud. the cloud for smarter business.

the ibm cloud. so what else is new? humm..she's doing good. she needs more care though. she wants to stay in her house. i don't know even where to start with that. first, let's take a look at your financial plan and see what we can do. ok, so we've got... we'll listen. we'll talk. we'll plan. baird.

gap and signet jewelers bright spots in today's selloff. the two top gainers in the s&p 500 right now. some of the biggest names in retail are in las vegas for the hop stock commerce, talking e-commerce, big data and the future of the sector courtney reagan is there talking to the industry. >> it's a unique conference because it brings together really all of the big players in the retail industry. you have the established players and also the start-ups the tech companies and even venture capital. everybody is looking for the next big idea in retail to keep shoppers coming back macy's is rolling out a virtual reality program in 60 stores so that shoppers can actually see how furniture will look in their living room before they commit to buy it. >> it's increasing what they buy

in that purchase, and it's decreasing the amount that they return because they have already kind of tested it they already kind of feel that the shape and the size is going to work in their home environment. you don't have to have a physical sample in the store, and that's why the furniture space can be half of what they are today to do the same level of volume. >> but infusing technology into retail really only works if that's what shoppers are looking for. westfield co ceo steve lowey said he thinks retailers are massively behind when it comes to understanding what shoppers really want. he's the chairman of one market and he's working to change that. >> the retail industry, and anything associated with the retailing industry, really needs to focus on servicing its consumer much better than it is. it's currently really boxing with a hand behind its back because they're only working with their own data. they don't really have the

ability to share data across the networks so they can better understand their consumer. >> another thing the retail industry is concerned about, of course, is what happens if there are tariffs slapped across goods that would affect the prices that consumers pay a number of the retail lobbying groups senting a letter to washington urging the administration to not institute tariffs. back over to you >> very worried about that thanks so much >> let's talk more on the state of retail, what needs to be done to improve our malls let's bring in a pair of industry insiders. steve is former ceo of sac's, and amanda is at syracuse university, after a long career in the retail industry steve, i don't know you saw the article in "the new york times" magazine a week or so ago about the new nordstroms in new york city they're going to have a storewide liquor license did you read that and think why didn't i do that >> we had a liquor license >> for the whole store

>> no, in the restaurant >> would that work you think it's a good idea >> it's a part of the notion of experiences in the store you have to make the store fun you have to make people feel like they want to be there and they're part of something bigger than just buying products. >> when i was a waitress, when you worked the overnight shift at the pancake house on friday to saturday night from 11:00 to 3:00 a.m >> is that what you did? >> that was the most profitable. >> no, i worked at pizza hut that was the most profitable time to be a waitress was drunk people spend more money and leave bigger tips. only being half joking, but when it comes to adding a liquor license in a department store, is that part of improving the experience >> i think it can be part of improving experience, certainly. i think steve's point is actually the core of it. i mean, people keep talking about a retail apocalypse that we're in now the fact is people are still spending money on eating and going out and shopping, and they want to socialize.

they're still human. but they want to do it in a way that is fundamentally different than what we were doing 40 years ago, in a one-level mall with a smelly food court in the center. that's changed and that's not going to -- we're not going back to that at any time soon as far as i'm concerned. so whatever it takes to make it fun, to go out and do more than just buy products, is probably going to win this game >> so all this dead space that we see in malls, we see people putting in places to work out, because they think, oh, people come more often to work out. that's a good idea we're going to see more of that? >> all kinds of things health centers, education, medical centers for the dead space. i wouldn't focus on thedead space, though. i would focus on let's say there are 1200 malls in america right now, and 800 of them are going to survive and 400 of them will go away. the top a-malls are what we're looking at and are going to grow very nicely. i look at things like hudson

yards or the pacific grove or shorthills or some of these great malls, they're innovating, bringing in higher-end food, not just the food court, they're bringing in really types of experiences. they're bringing in pop-up shops, innovating in terms of what the consumer gets the dog malls, these ones that are going away, they should go away >> not that the restaurants are any more feeding off the sac's being the destination at that mall but maybe the restaurants also have to be destinations >> absolute. in fact, the reverse i was in brickle center down in miami this weekend the food court down there is nothing like what you would assume a food court used to be >> amanda, what are other ideas you think malls need to do at this point in order to improve traffic and get people to come back >> well, i think people are trying things, but i think we're in a renaissance for the mall right now. one of the things that is really key is to keep trying things,

and maybe multiple things at the same time. so we have had a sort of bunch of rules around malls for decades that need to be broken, like you don't have residential in malls well, why not? why don't you create some of these dead spaces into mini villages so you would have a place to live with a place to shop, with a place to work out, with a place to maybe go to a luxury movie theater and have dinner why are we always segregating so much around here, we can't even go to a grocery store in a mall. that's ludicrous to me >> amanda's point is right look at hudson yards >> here in new york city, for people who don't know what it is >> hudson yards is just opening. it's got offices, residential, phenomenal retail that's coming in probably some of the best dining around that's the future of the mall. and that's what you're starting to see in other areas around the country. >> that's creating a mini city amanda, hudson yards is being built from scratch in an area that was empty and dead. what do you do with something that's already existed for a long time?

it's hard to put residential on top of a structure that's already been in place? >> well, you have a whole lot of space out there. you have millions of square feet some of it, i agree, will not actually be useful because location is poor but by 2035, 1 in every 5 americans will be over 65. they're all looking for -- they will be looking for a different way of living. okay, we have millions of square feet and some of it in good locations. where we don't need all of the mall space we have we know that, with the revolution we had with technology in terms of more space, just for shopping so why don't we make these into mixed-use centers? there's plenty of space. you know, doughnuts of parking space surrounding every mall there's really a lot of space here, and some of it is in really good locations that could be completely transformed into new living areas with residential, with shopping, with eating, with everything there, which would be in many ways more

sustainable and attractive >> i thought, steeve, that the belief is that it's the poor location malls it's the class-c and d malls that are the dead space. >> that's right. >> but nobody will want to live there or create anything new, will they? can you build and they will come kind of thing? >> depends upon the location each one is going to be a specific instance. i think some of these should be torn down, and you know, either going to be dead space or you're going to repurpose it. could take it if it's a big mall in an interesting area, build a top golf they need ten acres, and people are dying togo and play golf at one of these things. it could be any number of these spaces, the dead space let's focus on where the consumer is healthy, by the way. we're talking about a consumer, retail growing at 4% the consumer shopping, so we have to find the right innovations. >> quick final thought it's hyperlocal and i apologize for viewers who are not familiar what do you think of the huge project, it used to be called

xana xanadu i can't tell what it is -- in new jersey >> they have been building that one for years and years. i hear and understand it's got a great mix use. it's got tenants from sack's fifth avenue down to entertainment, the concept is -- >> go-karts. >> the same people who developed mall of america. and that is a wonderful property out there. i don't know whether you're going to get the tourists to go out there, which is what they're banking on out in the meadowlands. >> shoppers collide with the jets fans, it's not going to be good when sac's shoppers collide with jet fans, it's not going to be nice thank you. it's merger mania in the defense sector we'll tell you about the deals in play as defense spending is poised to increase plus, facebook shares falling on concerns that regulation may be on the way after a data scandal after flying high for so long, is this the buying opportunity that many have been waiting for in facebook? we'll debate that. mercedes-benz glc...

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pain in the selloff with facebook feeling the brunt of it now $2 off the session lows. ow lchba itwo minutes.

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hello, everyone. i'm sue herera here's your cnbc news update at this hour. a tenants rights group and a new york city councilman announcing a new probe into kushner companies for allegedly falsifying dozens of work permits to force out rent-controlled tenants. >> we convene here today because kushner companies is breaking the law with reckless abandon. besieged by a torrent of lawsuits and investigations, a reprehensible pattern of misconduct has manifested itself across the company's 20,000 unit portfolio. where there is smoke, there is kushn kushner. >> ivanka trump in iowa today, meeting with students at the walky innovation and learning center she also took part in a roundtable discussion about iowa's approach to education and the skills training opportunities that that state provides to students >> and pennsylvania lottery

officials announcing this morning that the powerball ticket worth $457 million was purchased at a speedway convenience store in manheim that's in the central part of that state the store will get a $100,000 bonus. the jackpot was the eighth biggest prize ever congratulations to whoever it is that's the news update this hour michelle, back to you. >> they had a great day. >> they did. they really did. >> all right, let's get a check on the markets all major averages taking a let down the dow falling over 400 points. now lower by 420 had been down as much as 480 points the s&p 500 is lower by 50 points, nasdaq by 177. that's a big decline of more than 2%. dow having its worst day since february 8th -- excuse me, the nasdaq having its worst day, down over 2% all s&p 500 groups trading lower. tech, energy, and materials the biggest laggards >> let's get you caught up on

other headlines. walmart bringing handy's installation and assembly services to more than 2,000 u.s. stores the service can be bought at check-out to help you put together tvs and furniture i need this. the fsb saying today that they believe cryptocurrencies do not pose risks to the global financial stability at this time the comments sending bitcoin higher right now >> and shares of hyundai falling today as the u.s. launches a probe into why airbags failed to deploy in some of its sonata sedans four people were killed and six injured in crashes that are still being investigated so let's get back to the markets and the big selloff, where we see the sharp move, the dow down by more than 400 points, down 480 at one point. here's what marc lasry said is his biggest market concern right now. >> you have two risks. i think trump firing mueller ends up sort of, will

republicans do something about that i think the biggest risk you have in the next six months is if democrats retake control of the house. because if they do, then what you're going to have is just constant investigations. and i think what the market wants is a little stability. and they're not going to have that at all. >> let's bring in ian winer, director of equity training, and art hogan is chief market strategist with b. riley fbr >> we focus so much on facebook. all the fangs are dragging down the markets today, but early this morning if you logged on to cnbc.com, you saw there were concerns about president trump, his tweets over the weekend, naming mueller for the first time how much of this, ian, is because of concerns about what might happen with president trump, especially depending on the outcome of the midterms, as marc lasry highlighted >> i think about 80% of the selloff is related to that issue. >> really? that much? >> i do. because ordinarily, you know,

even with facebook having the issues, you would see some kind of rotation into other sectors which we seemingly saw for the last few years this time, we're not and i think what's going on is people are starting to price in the possibility of a real constitutional crisis. and throw on top of that, you know, the democrats sort of surging. you just blew out your secretary of state, and now your national security adviser is kind of like a zombie and on top of that, you continue to blow out the deficit. i think this is 80% washington >> the market fears a constitutional crisis or does the market, ian, fear the departure of a president trump is that what -- i'm trying to nail down exactly what you think the concern is >> i think the first concern is that if the president decides to fire bob mueller, then yes, you're going to have -- i mean, i don't even really know how to describe it, but my guess is people will be pretty angry and start to question his legitimacy

then, obviously, if we lose the president, you lose a big reason for the rally, and then you start to maybe get the democrats in, regulations go back on and all of a sudden the market multiple compresses. that to me is the biggest fear, and that's what i think the market is just getting a whiff of right now today >> art, you think so i mean - >> it's interesting. >> if it happened any other week where it was not the first fomc meeting of a new fed chair, where facebook wasn't under pressure, one of the biggest market leaders wasn't under pressure, under the threat of new regulation, i might be a buyer of ian's argument. >> yeah, i would, too. unfortunately, we have a basket of things to be concerned about. ian is correct, the market is not going to stay resilient against noise coming out of washington forever that's one of the things we started to learn last week i'm less concerned about a constitutional crisis than i am about really faulty trade policy, and making a mistake where we think we're negotiating and really end up in a trade war. that's the biggest threat out of washington i certainly thing there's enough

smart people around the room, hopefully, to keep him from doing something as rash as firing mueller in the middle of an investigation because it would be draconian you couple all of that with what's going on with facebook and the apple supply chain getting beat up today because they're going to inhouse some of their production, and things around the fed meeting because that's a big unknown we haven't seen how the chairman handles himself in a presser we don't know if they're on auto pilot and indicate they're going to raise rates four times. i think we'll learn a whole lot more after the wednesday fed meeting and probably feel better about that it's easier to have a press conference with you than it is to talk to people on capitol hill where the market moves around in its two-day visit up to the hill. >> what should i be ready to do on wednesday when i listen to jay powell for the first time? well, not the first time he's testified on the hill >> he testified on the hill. this is a different set of situations the questions is probably going to make a little more sense, be more jgermane to his role.

even if the dots were to go to four, the fed may raise four times, we have been wrong with the dot plot every year for the last five years. it's not as if we're on autopilot. we'll feel better about the fed and their pace of normalization after the meeting. you listen to the changes in the tone of the statement and how he answers questions. >> ian, same question to you in the vein that tyler asked art, which is, based on what you told us earlier and what you think the selloff is related to, what do you do? are you investing based on that or buy into the weakness you think we overcome this what >> clearly, it depends on whether you think the argument i just presented is valid. i don't know fits rr going to happen, but if you have a legitimate concern about that, i'm pretty sure that the market is not going to take that very well so if that's a concern, i would lighten up a little bit. >> it's a concern for you, ian, so are you -- would you lighten up >> yes, i would lighten up >> okay. >> cash or what? >> not all the way to cash >> correlations are a two-year

high there's no safe place to hide. >> look, every client's a little bit different, but i think that there's enough noise out there that, and you know, as far as what grown-ups are left, who's left and so, you know, i'm not really sure what happens from here, but there's enough confusion and enough concern that i think there's going to be a lid on this market, and you want to sell rallies >> thanks, guys. ian and art, weighing in on today's big selloff. >> a bidding war is breaking out in the aerospace and defense sector as companies look to capitalize on higher government spending the latest feeding frenzy is over the contractor csra, maybe you haven't heard of it, but morgan brennan has, and she has the story. >> a day where it's the down market, this is the stock up 1%, that's after caci international offers $44 per share in cash and stock to merge with csra, the move meant to best general

dynamics which is trying to acquire the government's i.t. provider in an all-cash deal it believes shares superior value expect to see more deals in this seconder that's the bottom line here. companies are sitting on a lot of cash, and defense spending is ratcheting up. that will mere more demand for personnel and services that's the impetus behind this battle for csra, but we have seen a number of big m&a deals we have seen united tech buying rockwell collins just today transdime also announcing a $529 million purchase of exten, but the sector is already consolidated there's not a lot of choices hence, you're seeing something like a bidding war look for more deals in small and mid-cap part of the market, what analysts are saying, names like the government services space, saic, mantech, booz allen hamilton also, mercury systems, aerojet rocket dimer, even potentially harris which is viewed as both a

possible seller or buyer these are the names analysts are focusing on as we see the pickup in deal making >> what do these companies do? a couple, caci and saic, they all go by initials because names don't work they're a little below the radar. >> you're talking about government services here this is, you know, this is the other part - >> intelligence services >> things like the cloud and i.t. and you're talking about providing personnel for certain types of services. so whereas some of the defense primes are involved in hardware and sort of these long lead contracts, these are the guys doing stuff that tends to be more profitable more quickly >> but has an intelligence overlay. >> contractors to the defense department and other sort of more security focused agencies bl some of the smaller names have had big runs. caci is up 20%, they want to use the stock in this deal because of that currency i would imagine a lot of others

are boxed out of being acquired because of the runp? >> absolutely. you saw this major run-up, overall, even as we have seen a sell-off in aerospace and defense in recent days, you'll still seeing valuations pretty stretched. a lot of people are surprised to see caci jumping in there, and gd is the one who is considered to potentially win in the bidding war. we'll see. >> thanks. investors are selling off facebook on the back of fears that regulation may be ahead is this the perfect buying opportunity or should you stay away from the social giant >> and uber will pause its autonomous vehicle program and take a look at some of the winners in today's session yes, there are a few winners gap, signet jewelers, hormel, and carnival whoooo.

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with ingenuity, technologies, and markets expertise we create the possible. and when you do that, you don't chase the pace of tomorrow. you set it. nasdaq. rewrite tomorrow. we want to highlight that we're near session lows at this hour dow industrial average lower by 461 points had been as low as 488 points in terms of the decline when it comes to percentage selloffs, nasdaq is the worst. now 2.5% the s&p at one point was lower by 2% as well. on the heat map, every member of

the dow joins industrial average is in negative, with caterpillar lower by more than 3%. johnson & johnson, dow, dupont, and 3m are also big drags on the dow right now. >> well, facebook helping to drag the markets lower on news of a research mining firm mining the data, excuse me, of 50 million users. this reigniting calls to better regulate social media companies. sending the stocks lower joining us is dan ivs, and michael graham, the senior equity analyst gentlemen, good to have you with us danering i'll start with you when i road your note initially when facebook was only down by about 2.5%, it seemed like you were sort of boxing in this, like this is a near-term concern, but not something long-term to worry about as your thinking changed as the day progressed >> we continue to box the risk in terms of how we view this longer term, but the longer that zuckerberg and facebook takes to

really respond to this, and ultimately how they're going to sort of handle, the weraes for investors start to increase. what's starting to happen is it started as a small fire in the beltway and eu, and the longer it goes on, it becomes a brushfire. regulatory crosshairs for facebook, that's the draconian situation that from a modernization perspective, we're talking $5 billion in revenue that could be at risk. i think that's really the worry here from the street's perspective. >> seems like the best case scenario would be for facebook to find a way to self regulate to satisfy regulators, but i would think that for investors, the real concerns are the european regulators, which have been much harder and taken a harder stance when it comes to privacy concerns and technology companies, particularly those that are -- that were created in the united states of america >> well, i think you're right. this comes at kind of a bad time for facebook, honestly, because not only do we have a possible

trade war, you know, brewing and more broadly than in tech, but we also have the eu's concerns about facebook and google and the use of data. and you know, obviously, it comes on the heels of earlier, problems with the election so i definitely feel like there are a few short-term headwinds for facebook that are mounting here i also do think we have seen this before in some other waves of tech development. you know, going all the way back to microsoft and then to google and then now to facebook and i do think that the company will figure out a way to navigate this. >> sorry to interrupt. we have breaking news on this very story i want to get straight to julia boorstin in los angeles. >> facebook announcing it's pursuing forensic audits to investigate the cambridge analytica claims facebook saying it has hired digital forensic firm to conduct a comp hencef audit of cambridge

analytica saying they have complied and give complete access to their servers and system facebook has always approached the other parties in involve, the people who helped create the app to harvest the data. christopher wily, and asked them to submit to an audit as well, saying coken has verbally agreed to do so, wily so far has declined facebook saying this is part of a comprehensive internal and external review they're conducting to determine the claims that data exists, referring to reports that 50 million facebook users' data was accessed by cambridge analytica through that app, which got the information from facebook. facebook saying this is data that cambridge analytica and the two other parties certified to facebook had been destroyed. this is back in 2015 facebook saying if this data still exists, it would be a grave violation of facebook's policies and an unacceptable violation of trust and the commitments these groups made. facebook going on to say they're moving aggressively to determine the accuracy of the claims facebook shares now down about

7% >> all right, thanks, julia. >> dan, to the degree that there has been reporting all morning that they knew for a couple years, they're going to hire an auditor now? zuckerberg was going to testify in front of congress, if i were congress, i would ask what took you so long to do this forensic accounting >> this news in two hours gets you a cup of coffee. this really does nothing in terms of fundamentally, the data leakage and the data content issues that facebook continues to face are growing. and when we're talking about 50 million users, and potentially that they had this information, the big worry here is ultimately, user growth engagement and the ad model, what's the potential threat to that ad model? that's why the stock is down >> to me, that is a bigger idea than whether regulators will come in. i mean, it seems to me that the question has to do, michael,

with advertisers and how they might react and consumers and how they might react >> i mean, we definitely see facebook as still being pretty early in the evolution of its revenue model. i totally agree with the four pillars of revenue growth are users user engagement, ad load and pricing. we still see most of those with the exceptional of ad load moving in the right direction for facebook a big part of their ability to bring pricing up over time is clearly the data that they have and their ability to sort of leverage that -- >> hold on dan, you came up with an actual number before. >> yeah. >> that's because regulators actually would step in and start to control how they could monetize or actually used in growth >> that $5 billion is based on lower user group, monetization i do view this as a different

chapter in this book this weekend, just to be clear. this totally changed the game. and i think that's why you see before, investors viewed a lot of this as background noise. >> this is a moment. >> this is a major black eye. >> this could change the business model of not just facebook but the likes of a google anybody who sells data. >> the longer zuckerberg puts lawyers and others instead of himself, it becomes a broader issue versus the likes of instell and their ceo how they handle the security issues this is a huge make or break time in terms of this issue, how zuckerberg and facebook handle it. >> dan, michael, thank you >> tesla shares hitting the brakes today after a bearish call by goldman sachs. has the electric carmaker lost its spark? we'll detat that in two minutes. mercedes-benz glc... ...with its high-tech cameras and radar... ...contemporary cockpit... ...three hundred and sixty degree network of driver-assist technologies...

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time for trading nation. tesla sinking after goldman sachs citing delivery expectations is there more pain ahead let's bring in the team, michael and ari wald with oppenheimer. michael, i feel like a lot of analysts think tesla will miss delivery numbers and in the end,

tesla is about cash burn and the promise of the company in the technology >> that's very well said there's been tons of pressure on the name in what many consider to be a make or break year for the company. analyst consensus is negative. short interest is at such a high level and people have been hurt by that. now they're starting to make money. they're losing between $1 billion and $2 billion this year the monday mentals are breaking down we think it's priced more for the consumer than the investor >> how do the charts look? >> well, they don't look great this is one also we'd stay away from the moderation and the trend is what's most troubling for us you can see the stock's 200-day moving average starting to roll over that's a cautionary signal why we're still on the sidelines the silver lining is from a 30,000-foot view, big picture, symptom is above its major breakout above $290. i think ultimately longer term

it could work again but for now this is a no touch. >> thanks, guys. for more market insights, head to our website, tradingnation.cnbc.com check please is next. >> announcer: now the latest from tradingnation.cnbc.com and a word from our sponsor. >> technicians often look to wedge patterns as catalysts for stocks a bullish wedge occurs within an up-trend and two converging lines. a bearish wedge occurs within a downtrend and consists of two lines.

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stock is struggling. dow down 500 points at the lowest level but we found a way to bring calm and maybe joy to us during the selloff. our producers found this live feed of puppies. >> woo hoo >> warrior canine connection, maryland-based nonprofit to provide service dogs to veterans this mom is resting with her newborns now they're just hanging outs. >> i love puppy videos of all kinds. i follow tons of them on instagram. this is great. >> that's an exhausted mother right there. >> yes. >> and they are hungry >> there goes one. >> he's falling over. >> puppy cam warrior canine connection.

>> does that make you feel better on a selloff like today, guys >> yeah. >> all right s&p 500 down by 1.3% dow lost their gains for the year, down 1%. we'll follow the action through the next hour. >> "closing bell" starts right now. hi, everybody, welcome to the "closing bell. i'm kelly evans at the new york stock exchange. >> facebook sinking on data coming up. >> i thought it was because you deleted your account. >> not today. >> first though, the dow down 482 at the lows of the session now 2,000 points below january record highs let's get to bob pisani on the floor. me i'm way over here