m and a activity it's not just rates. >> has a lot to do >> it does not taking that away >> wages again >> i have a feeling we will. catching a falling knife and buy being more citi and m and a. "power lunch" starts now i'm michelle caruso-cabrera, and here's on the menu from historic highs in january. lots of headwinds in march second quarter starting with sea of red arrows. we'll go inside the slide straight ahead hating the brakes. tesla stock continues to get hammered ceo elon musk is joke about bankruptcy on twitter. is wall street done giving him and the company a free pass? housing and home improvement stocks getting crushed but a new stat out today that could provide some hope. "power lunch" starts right now

welcome, everybody to "power lunch" for april the 2nd i'm tyler mathison stocks are deep in the red nasdaq leading the declines. now negative for the year. right now take a look. there you see the industrials. off more than 2% s&p, the same. and the nasdaq off 2.3%. russell 2000 in relative terms doing the best nike, walmart, cisco, intel the dow laggards insurance stocks outperforming today led by humana. and united health and anthem fang stocks are lower. amazon in correction territory it's off more than 10% from recent 52 week high and facebook has entered a bear market. that means a 20% slide tesla falling again today now down 25% in a month. got lots more, melissa on that

ahead. >> the second quarter the way the first one ended. bob pisani is at the new york stock exchange with the very latest >> we started weak but got much weaker in the middle of the day when we broke an important technical level. the s&p 500, we started weak but then around 10:30, 10:35, put up that chart we broke the 200 day moving average. important thing once we did that, threw see it, 2589 we took a leg lower another 18 points on the s&p. people say technicals don't matter in this case that was an important psychological level and did matter sectors, some are weaker than others consumer discretionary because of amazon and netflix. financials weaker. lower volatility groups, utilities not as much. fang names down except apple

which is down only 1%. i want to mention the correction territory. facebook is in bear market territory down 20% alphabet, netflix, amazon all down in the teens. another group to watch is semiconductors classic high beta. a lot of expectations on earnings they are down more than everything else today. you want to look also at how this plays out against lower volatility sectors like mcdonald's, pfizer and the drug group, coca-cola, not down nearly as much if you look at this momentum stocks big tech names, big semiconductor names, all out perform. that's the orange line etf for that and lower volatility names under perform is now going away in the last two or three weeks these momentum names have slowly moved to the down side what's the issues? several. trade and tariffs were a big one but now social media issues around facebook perhaps even amazon

google, rather driverless cars and nvidia a whole basket of things to worry about as we enter the second quarter back to you. >> speaking of valuations, last time we saw a selloff where you talked about the s&p forward multiple what had it gone to and fallen to down to 17 where are we >> in the 16s. mid-16s. important thing is remember back in january we were at 18 and a half, essentially. that's historically on the high level. we're essentially back to the historic norm on the forward multiples, i use forward multiples meaning this full year ahead of it. getting more attractive. >> it seems like it started with tariffs then went to tech and maybe now back to tariffs. you were seeing as you pointed out a broad selloff in the market can't just be tech there were several mentions of the impact generally of tariffs so far and even though a lot of

strategists have come on and said we don't expect the impact to be there, but there seems to be an overhang when it comes to the possibility of increased tariffs. >> i would agree remember something, we have had years now of moves to the upside and finally there's some issues for the market to deal with. remember at the end of last year we were dealing with global economic expansion and tax cuts and that's what we endeavorry single day now those other issues i mentioned in the full screen there have come to the fore and while tax cuts are valuable and companies will have positive things to say what they are doing with tax cut money in the next few weeks these other issues are dominating discussions. >> absolutely. thanks, bob. first in business worldwide down at the nyc very busy day at the white house. the president going after amazon while china hits back on those aforementioned tariffs eamon javers has it covered for

us >> reporter: the tax cuts are weighing on the markets overall. the president talking about a trade war here with china. the white house giving me their response to china's response to the white house tariffs that they announced last week the white house spokesman said our action under section 232 was legal, justified and necessary to defend the steel and aluminum industries and if china uses that as a pretext for other unfair trade practices we think that's very unfortunate. so the white house calling china's action very unfortunate today. we also got the president tweeting about amazon today. you see that impact on the market the president saying only fools or worse are saying that our money losing post office makes money with amazon. they lose a fortune. this will be changed also our fully tax paying retailers are closing stores all over the country not a level playing field. i want to emphasize when you talk to white house officials about the president's tweets and commentary about amazon in particular and ask them what specific actions the white house

or u.s. government is going to take against amazon, they kind of shrug, they don't know. we wonder if there's anything of substance behind these tweets or if the president is venting politically. in about an hour's time, larry kudlow is going to be meeting with the president in the oval office i spoke to gary cohn earlier he said he's going to be sitting in on that meeting as well so two national economic council directors at the same time both of them seen as opponents or skeptics of tariffs and trade wars generally meeting with fortunate who has embraced trade wars and said trade wars are easy to win. fascinating moment inside to value office eamon javers, thank you very much turning back to the markets the s&p and nasdaq are now on pace for their lowest close in nearly two months. is it the trade fairs, tech

tumble what spooked the stock market today and in recent days gentlemen, welcome good to have you both here all three of the major indexes now in correction territory. let me ask you both, mike you first, what are the odds that this correction proceeds and leads us into a bear market or decline of 20% or more >> i would be surprised if we get below 20 animal spirits are pretty serious. i think at the end of the day we really believe that the fundamentals are still pretty solid and usually prevents bear markets and market scares from getting out of hand. we would expect more down side clearly people are waiting for the end of the quarter to unleash some selling power and we're starting to see that right now. but i think when earnings come

out in the next few weeks as bob was saying and as we start to see growth rates and some expectations for the balance of the year, it wouldn't surprise me if we arrest this meltdown. >> andrew, same question to you. if you do not see a bear market and see a bit maybe potentially of a turn around in equities where are the targets of opportunity? so first bear market or not, second if not, what to buy >> right sure first of all, reversion means both powerful concept in investing. last year the market went straight up. so lo and behold we're having more volatility. i think what's going on here is more volatility and it's a black out period so not a lot of stock buy backs. i think the quarter will be pretty good. we had a pretty good rally in some of these interest rate sensitive stocks i would avoid those. some of the value, the

financials, the industrials have been really hit recently and i think they will have pretty good quarters and that's an area i would look towards southeast secular growth stocks, you're seeing some of the big tech stocks coming down, it just points to how crowded and how many people already own those. so i think the value area is a place to fish right now. >> mike, you saw the ism number this morning still pretty good. but as we talked earlier in the show some of those manufacturers have raised worries about tariffs. bob pisani made the case over and over again, models in the effective tariffs, the effect of a trade war on the e is difficult. we haven't seen earnings come down are we getting the twinkling the beginning of what could happen when we see manufacturers who were surveyed say they are worried and therefore the e could come down and hence bring down the market. are you worried about that at all?

>> of course but i don't think the impact of tariffs unless this spirals out of control, which we hope doesn't happen, will be very large. we think that the earnings impact will be relatively modest specific to industries that are clearly set up for that. so, it's really how you knock the global economy off of it rail and i don't think that will happen with the little bit of saber rattling and probably a little posturing and negotiating on the part of our current administration so we feel pretty good about that you know, look, i think we've seen this game before. we're seeing interest rates come in we're seeing ten year, anyway. we're seeing sort of worries about growth and as a result, you're starting to see all of the low volatility stocks perform really well today on a relative basis and cyclicals and financials get smoked. i just don't think that's in the cards. it will turn around especially if you see the robust earnings

growth this quarter. >> what's remarkable, strategists are putting faith into earnings season because expectations are so high maybe that's why earnings season could backfire throughout first quarter we've seen estimates rise for the s&p 500 by 5.12% or so-and-so analysts have been ratcheting up their estimates and so the bar is going to be very high and then on top of that you got whatever they are going to say about commentary, when it comes to the impact or possible impact of tariffs or anything else. >> i agree with that that does worry me the more the market sells off the more that's priced in to the market i don't think this will be a great year for equities. and, unfortunately, high single digit return year it's not linear and you'll have volatility the more the market sells off in the quarter the more that's priced in. as bob pisani said let the

marketing is trading at 16.4 and that e will be higher at the end of the year. the multiples are going to support equities here, but, you know, we're going to have a lot of volatility this year. >> mike, just to conclude on the thought that there's one thing that we have not seen in many, many years and now they are occurring in tandem. one is rising interest rates and who knows how high or how fast they will go the other are major trade frictions including the renegotiation potentially of nafta and other deals. how do i process that information which is different than the kinds of things we've had to deal with in recent years. >> completely agree. that's part of the causality of this correction from the end of january. clearly things got out of control and over hyped to say the least one january. how do you process that?

i think you do it by selling a little bit by coming back to your targets in the equity markets. by taking off some of the more speculative positions. you think about the fact that trade war could spin out of control. you think about what if rates go to 3.5% in the short term and ten year stays here. then you have an inverted yield curve. that's what's being priced in. i agree, the more this tinge sells off before the quarter, the better actually it will end up being we southern like we're in the same camp. we don't think that absence of a large recession, this market is going to really, really be, you know, a 20% or 30% correction. that would be a big surprise to us >> andrew and mike thank you very much. so if you're staring at the screen big selloff technology streets are leading the way lower. one group getting hit especially hard the chip stocks

intel, micron, nvidia, amd are sharply lower as you see there more than 4% is now the time to buy these stocks we'll ask a chip analyst next on "power lunch". you know what's awesome? gig-speed internet.

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currently on pace to close in that 10% or greater pull back zone energy the leading charge to the down side here that group of stocks more than 15% off their recent intraday highs. all names in that sector trading in negative territory. tech and consumer discretionary contributing to today's losses only two still not on pace to close in those 10% pull back or correction levels, sectors to watch. >> the breadth is wide when it comes to selloff chip stocks are getting battered the next semi-etf is down 10%. nvidia, lam research so is now the time to cash in your chips or buy more on the dip? >> joining us now is an analyst.

so many things to worry about with these chip stocks the recent situation with autonomous cars. bigger in growth for some of these companies is bitcoin and that's well off of its highs regulation on tech in general. tariffs with china these guys feed that beast, right? seems they face all kind of head wind tell me where i'm wrong. >> you're seeing a confluence of many headwinds from tariffs to regulations, but we think some of these are reflecting another down side and also shorts from taxes coming down. longer term the seculars are still intact i don't think safety in automotive are going away. i think could have a solid road map ahead.

same for computing wise, data traffic. so there's still, you know, very long term themes here. if you look at these names they have held up well. >> but you don't seem to differentiate between any sector within semiconductors. every single one of them is okay you say long term but semis are like commodities when they go down, wow, they go down can you suffer a lot of pain and multiples can get teeny tiny do you think it's done for now >> no. that's a good point. semis definitely have run up quite a bit, definitely seen them quite a bit if you look at the names that we focus on especially the automotive, the computer, storage, these are not going away tariffs and regulations might hurt them on the margin but we don't think automotive, you

know, that it changes the road map on automotive safety, won change long term outlook, computing performance is going so we think some of the names still stand the benefit. definitely, looking at names that are more dramatic trends behind them. >> the semiconductor index is in correction territory a lot of stocks act like there has to be a re-rating based on developments michele outlined earlier. where are the buys right now >> the names we like is cypress, owago. memory side like lam research and micron and western digital so trends are still intact some names pulled back but still see good upside to the rest of the year

so some of the trends start to pick up pace so tax cuts and buy backs start to show up in the numbers. >> got it. okay thanks >> thanks a lot. the president once again targeting amazon in a tweet and the stock has been sinking cost jeff bezos the founder and ceo billions much more on this selloff. more "power lunch" after this. it was my very first car accident. i called usaa and the first thing they asked was 'are you ok?' they always thank you for your service, which is nice because as a spouse you serve too.

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boom! mad skills. education to take your trading to the next level. only with td ameritrade. welcome back to "power lunch" i'm melissa lee. the dow is down by 575 points. that's a loss of 2.4%. s&p is down 67 points, 2.5%. nasdaq is down by 202 points, about 10 points off the session lows for the nasdaq. looking at individual stocks, alkermes falling sharply more on this story in the next hour snap is continuing to fall as it confirms it's cutting 7% of its global workforce and we're continuing to watch shares of nike the company is taking steps to address its so-called boys club culture.

following the resignation of a top executive who is considered to be a possible successor to mark parker. shares of tesla are falling again today. down nearly 20% in the past week in part because of the fallout of a fatal crash while that is happening look at this elon musk sending a joke tweet including a photo of him passed out against a tesla. channels his elmer fudd there. bank what it says? are jokes like this getting old. april fools' day but really costing shareholders money all over tesla and this broader selloff when "power lunch" returns.

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hi there i'm contessa brewer. after afghan official says 48 school girls have gotten sick at a high school in what authorities suspect is a case of group poisoning. those girls were admitted to a hospital and now in stable

condition. thousands of oklahoma teachers are rallying at the oklahoma state capital demanding more funding for education they say the 15 to 18% increase approved by the governor just isn't cutting it a texas man who as a teenager invoked affluenza in his defense after killing four people in a drunken crash has been released from jail. ethan couch served nearly two years for a revoked probation. a psychologist said at his manslaughter trial blamed the accident on his family's wealth. >> polaris industries will pay fines and recalling off highway vehicles because of a fire hazard that's the cnbc news update at this hour. tyler, back to you markets right now lower across the board we are down, what is that, 615 points right now these are serious declines,

folks. s&p and nasdaq now in correction territory. the dow well in that territory as well. all 11 s&p 500 sectors are lower today led by consumer discretionary, energy, financials intel, cisco, walmart dow performers leading the way lower. united health is the only name in the green right now let's go to jackie deangelos >> energy is one of the biggest drags. s&p energy sector down 3%. contra resources is leading the way lower. the worst performers in the s&p 500, contra on pace for its worse day since january. exxonmobil a 52 week low today down 2%. this all as oil is taking a hit of 3% on its own back to you. another area taking a hit, the news on tesla today ranging from the very serious to the ridiculous phil lebeau covering it all for

us >> let's talk about the serious first with the comments from tesla on friday night regarding its auto pilot system. this stemmed from an accidents in california where a man was killed while driving his model x. it hit a barricade the auto pilot was engaged tesla defended the system putting out a release friday night saying look, the system shows he had been told to engage it well the ntsb wasn't happy issuing a statement the ntsb investigating the accident is unhappy about the investigation by tesla they are looking into all aspects of this crash cluing the driver's previous concerns about the auto pilot there's at least one report out of california that the driver had complained that the system was not functioning properly also, there's the other big news of the day which is what's going on with tesla when it comes no del3 production. we expect these numbers could be today, could be tomorrow

guidance was for 2,500 per week by the end of the first quarter which would have been last week. media report earlier today gave the stock a bit of a bump saying internal e-mail said it was 2,000 per week was the production rate. most analysts expected to it be about 1500 to 1700 model 3s per week take a look at shares of the eslarks keep in mind a number of analysts looking at this stock saying is this the bottom? is this where at it's at jeffries upgrading the stock to hold michele you talk about trillion. everybody knows about tweet, not everybody but most people know about the tweet yesterday from elon musk regarding the company going bankrupt ill-advised april fools' joke on his part >> seems kind of tone deaf stay with us let's bring in brad ericcson great to have you with us. i want to ask about the report that had tesla pairing its losses

media report citing an e-mail from elon musk to staff say if they go at the same rate by the end of the day they will hit 2,000. which is greater than what analysts have been expect the in terms of how big the miss would be are you hearing anything from the company about this or from your own sources >> yeah. i mean we've caught up with the folks that got a hold of that e-mail i wouldn't read too much into it it highlights what the bulls are thinking which is they are improving. getting hung up on where the numbers, 1900, 2100 or 2300 is just not all that important. the fact that they are improving is the most important piece. >> let's go to what is important, the degree of the ramp and by when because at some point they might need to do a capital raise let's put it that way although most people think they will need to do a capital raise if that ramp isn't fast enough at what point is a critical junk

you're the for this company. >> very hard to know effectively you're working towards some number that's at or about 5,000. starting probably in by q3 and the company continues to maintain the narrative that if they get to something approaching that level, where they think they can do profitable wise on the model 3, gap profitable in q4 when you look at mood ymoodys a insolvent these guys look. if they get to that point those cash burns decline quickly and that changes things relative to where the stock is trading today for the good >> what's that number we need to watch for when it comes to dealing with the cash burn rate. the reason we're focused on that is because the bonds have been selling off. bond investors are worried about getting paid back. stock investors should be very worried. >> they should

>> go ahead. i'll let our guest answer and then i have some thoughts. >> they absolutely should be concerned. but like i said the moment you go north of that 5,000 number, the potential for these guys to get profitable quickly, dramatically changes so we think we're at a very critical point right now, but potentially at the fulcrum of where that changes >> michele, to play off of those comments, remember they've already said their capital expenditures this year, they are going burn through what 3.2 billion in cash. something like that. and the question becomes does it have to go up by another billion if they cannot get that ramp above 5,000 vehicles starting in that third quarter we had colin langan on earlier today and he's questioning whether or not they make it by third quarter and if they don't then do they have to raise a billion dollars whether through equity or debt and, of course, that brings up the question --

>> is the market telling them they won't be able to? the stock falls every single day. equity raise gets more and more expensive. i don't know why they did a debt offering the last time because that really constrains them, right, in a fundamental way. every single day that we see the sell off it gets harder to do that capital raise >> sure. provided that you don't buy into the idea of them getting above 5,000 by the end of the second quarter. that's their guidance which comes back to the original question which is it's a bit of a black box right now. do you buy into their guidance because they never met their guidance or haven't recently met their guidance it's a broken record or do you sit there and say look they showed some risk, maybe not at 2,500 but we think they will be at 5,000 per week by middle july or august >> the market no longer -- >> the market is not buying it >> they have no patience in it

>> so, brad, does elon musk for all his many faculties and all his intelligence does he have too much on his plate? should he have somebody else running some of his ventures >> i think you can probably make a strong case that these guys may need a coo of some kind to corral things a little bit better going back to the previous discussion, i think the biggest question not just, you know, looking at it from the bond holders perspective of whether they can raise capital or how expensive that would be, this ully falls back to a demand question if people feel like the love and the adoration for the brand is still there the bulls will underwrite further capital raises albeit more expensively but that's the single biggest question i think still is people are trying to figure out relative to what happened with regard to the accident >> electrical. the recall, right? some early reviews of the model

3, they are upset with the software you can use within the car, the finish of the car brad, are you concerned at all between the recall, the auto pilot death, the finish of the model 3 that perhaps things are building up and consumers are saying i don't know. there are other options out there. >> we don't know the recall doesn't concern me. that's a straightforward thing and immaterial financially the model x fatality is new. that's the first time that auto pilot has been involved in something like this. technically auto pilot functioned properly in this case however, i think what we're finding today with stock price in the last week or so there was a perceptional gap between what people thought auto pilot could do and what it actually does i don't know that it actually functioned incorrectly in this case >> another risk is people get tired of waiting, right? other companies are starting to do this. >> that's always the case.

>> phil, go ahead and answer the question >> the big question is, for some time they have said look, we have 450,000, something like that, reservations people have put down deposits on a model 3. we don't know what the converse rate of this is. there's reports people are looking at how many folks are following through, are they deferring a delivery when their number comes up? is it still that high? that all factors into the question of this ramp up in production are they still getting the demand out there are there still people who want the model 3? there's no way of knowing because they are not giving us exact numbers on reservations. >> brad, you also have a thought on that? >> yeah. we visited in person with the company about two weeks ago and the comment, you know, at that point was that the model, the order book for the model 3

continues to grow even here in the near term. that's a pretty, you know, they are stating that as fact hard for nine refute we do think that continues to rise >> got it. okay, guys, thanks speaking of bonds let's get to the bond market rick santelli tracking action. sell off in stocks led to buying in treasuries. >> operative word. if you consider that two year note yields are down and ten year and 30 year bonds are unchanged we have a curve scopening. look at dow versus ten year note yields which is what you were referencing. even though we hit the marks meaning the extremes around the same time it's not necessarily and equitable move ten year chart moved up last week and not moving down aggressively steady eddie steady eddie in the face of

softening data today's ism was healthy. high yield etf intraday chart say 90, 92 low. the low close going back to november of 2016 we want to pay close attention to it. it's a barometer in the transmission between stocks and fixed income market. dollar index posting another decent session hovering at the top of the range as you see on the one week chart. many say it can't really even make pass at unchanged on the year unless it gets through its mid-point of the year which say round 90 and a half. we just want to point out that on the dow we're back below a loss of 600 points now at 625, 627 points low point today was a selloff of 639. tech and trade the two ts being blamed for this recent sell off.

up next a look at the industries being hurt by china's retaliatory practice and facebook, that stock down rrorin a month in bear market we'll be right back.

tomorrow, it's a day filled with promise and new beginnings, challenges and opportunities.

at ameriprise financial, we can't predict what tomorrow will bring. but our comprehensive approach to financial planning can help make sure you're prepared for what's expected and even what's not. and that kind of financial confidence can help you sleep better at night. with the right financial advisor, life can be brilliant. in response to president trump's tariffs on steel and aluminum, china has announced it will impose new tariffs on 128 products from the united states. they include agricultural products like fruit, nuts, wine and states like california could be quite hard hit. we go to san francisco for that story. >> no other state gets as much in chinese investment or exports as many products as china. some analysts are concerned a prolonged trade war with china could cost the state investment

dollars, jobs and hurt farm income last year california exported 16 billion dollars worth of goods to china make california china's third largest trading partner. california received $16 billion of investment from china 84 of the 120 items on the list that will be subject to tariffs include critical california staples like fruit, nuts and wine california exported $2 billion worth of agricultural products to china in 2016 that's 18% higher than the year before top experts in those categories, almonds, lemons and wine another important agricultural product, pork. that's affecting shares of tyson foods which is down by 6.5%. hormel is down 3%. largest pork processors is

smithfield foods that company' shares flat on the news technology just went negative for the year. hit been hanging on by less than half a percent tim, good to see you thanks for joining us from florida. i want to dovetail off of what aditi was talking about. on top of what's going on in technology, slowly we're getting these data points that tariffs are having an impact on the economy even before the tariffs have begun a week and a half ago we started to get that from the dallas data and today we're getting it from ism. >> so the regional fed surveys including dallas last week told us the ceos are talking specifically about steel tariffs. to the extent the larger macro data -- we've seen a weakening in the last couple of months i cannot attribute that to trade tariffs. i think there's a much more

cautious tone and let's see. earnings will be a big tell as ceos guide on the overall picture. the tech sector has issues from the regulatory side and possibly as you get into data and privacy issues which we've been talking about significantly over the last few weeks i don't think that trade tariffs other than fear in steel and aluminum right now are affecting the broader economy. the weakness in some of these pmis -- china's pmi was a major recovery whether you want to believe their state figures or not we got figures out this week we'll be watching those. seasonally a lot of economists i listen to believe that we probably are dropping before we start toate. but the jury is out. >> tim you talked about the regulatory potential for some of these tech stocks. the heat is not letting up on facebook we had scott stringer on earlier today comptroller of new york and in charge of nvesting for the city's pension funds

listen to what he told "squawk on the street" >> my job is to represent firefighters, police, teachers people who we invest on their behalf and there needs more independent board oversight. there needs to be an independent chairman of the board. we need more independent directors, directors that have experience in terms of data and ethics and all the things that these emerging huge companies have we've been wondering will we see it out of congress will we see state ags but pension funds across the country that own facebook will be very angry. >> they can swroet their feet. they have to get out there and say something. they have a responsibility people didn't wake up two weeks ago and found out facebook of selling their data for the first time, though so, on the board level and with the company in a position where there was malfeasance, et cetera, i'll leave that up to everybody else to say.

what it comes down to the consumer level and push back will be and really what will probably be a self-regulated internal dogfight between the biggest and the best technology companies that fight for your data and use a centralized platform they to have to settlet amongst themselves the best will win by being the most private scott stringer's reaction is one that he is supposed to make, and everyone is going to make. it's why the pressure here does not let up, and i think investors need to think about which management teams have the most progressive and proactive approach to data, to privacy, to cyber, and i think they're going to start putting different valuations on these companies. >> when you have so many companies, tim, that have been the market leaders, facebook, amazon, netflix, and the like. stumbling this way, does it signal -- and they're seemingly individualized reasons not necessarily all of a piece

but what does it tell you, if anything, about the health of the market and one's ability to make money >> right so you're bringing up the point that these story stocks you can find different reasons, whether it's tesla, facebook, you name it, go down the line there are reasons why some of these high multiple tech companies, and yes, tesla is a tech company, are in there but the change in character for the markets is obviously very significant because a lot of these stocks were very defensive during some of the previous down drafts if you look at the triple qs and you were to graph them against the s&p -- excuse me -- sorry about that >> it's elon musk on line two for you. >> he's been very talkative. maybe he doesn't want meek talking. something april foolse since february 12th when the market had its first drawdown, triple qs have outperforming the s&p. we may close below the 200 today, and that's the first time

since brexit >> again >> answer that phone someone really wants to get ahold of you >> a busy man. >> a man in demand >> we want to get to josh lipton intel shares are sinking josh >> this news on apple here, a report just coming through that apple is planning to move away from intel for its own mac chips, and intel reacting to that headline. you can see down strongly here we know apple, for several years now, has been looking to design more of its chips inhouse, for its range of devices, for iphones, ipads, and macs it gives them more control over their devices. you get cost down. maybe you keep more of what you're working on inhouse there in cupertino it's certainly a pricey, complicated, expensive endeavor, but price is one thing apple doesn't have to worry about. apple's chip business in cupertino headed by johnny

schrugi, intel down and on pace for its worst performance since january 2016 >> josh, apple has been working for years to develop their own chip processes, and it's actually, right, you covered this joint ventures with chip companies so this wasn't a complete surprise. at the time, you're sort of projecting the dots and connecting them by saying this looks like apple could move away from its suppliers and be a danger to the likes of an intel or qualcomm. >> that's exactly right. certainly, you're right. intel has been working very hard there in cupertino, designing more of its processors inhouse a range of possible benefits from that in that you get costs down also, another benefit of that is we know tim cook likes to keep those secrets close to the vest. if you're designing more inhouse, that's a sure way of doing that but listen, it's also extremely expensive to design and make

these chips. but listen, we'll reach out to apple and bring you more headlines on that if we get them >> does intel break out just how much apple represents of their revenue? >> i haven't seen that, michelle, that hard data, no, as a customer >> got it. >> interesting to get ahold of that this goes back, folks, to a time long ago and far away where it was intel and windows, intel and microsoft. and intel really didn't make chips for apple. that was the two competing systems. one was intel and the other was apple. >> intel inside. part of the whole dell ad. >> americans are sitting on trillions of dollars of untapped home equity. what are they going to do with it how could that impact the economy? and much more on today's big selloff coming up. financials among the worst performers morgan stanley off by more than 3% actually, all of them are off by more than 3% we'll be right back. most etfs only track a benchmark.

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taking a check of the markets. the dow down by 668 points we're off the session lows, the s&p is down by 77.

almost 3%. the nasdaq really feeling it, down by 3.25%. semi-conductors taking it hard a lot of these beta names, the high flyer names, the ones who had gained the most during the year feeling it the hardest right now. >> and homeowners are sitting on a record amount of cash in the form of home equity. will they use it what will they do with it, how will they access it? diana olick joins us with the details. hi, di >> hi, ty. you can thank fast rising home prices and tighter lending for the record amount of tapable equity available that's the amount of home equity above 20% of the home's value which is what lenders require for you to crash out $5.4 trillion at the end of last year that's total, or nearly three times what homeowners had during the recession, and 10% more than what they had at the peak of the last housing boom. it rose by $735 billion just last year as home prices soared. unlike during the last peak, though, today's homeowners are

far more conservative. last year, they took out just $262 billion versus cash-out reifies or home equity loans of credit that's less than 1.25% of all home equity, which is a four year low that when more than half of equity is held by borrowers with high credit ratings. so what will they spend it on? you know it, remodeling, which is projected to rise dramatically this year, mostly because there's so little for sale on the market people are choosing to stay and renovate rather than move. back to you guys >> all right, thank you very much, diana olick. melissa. >> in case you're just joining us, welcome to "power lunch. here's what's on the menu, april, typically the second best month of the year for stocks, but will the recent tech slide lead to april showers. >> talking technicals, the s&p

500 breaking through technical levels is more pain ahead or is a bounceback in the cards? and a healthy conversation reports out that walmart may be in talks with humana is it a good deal for the giant to bet on health care? "power lunch" starts right now >> and welcome to "power lunch." i'm michelle caruso-cabrera. as you can see, stocks are deep in the red the dow down more than 600, actually now 700 points. that's a decline of nearly 3%. s&p and nasdaq also lower by 3%. all three major indices are in correction territory technology is the big drag today. amazon, netflix, facebook, alphabet they're all deep in the red between 3% and 5%. amazon now officially in correction territory, that means a decline of more than 10% from the recent high. energy also seeing steep losses. chesapeake, range resources,

noble, they're down 4%, some 5% and 7% and construction stocks, home construction stocks, are getting hit with the etf, the itb on base for its worth day since february all leading the declines intel is on pace for its worst day in more than two years on news that apple may be set to move away from intel to use its own chips for its macs tyler. >> thank you very much welcome, everybody i'm tyler mathisen markets are selling off to start the second quarter, and that selloff is quickening right now. the daz nack has now lost all of its gains for 2018 bob pisani is standing by on the floor of the new york stock exchange hey, bob >> we opened on the downside, but things accelerated rather notably around 11:00 eastern time let me show you the s&p 500, when we broke through the 200-day movingarvage we had support there for a number of occasions including the february lows, when we broke through that around 11:00, the market took another leg down,

and frankly, has not recovered looking at the lows for the day. sectors, i don't want to exaggerate it too much, but the tech sector and anything momentum related, consumer discretionary is weak because you have amazon and netflix in that sector. financials have been down, too industrials, utilities, more defensive names generally doing a little better. overall volume, believe it or not, you might think a lot of selling going on, but not terribly heavy, but some individual sectors seeing heavy selling. power shares qqq, heavy volume there, s&p midcap, basic materials all seeing volume above normal the overall market, not that heavy in terms of volume fang stocks, all down to 3% or 4% all the momentum names including semi-conductors weak today i want to note that the fang names generally are in correction territory facebook down 20% now, and that's as we said before, in a bear market. apple is only down 9% from recent highs i don't want to overemphasize

the tech selloff, because this is a down 2% to 3% day for virtually everything nike, for example. home depot, caterpillar, jpmorgan and the big financial names. even more defensive names like pfizer and coca-cola and mcdonald's, they're down, although obviously not nearly as much what the issues are, we talk about them many times. trade and tariffs floating around as an issue issue s around social media and facebook valuations on semi-conductors and high prices. this is a plethora of issues that the markets are dealing with right now back to you. >> it's interesting that we're not seeing a strong bid to safety when you take a look at the tlt that tracks treasuries that's only up by a third of a percent. not a move you would expect on a down 600 point day for the dow >> yeah, what's happening here is just an evaporation of bids not so much that there's people coming in, traders saying i want to sell, just keep selling that's not really happening.

the bids have evaporated there's no real buying interest at this level. when you get normal amounts of selling on any day, you get normal trading activity and no buying interest, the market dips so it can give the appearance of massive selling when really it's just lack of buyer interest. that in itself is an issue that's not anything comforting by itself. we need to have a better reason to buy stocks right now. >> thanks, bob >> meantime, new data out for the ism manufacturing index that included manufacturers reporting that new tariffs are causing concerns across the supply chain. steve liesman joins us here with the details. >> thanks. the institute of supply and management, their portfolio for march underscoring the negative effects of the president's tariff policies on business. to be sure, the 1.5% decline leaves the ism at a pretty high level of 59.3, and that boidz well for manufacturing and economic growth in the months ahead, but the commentary from individual businesses in the report shows strong concern about trade and tariff policies.

quote, much concern in the industry regarding the steel and aluminum tariffs, said one person in the primary metals business this is causing panic, buying driving the near term prices higher and leading to inventory shortage for noncontract customers. these people are quoted anonymously in the report. another person saying the price increases will begin to impact our company's performance. that individual in primary metals sharp falled in addition in the ism space. the report highlights the difficulty of the president's trade policy as he moved to help steel and aluminum businesses. a far larger amount of businesses who use the commodities pay the price. china widened that impact by announcing retaliatory tariffs what's more, cnbc polling suggesting average americans feel the same way. among the americans who have an

opinion, they oppose the tariffs 35- 35-29. >> the republican party really has changed its tune when it comes to trade we used to hear, oh, free trade is good. now it's china subsidizes the steel sector and that's not right wwmd, what would milton friedman do what would he say about china heavily subsidizing the steel sector you have to put your seat belt on that for. milton friedman in 1978 in a column echoed pretty recently said if china wants to subsidize its steel business and offer us below market cheap steel, we ought to take as much of it as we possibly can. for two reasons. one is that we get the cheap steel and all our cheap steel industry using steel industrial using companies will advantage it, it also punishes china because if it costs them to make

more, the more they make, the more it punishes them. of course, along with that is a more modern idea that i don't know how milton would feel about this, but the idea that you then help the people who are displaced by that policy domestically you can see, by the way, the market doesn't like this at all. they're taking this, among the reasons that bob put up for the market down draft, clearly, the tariffs. by the way, as far as i can tell, china has yet to retaliate for the other set, the 301 tariffs that the president put on there's another round coming >> and those were bigger ones in volume, right? >> $60 billion, perhaps. the market loves when the world gets bigger. and the world gets bigger through tariff coca-cola can sell its product expands, and that expands the multiple what happens to multiples when you shrink the world they decline >> when we have strategists and economists on who are apt to say we don't see the impact of tariffs, it won't be

significant, how do you diff differentiate yourself, if you do, from their views it sounds like you think there is an impact, that is an overhang on the economy, and it is bearing out in some economic data how severely, though >> i don't think it's very severe at this level what the market is pricing in is taking this out several degrees later. if you stay at steel tariffs, you're okay. remember, there's the 301 tariffs to come. and there's a president who just doesn't seem to, how can i say this, get it the way the rest of the economics world seems to get it when it comes to the value of free trade >> the dow is off 722 points at this hour. thanks very much, steve. so, if you're just tuning in, a bearish start to april stocks are selling off dow and s&p back in correction territory. let's bring in brian, chief investment strategist for bmo. and jack, chief investment officer with cresset wealth advisers jack, how worried are youunts the effect of the tariffs moving

through the earnings line of the market and therefore bringing down the market? is the market as a discounting mechanism, is it telling us today that that's what could happen as a result of the tariffs? >> it must be because right now, we're going into first quarter earnings season with a running head start analysts are expecting earnings to be up nearly 20% year over year, and that's up from about 11% expectations at year end clearly, we do have some acceleration in earnings we've got some acceleration in revenues and if you look at the market purely as a discounting mechanism, of earnings and dividends relatative to prices, i dare say the market is cheap it's about 5% to 10% below value right now relative to just that alone. so clearly, the market is discounting something else, and that's the tariffs >> brian, if earnings are going to be going up in theory, stock prices would go up too, right?

so why is the stock market going down now >> well, what we have here is a failure to communicate i just don't think that most investors understand that stocks go up because of earnings and the economy. most investors quite frankly, have been schooled in the thought of stouks only go up if interest rates go down so far this year, we had three very distinctly different markets. january was a momentum market to the upside where investors are trying to catch up to last year's gains february was a momentum move to the downside, as we saw some algorithms kick into place, and also some good old fashioned profit taking. march was this month, michelle, where we're starting to worry about the economy overheating. on one side, and a recession on the other. so what does this mean we're in a news vacuum right now because earnings need to come out. companies need to come out and talk about how good their operations are and calm some of these fears that the recession is nowhere near, which it's not growth is real and the economy continues to

expand, period >> what do you think the number one question will be in the conference calls it will be about the impact of tariffs, right what you see for demand, what the potential of tariffs will be on your business and those fears will just sort of be underscores once again >> i think that's an excellent point. what i would say is tariffs -- i'm sorry. >> i'm just back from vacation tariffs aren't going to affect everyone, number one number two, i would say this i think when you do the work and start looking at a lot of these companies that could be potentially impacted by tariffs, a lot of companies exempt from the tariffs. we hear the word tariffs and start to freak out a little bit. those companies impacted by the tariffs are a smaller part of the overall market let's move forward from that and move on. >> that's a very narrow look at the tariffs in terms of what is in play. jack, if the markets like to go one step further, they like to go all the way down the line in terms of potential impacts

if you do that, almost every seconder, you could hear from industrials, like boeing and lockheed martin. the tech sector, the semi-conductor stocks. those stocks quake in their boots. >> the secular move we have enjoyed from the early '80s to now is on the back of lower inflation and higher productivity, largely due to globalization and technology throwing tariffs or government interference, let's say, or regulations on the tech business is a move in the opposite direction. higher prices, lower productivity and that's something that scares certainly investors. >> jack, what wins what wins then i mean, on the one hand, you mention higher -- the possible of tariffs, higher interest rates. on the other hand, the idea that earnings are going to come in and be very good

there's a push/pull there. what wins? >> i think what ultimately wins is we have to put this all in perspective. this is a contrived crisis, right? this is not a meteor coming at the earth from outer space if this were to really fall apart, we could simply reverse some of these policies, you know, move forward so i don't think that, you know, given that we've got this natural growth of earnings and natural growth of revenues that's going on in the backdrop, my sense is that some of the rhetoric will get ultimately toned down some of the trade will likely, you know, may be modified. i don't think it's enough to really move the secular needle on these trends that are in place. that's something that we shouldn't do so ultimately, i think that i would pay attention to earnings and dividends, as brian talked about. it's really about fundamentals and it's about the less

interference of course the better >> tyler, financials financials, financials, financials will be the big winner we continue to think that investors are way underweight in financials tech was up 37% last year. time for a little bit of an unwind this is very natural >> thanks, guys. brian and jack >> so here's what else is coming up on "power lunch." retail wreck that sector falling hard today as well. underperforming what's already a tough market this as president trump attacks amazon and mall vacancies also hit a six-year high. should you buy the retail dip? >> plus, a silver lining for tesla. reports that the company is making more model 3s than analyst expected we get the bull back in the stock? much more on these markets as the selloff intensifies. all that coming up on "power lunch. ♪ feel that?

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you know what's not awesome? gig-speed internet. when only certain people can get it. let's fix that. let's give this guy gig- really? and these kids, and these guys, him, ah. oh hello. that lady, these houses! yes, yes and yes. and don't forget about them. uh huh, sure. still yes! xfinity delivers gig speed to more homes than anyone. now you can get it, too. welcome to the party. welcome back to "power lunch. i'm josh lipton. we did just bring you a few minutes ago the headlines that apple is planning to reportedly use its own chips in mac computers. the timeline here, perhaps as soon as 2020 in turn, replacing processors from intel intel in response to cnbc saying they don't comment on speculation about their customers.

apple, in response to cnbc saying they declined to comment. apple reportedly provides intel about 5% of its annual revenue certainly this would be part of the broader trind we have seen in cupertino, designing more of their processors inhouse you can see the pressure intel is under from that headline. design chips inhouse, it also means you could get costs down potentially, keep the secrets closer to the vest, and it gives you that much more control over the hardware and software. we'll stick on the story, bring you more headlines as they come. back to you. >> thanks a lot, josh. josh lipton in san francisco >> retail stocks are under pressure, getting hit a bit worse than the broader market. mall vacancies have hit a 6 1/2-year high, and the president continues to attack amazon let's bring in oliver chen great to have you. is the market telling us that we should be worried about the consumer is there a broader message that we should glean from this sell-off >> well, the consumer's actually

very strong. there's low unemployment and wage growth. what's very difficult in the environment is a lot of price competition. gross margins, price competition, and the digital disruption, the tremendous market share gains that amazon has made have been big factors that have been cautious in terms of the consumer. the mall story is largely played out. we have seen negative physical traffic for many years now this is not new news but what's happening is companies are competing very hard for market share through pricing. so there's very selective innovation, very selective pricing. even the walmart/humana deal has a lot to do with bricks and clicks in the evolving landscape of consumers and consumers in retail >> i was going to ask you about that potential deal. there are reports they're considering either a merger or some kind of joint venture walmart, a massive retailer, with humana, a massive insurer what would they do together? and why? >> i think what we're really seeing here is the integration of physical and digital. and the integration of targeting

younger and older customers and retail and the age of customer centricity how can retail be relevant to all kinds of customers, old and young, and address your needs for grocery as well as health care also, the future of retail is big data as we think about data and who owns the data, can you integrate that with health care? that could be an opportunity it's a tough time in retail. we're own lee looking for a plus 1% to 2% comp store gain at walma walmart. if this deal could happen, there would be synergies that would drive more people into the stores a customer that is pharmacy plus grocery is about 3% to 5% more productive >> they expect more people to come in the store because they need medicines or they're going to see a doctor? is it that simple? it's increased traffic and while they're there, they buy more stuff? >> it does have to do with relevance to a broad population. walmart has 4800 locations 90% of america within ten miles

of walmart as health care moves to a single-payer system, there will be added vertical integration. and there's lots of complications about this deal, though does walmart really want to be in the business? how would it be structured >> this would be a transformative deal unlike any other deal walmart has done in its history. humana is a $40 billion market cap, that's a huge deal. you would like walmart's stock better if it buys the company as opposed to just maybe create a deeper jv? >> well, we think there's a 30% to 40% chance a deal will happen 70% to 80% chance that a jv alliance or just a deeper relationship could happen. what could be great is if they achieve synergies without doing the deal, and it depends on the level of risk. as we run the accretion dilution model, it could be accretive on

an all-cash basis, and there are synergies, and this is a time in retail like never before it's about older and younger, about physical and digital how can we be creative and be ahead of this. logistical risks, but health care is transforming as well as retail, and walmart wants to be ahead of it. jet.com was not expected, that was novel. what we'll have to see is unlikely/likely bed fellows in the new world of retail. >> oliver, thanks a lot for your time >> the fda turning down alchemy's application for a new drug to treat depression, and the stock is plummeting. >> and the rate at which banks lend to each other is now at its highest level in almost ten years. that could spell trouble for the markets. "power lunch" back in two.

the biotech firm alchemy is plunging after the fda rejected

its application for a new drug to treat depression. meg joins us with that story >> an important pipeline drug for alchemy, an experimental medicine that the company hoped it could bring to market later this year to treat depression. that's a large market with millions of patients in the u.s. alone and a big need for new treatment options. but the fda said there wasn't enough information to assess whether the drug works, issuing what is known as a refusal to file letter and said additional clinical trials are needed before the company can resubmit its application. that process could take years. alchemy says it strongly disagreed with the conclusion and plans to appeal. the company had decided to file for approval after it ran three phase-three clinical trials. which was successful, and two of which had negative outcomes. it appears to be weighing on shares of another firm investors may be concerned that company will see a similar result, although an analyst at

jpmorgan said she sees only limited bleed through. >> what came to mind was sage therapeutics tyler talked to the ceo last week and the implications for their mdd drug >> right, so sage has been down a little bit, but the rest of the market is also down. they have a depression drug in the midstages of clinical trials some people wonder what implication this will have people are worried about companies with mixed packages of data applying for the fda right nu >> meg, thank you. >> elon musk tweeting out an april fools joke about tesla going bankrupt but investors are not laughing we have the latest on tesla's troubles straight ahead. >> the dow 30 heat map, a sea of red. united health, the one that supposedly is in talks with walmart about a deal, higher by a half a percent, and intel continues to dive following records apple is going to make its own chips. duncan just protected his family

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i'm contessa brewer. here's your cnbc news update president trump hosting children for the 140th annual white house easter egg roll.

the ceremonies took place on the south lawn kicked off when trump and first lady melania trump were joined by the easter bunny on the truman balcony later, the president discussed daca >> the democrats have really let them down. they have really let them down they had this great opportunity. the democrats have really let them down. it's a shame and now people are taking advantage of daca, and that's a shame. it should have never happened. >> one of vladimir putin's aides says president trump invited the russian leader to the white house when trump called putin last month the two governments did not begin any preparations for the meeting and the next week, the u.s. joined 24 other countries sanctioning moscow over the poisoning of an ex-russian spy >> thousands of protesters including teachers gathered in frankfort, kentucky, to demonstrate against budget cuts and pension concerns that's the cnbc news update at this hour. back to you. >> thank you very much, contessa brewer >> stocks are deep in the red with the dow down nearly 700

points right now all three of the major indices back in correction territory the dow at its lowest level since november 15th, 2017. the dow and s&p 500 are below their 200-day moving averages. the nasdaq has seen the deepest losses, a loss of 236 points all 11 s&p groups are lower. consumer discretionary, tech, energy, financials suffering the deepest declines take a look at the volatility index. it's jumped in today's session, higher by 25%. and take a look at the ten-year yield, hitting the lowest level since february 9th, now at 2.728% >> the oil market is closing for the day. let's get to jackie at the commodity desk >> good afternoon to you crude prices taking a 3% hit about today as the ecwouldy market is making the sharp move lower as well. fundamentally, crude has more reasons to move higher than lower, but oil is tethered to equities because the market thinks that equities pave the

way for the demand side of the picture. stronger than expected demand has been a bright spot for crude. take that away, the rebalance, of course, could fall apart. you could see crude closing over $63 a barrel tyler. >> thank you very much, jackie >> let's turn to the markets once again a bearish start for april. that is sort of counter to the usual trend. the dow has not falling in april since 2005 and the s&p 500 has only fallen once in april during that stretch. along with the nasdaq, all three indexes are re-entering correction territory the sixth decline in eight sessions for each today. more from futures and options trader jim with tjm institutional services jim, welcome good to have you with us >> thank you, tyler. >> what is the market telling you? >> well, there's a couple things we have to keep in mind. that's that today is a holiday in europe. the volume was very low. it's caught up in the last several hours.

to me, the first ting that tells me is it's a big deal but not a huge deal. yes, we're below the 200-day moving average, but i would need to see confirmation on a move like this for me to think there are 5, 7, 8 percentage points left on the down side. what it's telling me is we're going to test in the s&p the two spike lows in february that come in at 25, 30 with the way it's going, we might test them today, but i would be a buyer we have unemployment and earnings coming up, both things the market think will be good. >> when you don't have -- when the leadership of a market and the leadership, i'm thinking here of google and amazon and facebook and the like, when the leadership starts getting pummeled, is that especially worrisome or takes a garden variety sell-off into something more worrisome >> no question and i think you hit on there's two big things that's happening here the transition from historically low rates to medium level rates,

or whatever you call where we're going to, what the fed has talked about, and the fact that the leadership, the nasdaq itself had rallied 60% in the tune of 20 months. the fang stocks shoulders much of the heavy lifting on that if they're falling into bad public perception, something needs to step up over the last couple years, when one thing, the fangs lost leadership about a year and a half ago, and bank stocks jumped up that hasn't happened this time yes, we need something i mentioned bank stocks. i suspect that's what it will be, although they haven't shown desire for it yet. >> thanks very much, jim appreciate you being here. >> let's talk technicals now the s&p and dow breaking below their 200-day moving averages. what's the next key level to watch? todd gordon joins us on the phone now. great to have you with us on a day like today for the s&p 500, what is the next stop here >> sure. i'm looking at just the up trend from 2016, and if the charts are

showing, i'm sorry i'm calling in remote, the uptrend is being challenged around 2600 if we punch through as it looks like we have, it looks like there will be a quick shot down to the 2018 lows at about 2532 i think there's momentum in this market i do think we test lower on the daily chart, but if we step back and look at the weekly chart, there's much graver concern out there. if you look at the trend channels, if it's appearing that encompasses the rally from 2009, from the credit crisis low, if we break through about 2500 there, i think we have significantly lower to go. we have completed a five-way elliott trend. there's three phases to any healthy bull market. i think they're in place and we should go back and retest the wave for a low, just at about 1800 i have to say, we have significantly lower to go. >> i'm sorry, because you're remote and you're not here to point out the charts yourself, i want to underscore some of the

levels you're watching right now, the next stop in the s&p you're watching is 2532, is at that what you said? >> 100%. 2532 is our -- >> about 1.5% lower from here or so >> exactly i'm sure i'm on vacation right now, working hard on the beach here i just put shorts on to get down to that level, the elliott wave model says we should retest it, and it could be bumpy down about 1800 i don't know the timeframe, but that's what the chart says >> have you looked at subsectors of the market, tech or semis that give you other insights >> i'm a little out of touch over the last couple days. i do know materials continue to lag significantly. i know energy does, and again, if the argument that jim was saying, his position in the market of readjusting higher interest rates because of inflation, i challenge that and say look at materials. look at energy i think those are not showing good signs i think there's something broader at work here

and as you said, the technology is that leadership is being lost, so i think we're seeing broad based selling. i think the trend is lower for some time. >> bob pisani when he's been on in the past couple sell-offs, actually, he's pointed out that there are just simply a lack of buyers out there, and that's -- there's very little volume from a technical standpoint, does that matter does it matter how we get down to 240 points on the nasdaq 100? >> what i look for on buying is -- remember those 600, 700-point up days in the market? that is not the birth of a new recovery is made of. those are panic short-term rallies. i want to see more of a methodical carving of a low. that's when you start to get a resurgence in the confidence in the market we're just not seeing it while there are really sharp rallies that kind of blow over and just kind of move on, then i think the sellers come back with

a vengeance, and i just don't see any upside interest here >> all right, todd thank you. >> thanks, guys. >> todd gordon, tradinganalysis.com. >> stocks are selling off. watching a key indicator for your money should rising lending rates be a bigger concern for investor snz is it causing part of the sell-off >> and take a look at the nasdaq 100. we'll show you that, all 100 stocks in the nasdaq 100 are in the red. stay with "power lunch." we have more on the sell-off right after the break. 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. they all lead here.

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steep sell-off on wall street, and stocks, the dois down more than 600 points. at one point, down more than 700 points currently down over 700. and the nasdaq is down 256 a lot of focus now on a key indicator for your money, libor. it's been rising and it may have a big impact on the bond market and potentially the stock market, too. mike has been writing about limol lib libor, and rick has to pay attention to libor libor is the london interbank

offered rate, the interest rate banks charge each other to lend bunny for regulatory reasons it happens a lot, shorm term and what's key is a lot of mortgages are written off libor, a lot of loans written off libor. let me start with you. last time libor rose sharply, it was the middle of the financial crisis, and it was telling us that banks were very sick and potentially going to fail. we see libor rising now. do we see any similarities back to the financial crisis? should we be worried about the credit worthiness of any banks >> i think we see more differences than similarities right now. when we look at other measures of the credit worthiness, that hasn't shown anything like a sympathetic move with the move in libor we think this has very little to do with bank credit worthiness, a lot more to do with supply and demand dynamics in the markets for short-term fixed income products >> a lot of technical reasons we could go into that would make

for boris cable television interest, but how many loans out there exist on libor, and how many businesses, how many homeowners will see higher interest payments because libor is going up? >> the latest tally is something like $150 trillion of contracts are tied to libor. vast, vast majority of those are derivative contracts for the household sector, about $1.5 trillion. and most of that is adjustable rate mortgages and a little bit of student debt. the business sector, probably more like $4 trillion or $4 trillion to $5 trillion of business loans tied to libor >> if you have higher interest rates on business loans tied to libor, highest interest rates on home equity products, that means those businesses and consumers have to spend more to pay for the debt surface on their loans. what does that mean for the

economy? >> so it's a big deal. when you shift libor, it's not just libor, it's the front end of t of yield curve we looked at where dividends are, when you lift the front end of the yield curve, you're lifting the expense side of the balance sheet, as you described, for companies and consumers, but also, it's an alternative investment for people looking at rates versus equities. it's a huge deal it may be the story of the year. >> this chart that we're showing everybody exemplifies what we talked about so often, which is at what point do bonds start to give competition to stocks, because you can get a yield out of the bond market that you couldn't get before from the stock market you can see with the yield in the blue and the yield from the stock market in orange >> yeah, it is -- when people don't take that into account enough, when you think about how

do i take risks the last few years? you think about when rates were at zero, i had to find out on the high yield market, i had to go out of the yield curve. today, all of a sudden, i don't need to own as much of the other products i take the credit risk, i don't have to take the yield curve risk it makes a huge difference, let alone as mike was describing the impact on the financial system i don't think, as mike said, it doesn't say anything ominously in terms of where financial system is. but it does say where the alternatives are today >> in terms of the sectors with the most exposure to short-term borrowing cost, i would think the likes of energy, real estate are you concerned about sknae of these sectors in the high-yield world? >> so, it's one of the factors you consider today when you think about where rates are coming from, you're still not at an onerous point that i'm not worried about it we like the emerging markets, but the thing you have to watch is front-end rates, if interest rates keep moving up, we look at

the emerging markets, and as you said, the places geared to the front end of the yield curve, the housing market, that does have an impact, but today, we're not that worried economically. >> we talk so much about what the fed is going to do, but if libor is acting on its own without the fed, you've got a rate hike on the economy already, right >> well, in a way. so first of all, some of the rise in libor is simply due to the fact the fed is raising rates. some is also due to the technical factors. look, the fed wants to slow the economy. that's the whole purpose of raising rates. is this move in libor or the spread between libor and the fed's fund hikes similar there are some aspects in which it hasn't affected condition, one of which is the dollar you haven't seen the dollar streng strengthen and we haven't seen longer-term

interest rates move. it is a tightening of conditions we don't think it's doing all of the fed's work for it. >> good discussion thank you so much. >> coming up on "closing bell," don't miss one of the white house's key players, peter navarro live at 4:30 eastern time some are saying a lion's share of this market's sell-off is a result of the president's tariff policy we'll hear what mr. navarro, one of the architects of the policy, has to say >> meantime, we have a news alert on tesla phil has the details >> one day after the ntsb basically said to elon musk, we're not happy that you released data regarding the accident of a model x driver who was killed in a crash in california about a week and a half ago a crash that's under ntsb investigation. elon musk out with a tweet within the last 15 minutes saying, lot of respect for ntsb, but nhtsa, that's the national highway traffic safety administration, regulates cars, not ntsb, which is an advisory

body tesla releases critical crash data aficting public safety immediately and always will. to do otherwise would be unsafe. so in the tit for tat between elon musk's tesla and the ntsb, elon musk is saying you're not going to stop us from releasing information when we believe we should release information back to you. >> all right, thank you very much, phil lebeau. >> speaking of tesla, that stock is down 24% over the past months should you bet on mr. musk's vision in this sell-off, or is more pain to come? the tesla trade is next. you know what's awesome? gig-speed internet.

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we're talking about tesla, still down 5% or so, following the company's model s recall late last week. let's debate the stock's next move with boris. what's your take on tesla? >> over the weekend -- that tesla is going through bankruptcy the thing is behind every good joke there's a kernel of truth it speaks under the psychological pressure he's under. tesla is facing massive, massive amount of debt due over the next 18 months and a big capital expenditure spend. so, the only way they can get out of it is to do a capital raise. that's the big question, can they do another capital raise and pull the rabbit out of the hat and go forward the market is feeling -- the shorts are feeling like they're just circling like sharks in the water at this point and i think they finally may have nailed the company to the downside so he's facing some very serious problems because debt is

absolute stock is relative. sales are all relative that's absolute but he has to face that problem going forward. >> at the same time as a trader, do you feel like this is setting up for a massive short covering rally? all they have to do is deliver 2,000 because that's the number that essentially has become the whisper number thanks to the e-mail that musk sent to his employees, indications they would get to 2,000 that would be their number they would report >> right but the point is that even if they deliver that number, he still has to service the debt. that's the much more interesting question that -- none of that is going to -- he's not going to be able to organically create the amount of revenue he needs in order to service the debt he has to do a capital raise that will be a much more interesting question investors give him more capital to go forward. i think even if they beat the number by 500 units or so, it may not be enough this time because the market was really looking at this point for tesla to become a much more productive car company.

and it's not so far. i think the disappointment is much greater at this point. >> last question for you, boris, and that concerns the broader markets. we're still in this selloff. well off the session lows but the dow is down by 609 points. where do we go from here are there buys you're looking at right now? >> i think the problem is this market -- this is a bad cyclical time, the second quarter of the election year, as we're facing it now it's kind of exacerbated by the tariff talk and trade war talk i think it's difficult to position yourself to get long just yet i think there may be more pain to come. the market, pretty much the whole second quarter, could be much more dangerous than people think it is. >> appreciate your thoughts. for more market insight, head to our website, tradingnation.cnbc.com check, please, is next >> announcer: and now the latest from tradingnation.cnbc.com and a word from our sponsor.

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better way to see it than to go to our heat map which shows in this case the 100 biggest stocks in the nasdaq. look at the lower right side zoom in and you'll see some of the great market leaders of the past couple of years struggling today, including tesla, nvidia, amazon, netflix and most recently and maybe famously, intel on the news that there's some chance that intel may not be selling as many chips if any, really, to apple >> we should note that while most of the sectors are poised to close in correction territory, including technology, which is currently in correction territory, it is still up for the year that's a strong testament to the strong gains it had back in january before this first bout of market volatility in january. >> boris got me thinking about the joke about going bankrupt. there's a whisper of truth in

jokes. there's a saying [ speaking foreign language a joke like that would make latins very nervous. you shouldn't test fate with a joke like that. >> i'm sure a lot of investors who do not like that joke either "closing bell" starts right now. >> hi, everybody welcome to the "closing bell." i'm kelly evans at the new york stock exchange. >> i'm wilfred frost a bearish start to april the dow down more than 750 points at the low. >> we're down about 613 points right now, but in -- and the lows were, what, within the last 30 minutes, an hour. >> it was a steady selloff from the open, about 12:00, a brief reprieve for 90 minutes and down to the lows in the last hour or so. >> don't blame the londoners