been there, who might have seen something. all of that is what the fbi will be looking into. >> it's more of an expanded background check than any ruling or anything like that eamon thank you. >> you bet. >> eamon javers with the latest twist in what was a dramatic week. >> yes. >> surrounding the supreme court nomination. >> dramatic to say the least thank you for joining us on friday that does it for "closing bell." "fast money" begins now. "fast money" starts right now. live from the nasdaq market site over looking new york city's times square i'm melissa lee. tim seymour carter worth guy adami tonight on fast pb tesla tanks having the worst day in five years after the ceo gets sued by the s.e.c. for you had fraud. but musk is fighting back. will it be a win for shareholders despite the odds a retail value holding strong the third quarter but the kmart master says the party could be so far sooner than you think but first the big story, facebook under attack again. the social media giant saying 50

million users were affected by a security flaw. let's get to josh lipton in san francisco with the details on this developing story. josh. >> mel, here is what we know, facebook saying on tuesday the engineers uncovered a security issue impacting almost 50 million accounts the ceo explained that issue on a call take a listen. >> i'm glad that we found this and that we were able to fix the vulnerability and secure the accounts but it definitely is an issue that this this happened in the first place. and i think this underscores the -- the attacks that -- that our community and our service face and the need to keep on investing heavily in security. >> facebook says that the investigation is still in its early stages but that they fixed the vulnerability and informed law enforcement, including the fbi, saying they have yet to determine whether the accounts were misused or any information was accessed so how did this attack actually

work in facebook saying attackers took advantage of a vulnerability in its code that impacted the view-as feature that allowed them to steal the equivalent ever digital keys which they could use to take over people's accounts the street starting to weigh in. ever core anthony declemente calling it bad news at a bad time with mid-terms around the corner the revenue trends are not likely impacted and he says under like the cambridge scandal, the company acknowledged the issue and took action another tech giant in the hot seat too sundar pachai meeting with lawmakers after he and larry page declined the invitation to appear for public hearing earlier this month cnbc reporting that pachai has agreed to testify before congress before the end of the year. >> josh the lipton in san francisco. >> the breech a latest in the series of missteps for the social giant leaching facebook all by itself. >> please. >> 2018 has been a long year for

zuckerberg and the stock plkting problems down 7% this year while the rest of the fang trade takes off and tech surges. has facebook become a no touch stock, guy. >> see that face i make. i wanted to make it clear it's a pained smell something bad face. >> is it because of the song >> it's a combination of the two. clearly the stock is forcing us to play celine dion all of which makes me ill she ripped it off from eric carmen tim said this. this is combination risk you have to be comfortable with the valuation in an environment where maybe valgts doesn't matter i thought it would trade back to the level we saw in march when mr. zuckerberg testified which is 155 i don't think you have seen the capitulation volume you saw in march. which indicates that's where we are headed quite frankly i don't think you

have to do anything in earnings. i think 80s no touch for a month. >> it's a perception problem 785 million in cambridge 50 million now perception problem. carter is on the desk. talking about technicals the hundred week moving average is 162.52. stopped on a dime. probably six times that's. >> that's not going to save him. >> i agree with that. >> the bottom line here -- i read about this on.com a couple days ago winners and losers in the data privacy world markey mark just told us that facebook is a service it's a community it's not their data brokers that's their asset and they can't protect you they cold told you on the second quarter earnings call they don't know the cost to protect it this is a security problem this is the core asset in the world -- think about data today as we thought about oil ten years ago. it's the new oil it's the asset everybody is trying to figure out what we have and i think you're going to continue to hear the headlines

to me facebook has not solved any problems and they are losing trust. >> a bad thing at a bad time you can break sentiment that's hard to repair that. and to have this happen on top of all of the things that much happened it's not what makes people want to buy the stock. >> is there a contrarien trade wrapped up with the facebook problem? they have of all the social media stocks they have perhaps the deepest pockets, the strongest revenue streams to combat any regulations out there as opposed to, let's say, twitter or some of of the other smaller players out there. >> in the long-term, yeah wsh i think over the longtime they have dose those. neck pull a number of levers' we said for a number of of years years on the devg. mr. zuckerberg just said himself, reason to spend more on security are you seeing them double down on security on october 31st. that's the concern nobody saw it last quarter coming but if it happens again it's shame on us. to answer the original question no touch.

>> you get the bulk -- the bang for buck with facebook the advertisers sort of are forced into doing -- yes they have other paces they can do it but definitely. >> should there be another story if the advertisers have no we are else to go. >> the the report said the analysts says it shouldn't affect the revenue stream. maybe it doesn't affect the revenue stream but you need it to play out a quarter or two i don't know if you get the solace in the revenue stream you have to be investing if you are an advertiser in facebook. >> again, i'm looking at this differently. i'm thinking about this in what is the multiple i want to pay for the stock where the company doesn't know how to handle it. i don't have a personal agenda against facebook i would urge all investors to think about how they invest in every company they invest in taqland that has this as a core asset. it's not a community of sharing. it's a company selling data. and sells data to advertisers. that's what's going on maybe in the short run that's

fine i'm not saying they're going out of business. they have a big cash flow but that's not what this is about. what doucht to pay for the company, the multiple and there is a reason it's zbleep no touch. >> absolutely. >> let's go to the kmart carter. >> let's stop and walk over here first talk about fang generally then go to facebook specifically here is a chart of fang over the past two years no drawings, no judgments. let's put in something and see what we can find so here now is the same chart. and what with we know of course is that this has been almost perfectly on trend over and over and over it has found this trend line what's happened now is just what you see here we have essentially broken trend. not -- not good. let's go on to another chart now, it's the same thing, fang on top but relative performance to the actual market. and i want to zoom in here if you see this, we have held

above this line. now, compare that, however, to -- well maybe go back one if we can but if not -- compare that to the -- where we haven't broke trend. so take a look at this we are below relative to the market performance is everything this is a huge outperforming now gnat not attracting capital. moving on. let's look at this comparative chart of now facebook versus fang fang starts to underperform the s&p and facebook is starting to underperform fang. you can sigh that here facebook in blue fang in orange and then let's draw some lines we have this epic. and we know it was epic selloff on record volume and guy referred to that and we try to make another new high and make another epic sell i don't have the biggest lost of capital, 120 billion with a gap

the odds of exceeding that high are exceedingly low for years. >> for those people invested in the communications services sector, the new s&p sector, is this the weight that causes underperformance of the sector relative to new tech sector, s&p 500. >> one of the issues -- the bull would say it's already down 27%. in fact rebound potential. but again sentiment is broken. and for this particular to have a reset like that it's hard to overcome to your point it could very well be the problem for that area of the market. >> the question for the desk, the money come out of facebook where has it gone or where will it go in theory? we talked time and time again about stocks that are crowded used as an atm and the money goes elsewhere to another company's benefit. >> i would have thought originally it would have went to twitter. because twitter suffered so much earlier than facebook for a lot of years and was not seen as really the grownup at the table facebook was what it originally came out it went into twitter. but then the social onslaught

happened on capitol hill i think they're coming out of all of them resetting, going into a different secretary are, different space. >> part of the whole rotation. >> industrials or health care. >> what do you think tim. >> there is a scarcity of investment plays certainly in the social media play. what is facebook it's a media companies. media companies are thought of differently netflix on some level gets -- if you tell tell me there is a substitution effect or would are where would we see could if it's a zero-sum game in i don't think investors are looking at this. they need to think about how they approach the companies that deal with governor governance issues. >> should we impute factual basis's problems on the rift of the social media secretarier >> yes. >> any company traffics. >> can you explain to me what impute means before i answer the question i think each of the companies have their own risk. facebook has its own combination risk netflix is is substitute in a wide enough. >> how about twitter, google,

amazen >> twitter is different than fv. it's sort of lumped in but the market wants to do that. carter walked back on his own without you asking him -- is that what happened. >> i'm not going to not invite him back to the desk he has a clair. >> you've heard of that march low do you think we're undercut nag march low. >> i do. >> i agree. >> wow >> think of companies that use data make your life better google is different. you know, when you think of winners and losers -- i think amaze isn't a winner on some level even though they have regulatory issues. it's the company using data to improve your experience or sell you services, i think those guys are in a much better. >> do you think members of dwres see it differently. >> no. >> but this is -- this to me is all about how investors perceive it shareholder value, correspondent c suite how they handle it the regulatory issue is -- that's not going away. okay that's going to continue a long time. >> to tim's point, you could classify those to amazon and

google, because amazon severance should make your life better they're there as a tailened to whatever consumer issues you deal with. they are not going away. they ma might be massed into mid-terms but not going away. >> for more on the facebook security breach and what the next move should be head over to cnbc.com plus it's been a hellish week for the banks and the headwinds are building are financials dead money as well in later tesla getting slammed as elon musk gets ready to take on the s.e.c. and defend himself against charges. is musk making the right above we are live from times square request, new york city, much more "fast money" after this

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i think that budget looks fine it doesn't surprise me to hear about it but a week ago we were ready to say the banks were performing. i'm not changing my tune i think the banks from a profitability standpoint are actually improving that dynamic and i can continue to stay long on banks i don't need them to outperform. i feel safe in banks right now. >> the best balance sheets in history. >> right. >> and yet the press action is horrible, especially with rates. >> what does that tell you are they dead money. >> in my view we're not getting as many hikes as we expect, the way the investment bank and broke rein the bkx. >> you think the way banks are trading is a precursor to what we expect from the fed. >> sure. >> that's fair look at the long bond in the last couple days >> is it just it doesn't matter if we get the hikes and the yield curve is just not -- >> think about this where rates are right now we got back to 3.12 on tennessee 10-year you look at rmz, the bigds aggregate for utilities still up 8% even

though rates are at highs. the messaging the is and see rates aren't going higher and that's not something we're high on. >> orp the 2-year goes higher and the yield curve is inverted is a bhoel another ball of wax. >> my concern would be if you are long banks or want to be long banks is europe a europe specific thing or are does it bleed into the united states i've been concerned about deutsche bank some time. traded miserably after having bounced. the klf is back below the 28.5 level. there have to be concerned dan nathan on the next show "options action" tweeted earlier it's the quickest rotation in history in terms of rotation in and out of banks we'll see. u.s. banks on just valuation in terms of earning power are great. the concern is if something is happening -- >> then piece of the market overall. there is not precedent for equities going higher when financials slump. >> banks do not show up in the

quarter or month it's health care, industrials, technology, those are the sectors performing so when you are waiting for this bounce that might never come, tim started off the segment talking about european banks that's only another headwind to avoid banks. >> we had the conversation so many times and i think that there's been not extraordinary moves to the banks but we have seen the rotation multiple times. yes they underperform but we are talking about one or two%. if i look at nine or 12 month period it's not that dramatic. i hear you guy on deutsche bank. but if we got say done saying i'm not saying we're right but us bank balance sheets are as good as they've been. >> what's the catalyst if we are in a environment or wore the bank should have the best -- they have the best balance sheets, the best conditions in terms of the u.s. economy to operate in and they're still not rallying what is that catalyst what's missing. >> i think people are concerned that banks margins on some level, the core based model is shrinking they are disrupted on

measurement levels that's an issue. if you look at profitability margins therefore that's a problem. but i don't know i look at earnings and every time the numbers out of jp morgan for the last three or four kwurs i've been reaffirmed in my view of banks. >> when you say performance. percent goldman sachs is down 12% yoortd. >> goemd has a ditch view thp talking money center banks and they're not -- thaesh not all created the same but looking at the xlf for talking about banks i don't think there is a disaster. >> yeah. >> banks after the election in '16 had massive 8:30 performances this woke that he give it back and they are below now where they were relative to the s&p from the presidential election. >> you say they go. >> i don't see how they go higher with this kind of sort of tape, yeah. >> all right coming up retail hanging tough in the face of a tough tape. but the chart master says don't

get excited. first in business worldwide in the meantime here is what's coming up on fast. >> his tweets that fund was secured and investor support is confirmed were simply not true >> announcer: but tesla ceo says, not so fast. he is going to fight the power and we'll tell you why that could be a good thing for tesla stock. that's when "fast money" returns.

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they reveal in extremes and defy limitations. these pursuits may seem unnecessary. but the scariest thing i can imagine is a world where this, doesn't exist. the s.e.c. suing elon musk, tesla stock tumbling >> the s.e.c. and elon musk heading to court. >> jim, elon musk, discuss. >> that's always been the question, right with tesla what's the musk premium. >> look at tesla shares worst day in nearly five years. >> shares of tesla falling sharply today. >> it did you hear that tesla

was in the news today. >> a little bit. a little bit. >> news to me. and shares in the electric car maker apparently posting the worst day since november 2013. this following the s.e.c. suing elon musk. for securities fraud but musk is fighting the power, rejecting an offer to settle with the s.e.c do elon musk and tesla have a fighting chance? and how much of a musk premium is there in the stock is it good or bad if elon musk is removed as ceo but stays with the company. >> i mean when the -- when the se s.e.c. offers a olive branch that's it the end of ma are they'll martha stewart you i think jim mentioned that on squawk -- squawk on the street that said, we are finding out. 2807 has been the line in the sand we are below that now. tim has been right i don't know what the premium -- but i think we'll find out in a very real way i don't think there is any way

you can buy the stock without knowing the outcome of this stuff. >> top holders have been lightening up on positions you have seen that in the last filing i know filings. >> from a risk management how can you not. >> you don't vacate. >> you can't hold we with whatever is is coming. you it's 244 i think the stock gets cut in half ultimately you are looking at a 150 or 160 if he is gone if these headwinds pace the way they are, i know it sounds cat a chris mick. >> how come is wasn't this is a benign selloff given the news. >> and given the volatility for the stock itself. >> we were here two weeks ago exactly this price. >> what does that tell you that we are back to two-week levels. >> exactly i don't think that big a deal. i mean i think people are so in or out on this that even this. >> mold on a second. but this is a guy who is up on fraud charges. maybe elon goes maybe he doesn't. but the reality is that

fundamentals and fraud are two different things on fundamentals i don't think the company is worth this. on fraud, look, the concept that they may not be giving you the true picture of the entire thing is something that at least you can start to hypothesize when you have a ceo making stuff up the 420,000 in terms of demand on the august 13th announcement on where the -- 420? get it, the same number that was this share price that they used with his girlfriend. if they're telling you and using a number -- i'm not saying they've done but 420 is the same number that lives in a demand number that they gave us on a release on august 13th. i'm just saying if there is fraud here there is -- there is -- who knows. >> but how come it didn't strop? when facebook dropped. >> it's a 26 percentage shortage because the guys are covering it doesn't happen at once. >> given what could be coming how muted the price was. >> was that your reaction today. >> down 14% i thought it was

significant. carter makes a fair point. we saw facebook move 29% in nine minutes. tesla should have been worse you can make an argument either way. >> you made the best point as usual by the way but that. >> really? >> if this guy cut a deal with the s.e.c. -- whether you think i'm joking or not if he cut a deal with the s.e.c. he would have destroyed short sellers he would have. we could have had a chance to put this get back the fundamentals. >> the issue whether or not -- whether or not you believe in the company's fundamentals in the future just look at ceo elon musk and the decision not to take that olive branch in the s.e.c. if he took that brrj this problem could have gone away for himself and the company. i don't care where you stand on the stock but in terms of his fiduciary duty as a ceo he could have made it all go away quickly. >> totally agree. >> he doesn't understand what that means, fiduciary duty. >> final trade time tim. >> data privacy at&t they do okay meanwhile i think the stock is cheap. at&t. >> carter. >> disney stock winner ahead. >> steve.

>> pfizer quietly you want up year to date i've been long a while stay long. >> guy. >> i agree on the pfizer and also a stealth rally in biotech that maybe you'll speak about in "options action.." >> tune in. >> tune in. >> that does it for us see you back here monday do not go anywhere "options action" starts of a the quick break. the riskiest job. the consequences underwater can escalate quickly. the next thing i know, she swam off with the camera. it's like, hey, thats mine! i want to keep doing what i love. that's the retirement plan. with my annuity i know there's a guarantee. annuities can provide protected income for life. learn more at retireyourrisk.org hi, kids! i'm carl and i'm a broker. do you offer $4.95 online equity trades? great question. see, for a full service brokerage like ours, that's tough to do. schwab does it. next question. do you offer a satisfaction guarantee?

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>> wrote live at the nasdaq market site in times square. the guys are getting reviewed hip me while they're doing that here is what's coming up on the show >> announcer: talk about going up in smoke. tesla shares are in free fall. and you won't believe how low some options traders see it going. mike ko breaks it down and. >> they're magically delicious. >> maybe but soup and cereal stocks could be bad for your portfolio hell so says dan nathan and he has a way to profit. plus talk about hanging tough. despite rising oil and