ten-year, 319. >> oil is going to snap back quickly. >> s&p off the lows, let's go out on a high note we still have some time. the dow was down 300, now down 271. "power lunch" will pick up that story, that begins right now i'm melissa lee. rising rates, bonds hit multiyear high this is record breaking run in danger it's been one month since amazon, facebook, alphabet, hit new high where do we go from here and how china infiltrated america's tech companies including apple and amazon and possibly the u.s. government the fallout, straight ahead. "power lunch" starts right now and welcome, everybody, i'm

tyler mathisen glad you could join us on this downer of a thursday after five days of gains, the bears are out and mauling the market today the dow down about 283 points right now. worst day now in three months. nasdaq getting hit the hardest it is down, as you see there, more than 2% but the story is really in the bond market, as it so often is interest rates hitting new multiyear highs, yields on two and five-year notes highest level since may of 2008. yields on the benchmark ten-year note at seven-year highs and the 30-year bond at its highest level since july of 2014 these rising rates are driving the regional banks higher. i suppose that's the good news they're on pace for their second straight day of gains on track for their best week since july transports meantime managing to ride the sell-off, holding steady, fueled by gains from

truckers and railroad stocks melis melissa? stocks diving this year, yields on the benchmark ten-year treasury note hitting seven-year highs, up 10% in the past month. even more pronounced in the past week the ten-year yield spiking and the s&p 500 going into the red the fed is a factor. what else could be driving rates higher we're all over these big moves in the market. rick santelli is here but let's start with bob pisani on the floor of the new york stock exchange >> yields have been popping, that's the starting to move the stock market the major issues affecting stops, melissa is right, global bond yields rising, not just u.s., a big issue here emerging markets are reemerging a little bit on that china issues, we have trade and tech spying issues, starting to affect our tech stocks

and those general spying issues affecting stocks that are generically what we call the faang groups apple and amazon, these vague reports out of bloomberg recently that the data center run by amazon web services, apple, may have been subject to surveillance we don't have any confirmation of that, certainly not from the companies. you see what it's doing to the tech group overall interest rate sensitive stocks, rates go up, emerging markets move down. reits tend to move down. consumer staples also on the weak side. banks surprising, a bit flat china stocks have been weak all throughout the day here. more big moves down. they had started to stabilize a few days ago that trend has been now reversed finally, i want to point out those bond eps, put that back up again. you want to watch, very heavy volume in some key bond etf. the tlt, the 20 plus and the

seven to ten, keep an eye on corporate bonds, that's the lqt, the one on the bottom there, watch that spread. any spread increasing between corporate bond yields and comparable treasury yields, that could indicate some trouble, not happening yet, but a lot of volume in those three etfs guys, back to you. >> thank you very much, bob. let's get out to chicago now, rick santelli is tracking the action at the cme. what is the bond market telling us, rick >> i think the bond market is telling us that, a, times are good for the economy, not perfect, but good, and improving. i like the catalyst yesterday being the nonmanufacturing as you look at the two-day chart, it really escalated from a range we've been spending for two weeks right around 305 area, and we popped, hit 323 today, is our time zone started to come into play. now, if you look at a chart of two weeks, tyler, between the s&p 500 and the treasury, the

ten-year, you could see that we've diverged in a big way, obviously. if you open that up to august 1st, you can see it also occurred during the emerging market issues of august. but it kind of reconnected, which is really the whole point of the story this is like a dance between the fixed income markets and the equity markets they're going to get back in stride it is not surprising stocks are down today the real key is to watch how treasury rates an that and to see how they unite over a couple of sessions when this pop in rates gets assimilated into trading. and finally, there's that other leg of the stool, the dollar index. now, as you look at a year to date chart, there's only one thing you need to pay attention to we know august was tell you ultimate with us because of the dollar's strength -- was tumultuous because of the dollar's strength. we're less than a penny away from challenging the high close for all of 2018. >> all right, rick, thank you very much. we appreciate it

rick santelli from chicago so our soaring rates, if this is really soaring, going to derail the record breaking rally? let's bring in bruce mccain, senior vice president with key private bank and dan fitzpatrick is president and technical analyst with t thestockmarketmentor.com as you look at which stocks have been leading the way, we had records yesterday, folks record highs today we sell off. what do you see when you look under the hood is the rally as strong as the top line numbers would suggest, the headline numbers >> certainly on the technical side as well as with some of the indicators like rates rising, it's not quite as good as it was somewhat earlier this year yet at the same time you've hit new highs and the economy is strong enough that it would be extremely rare to see more than a market correction over the

next few weeks as you look out a little bit longer, obviously if the economy deteriorates, you've got the prospects of a broader selloff for that reason, i think it's normal to see some deterioration, particularly after a high of this sort, and it's nothing to get too concerned about. >> dan, when you looked at the rising yield, the rising dollar, rising oil prices, this all points to strong economic growth yet right now they are headwinds to the stock market. at what point do we sort of break free of that notion that they are headwinds and say this is a sign of economic growth and therefore further gains? or do you not? >> i don't really look at it that way, melissa. here's why when i look at the yield on the ten-year, that's been kind of predicting higher rates for a while. we've been in a trading range for the last five months but the economy has been really strong we don't need to go through the numbers, but we're starting to see, when i look at the ten-year and what's happened today, i

think about, you know, the little dutch kid with his finger in the dike. today was a pretty big leak. but the market has kind of been leaking for quite a while. but i think bruce kind of brought up a good point, a good distinction between -- in time frame, what are you looking for in the short term versus the long term? and i wouldn't be -- i wouldn't be really negative on equities right this minute. i mean, as a trader, i'm kind of looking for a little rebound but we've been seeing some real deterioration in mid-caps and small caps those have been falling. they broke key moving averages in the 50-day moving average we saw retail sell-off in a big way the other day on really high volume and that's been a real leader. you know, i heard the guys on the last segment talking about some of the retail stocks. and they've been really strong for quite a while. but i don't think there's a lot

of money to be made in them right now, because of the overhead resistance. retailers send to get in at the top. i feel like at this point you want to peel back, look at the homebuilders i heard josh talking about how he thinks that the market is ready for these higher rates i don't really agree with that i agree that the homebuilders are ready for higher rates but we're seeing these big flashing red lights now because of the ten-year. but this stuff has been going on for a while. look at the ffty that's the ibd 50 etf. the ultimate growth. that's starting to break down too. so i don't want to filibuster here, but the bottom line is, i think that you really want to be careful and think like either a trader or a long term investor that's really the difference >> i want to bring bruce back into the conversation, dan, if you don't mind >> sure. >> dan, bruce says that the

market feels to him like it's leaking, like there's a little dutch boy with the finger in the dike does it feel that way to you and if it does or it doesn't, what should we be watching to tell us that the market is very fragile? what things would you be looking for? >> i think that there is some leakage. but it's not -- not to be unexpected, given the worry that's in the market, late stage cycle, rising interest rates what you want is economic confirmation for example, if the yield curve would invert, if you would see credit spreads widening, if you see restrictions of lengding, th other sorts of things that precede a downturn in the economy and the markets, then there will be time to worry and adjust your positions. for now we're not seeing that. overruling the worries and sticking with your positions is the most important thing to do >> all right, folks, thank you

very much. bruce mccain and dan fitzpatrick, thank you >> good to be with you now to the bombshell report rocking the world of tech, amazon and apple one of 30 tech companies that may have been subject to surveillance by the chinese government let's bring in josh lipton josh >> reporter: melissa, chinese government agents infiltrating the supply chains for equipment used by some of america's biggest companies. that's what bloomberg business week is alleging in this report, saying that the chinese military did force chinese manufacturers to insert special chips into components that ultimately went into servers assembled by a company called super microand those sabotaged servers made their way into dozens of companies, providing an open door into the hardware the supposed targets of this

attack dispute it. amazon saying, at no time past or present have we ever found any issues relating to modified hardware or malicious chips in any elemental or amazon systems. apple saying, the company has never found malicious chips, hardware, manipulations, or vulnerabilities purposely planted in any server. super micronotikcro noting, wet been contacted by any government agency in this regard. but super micro is dropping below $500 million in market cap. lawmakers are weighing in too, senator mark warner telling cnbc, this report provides more evidence that china's pattern of behavior is a serious threat to national security and supply chain risk management. tyler? >> josh, thank you very much what does this reported hacking mean for u.s. national security? eamon javers is at the white house with that angle. eamon, this makes everybody sit up and notice. >> reporter: yeah, absolutely, tyler.

you can imagine what's going on throughout the companies and government agencies that are dealing with the fact that they've got these motherboards inside their data centers and they don't know exactly what they've been used for. they're trying to go back and reconstruct exactly what information may have leaked out these back doors and where it may have gone and what damage may have been done as a result of that. there's so much that's going to be unknown here, even though this investigation, as "business week" lays out, has been going on for years inside the intelligence community we just saw mike pence, the vice president, make a speech at the hudson group, a conservative group here in washington, pence putting this sort of chinese hacking as part of a broader constellation of complaints by the u.s. government which has taken an aggressive rhetorical stance against the chinese government, the vice president saying this is all part of an effort on the part of the chinese government to leap ahead of the united states economically and in geopolitics.

>> eamon, if i'm understanding what the allegations, are and as we just reported, amazon and apple say they've not seen any evidence that any of the servers they bought from this company have been compromised, but is the idea that compromised chips were installed in the circuitry of these servers and that those chips then caused those servers to report back data electronically to chinese sources? >> reporter: yeah, that's right. and the reason it was able to be done by the chinese government, allegedly, is because so much of the supply chain for these parts is in china. so the people's liberation army would have had the ability to get into the factories and install the chips right on the premises as the motherboards were being made and then shipped out. some of these were apparently very, very small "business week" reporting some of the chips were so tiny they could fit between two slices of fiberglass and just hide there, or some of them were disguised to look like other components that you would expect to see in

that part of the machine, not necessarily standing out as if it's a chip that's out of place. so apparently a very, very sophisticated effort technologically to hide these things in motherboards that were shipped and now are in data centers across the country and presume briably around the worl unknown effect >> eamon, these could be a u.s.-company-made servers that are shipped to the united states and the chip was implanted even before this thing was shrink wrapped and shipped to the united states. there are government contractors which dismantle servers meant to go in the pentagon and dod and they scrub the motherboards for things like that it's interesting how these allegedly made it into these servers. >> reporter: and the effort that

went to disguise them, placed in such a way that they resemble other components, it apparently was a very technologically sophisticated effort just to find them. look, hardware hacking has always been sort of the nightmare of cybersecurity experts, right software hacking, you can find you can look at the code and you can see whether there's been some manipulation there. but the hardware stuff is just so below the radar for most cybersecurity teams that it's very difficult to get inside physically to all these locations and root out all of this stuff so once it's in there, it can stay in there for a long time. >> all right, eamon, thank you eamon javers from the white house for us big selloff on wall street today. the dow is down over 300 points. technical communication services leading us lower is faang losing its luster and its leadership role in the market the s&p 0 d50isown for the second week, that hasn't happened since the end of june stay with us

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technology getting crushed today, nasdaq down more than a percent, bank stocks all in the red. a rough couple of months for this once-mighty group none of these stocks have hit a 52-week high in weeks. 50 for facebook, 22 for amazon is faang still a good bet?

mark, great to have you with us. what sort of a feeling right now in terms of where they see technology in their portfolio, once it was the must-have. in the third quarter we did see a tilt toward more of a defensive leading, health care was leading the s&p 500 in the third quarter. is that the reason why we're moving away from technology? >> well, let's see i think the biggest question that comes up when i talk with investors about tech stocks and internet stocks is what the heck is going on at facebook. deceleration, margin compression outlook. the other names, people, investors, are pretty comfortable with they are attractive entry parts earlier this year. netflix had a price increase, and because of advertising revenue for amazon google is in the middle of the pack, it's been a compounder, it remains a compounder this year

investor sentiment is bullish for the latter three >> and yet facebook is your top pick >> absolutely. i'm looking for high quality assets that occasionally get dislocated there's no real great debate on amazon, it's probably the most consensus long that i look at. i still like it. but i don't think the risk/reward is as compelling the really interesting risk/reward in the group, and you're probably not going to get paid for it in the next 30 days, but in the next year is facebook this 160 today is the new 20, where that stock kind of based out post the ipo, and they figured out the desktop to mobile monetization. i think that's the opportunity you're facing with facebook. that's why it's a number one pick >> how does that opportunity get realized what drives it from today's price to a higher price? >> yeah, you know, you're absolutely right so back then, after the ipo,

they had to prove that they could monetize usage on small screen mobile devices. today they need to prove they can monetize usage across facebook and instagram stories and prove they can start monetizing facebook messenger and whatsapp >> don't they have to prove trust? >> yes >> yes, you're rate, yeah, they do they have to prove -- they're investing an enormous amount in artificial intelligence and building up the security of the platform getting hacked last week has probably put them back two more steps. i think these are solvable problems over time the question is how deep is that investment cycle going to be i think when they come out of it, it will be a stronger platform by the way, there's also a lot of product initiatives that the company is undertaking that they're not talking about. that's what this spend is going to help deliver. there's a couple of pieces that are going to come together in terms of new modernization, new products and greater platform security that package when it comes out, that's going to be the asset to

buy. you can buy it here. >> i'm curious, mark, how do you wrap your head around how much they need to spend and how much will be spent when it comes to improving security, when it comes to improving the quality of news on the site, when it comes to complying with any future regulations that might be put in place in the united states because i feel like only when you can really understand what they might have to spend, can you actually understand how that impacts the rest of the financial model. >> good point, melissa i think it's an unknowable i don't think the company knows. i think they'll be kind of groping their way through it the size of the spend they're talking about, they're doubling capex, more data centers, more engineers, 20,000 people just to monitor core content then they're digging deep into more r&d spend and sales and marketing spend. but it's really the r&d spend and the data center spend. i don't know if it's going to be enough or not. there will be $7 billion incremental in capex it's an unknowable are they putting enough

resources behind it? probably are they correctly in panic mode yes. and our assumption is they'll get through this >> all right, mark, thank you. mark mahaney it is not just tech that is tumbling, retail also a wreck today, led lower by ralph lauren, under armour and l brands plus the political fallout from the brett kavanaugh nomination we'll take you so the site of what could be the single most important election this november all that and more when "power lunch" returns alerts -- wouldn't you like one from the market

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powered by ibm blockchain. when you understand the potential of new technology, you can put smart to work. welcome back to "power." we want to take a check on the markets. the s&p 500 pretty much at session lows we're down by 1.2%, a loss of 35 points 2890 is your level dow industrials being led lower by nike and home depot midterm elections are a month away all eyes are on florida, in a senate race that could determine the balance of power john harwood is live in celebration, florida hi, john >> reporter: hi, tyler this kavanaugh nomination controversy has sent an electric charge through the midterm

campaign and right now, it appears to be benefiting the republicans the most take a look at this poll for npr, showing a narrowing of the enthusiasm gap republicans now almost as interested in the election and enthusiastic as democrats were democrats of course were fired up by trump. now republicans by the kavanaugh hearings you look at the states, the reason it matters so much in the senate is because you look at these states where democrats are trying to take republican seats. republicans are trying to take democratic seats those are almost all states that president trump won in 2016. here in florida, bill nelson, the veteran democratic incumbent, is leading by just 1 percentage point in this recent mason-dixon poll rick scott, the former health care ceo turned governor of florida. if the voters we talked about about this kavanaugh nomination are any indication, rick scott

may benefit from angry republicans fired up by this issue. >> it's such a fraud issue >> the kavanaugh hearings are a disgrace >> the thing nowadays, there are so many people nowadays, if i come up and say, you're joe smith, and you sexually harassed me when i was in high school, you're guilty. there's no it's, and's, or but's. >> i don't think the liberal side, the democrats are doing themselves any favors with what's going on right now with this nomination, this supreme court nomination i think it's a sham. i'm disgusted watching it. >> reporter: now, here is the paradox of the situation if brett kavanaugh is confirmed, and at the moment that looks more likely than not, republicans worry that that anger may dissipate and democrats may regain their edge in enthusiasm and voter turnout. a long time republican strategist told me, the best thing for republicans in the midterms is to have kavanaugh

defeated but i don't think that's the way president trump looks at it right at the moment, guys. >> john harwood, thank you very much and now we go to sue herera for some cnbc news headlines sue? >> indeed, thank you very much, ty we'll start with a u.s. official that says the u.s. will continue to tighten sanctions on iran despite a ruling by the international court just the other day that ordered the united states to ensure that sanctions against iran do not affect humanitarian aid or civil aviation safety. >> i think it's very clear what iran's motives are we will continue to tighten the sanctions on iran and we'll be seeing new steps in november and we'll go from there. >> closing arguments are under way in the murder trial of a chicago police officer jason van dyke is charged in the 2014 shooting death of

17-year-old laquan mcdonald. if convicted, he could face life in prison. researchers at harvard say painkillers may impact a woman's risk for ovarian cancer. they discovered those who regularly took a low dose as princip - aspirin were less likely to develop the disease but those who took naproxin long term seemed to have a higher risk it was a large study as well that's the news update for this hour i'll send it back to you guys. >> thanks very much, sue, we appreciate it. again, a check on the markets in the meantime. the dow is down 325 points it was only yesterday, remember, we were talking about all-time highs for this market. how do investors feel about these markets right now? are they confident, worried, maybe a little of both transport is down today but holding up better than other sectors. should you bet on the trains, an, trucks that's next on "power lunch.

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even before today's selloff, some of the stocks that have driven the market higher were starting to lose some steam.

dom chu is taking a look at the change in leadership dom? >> mielissa, it turns out about 168 stocks on the s&p have hit at least 52-week highs just since the end of august. now, we take a look at those stocks and said, how many of those stocks have now fallen by at least 10% from those recent highs? turns out only 11 of them are there. these are some of the names, to give you an idea of the types of stocks we're talking about first of all we have some of the retail side of things. as you can see here, we've got nordstrom and also kohl's as well nordstrom off 10% from its recent highs kohl's about 13% look at some of these other themes as well one of the things we want to look at is the idea that other stocks out there like perhaps a darden restaurants is also off about 13% from its recent highs as well. and of course we'll end on one that everybody kind of takes a look at overall, the semiconductor space, the technology overall, that particular stock, amd, now off

about 18% from the highs it hit a couple of weeks ago. we're watching many of these to see whether or not they continue that down trend after hitting those recent highs >> thanks, dom chu transports were one of the bright spots of the day before taking a nose dive let's bring in the president of argus research anobvious culprit would be a rise in it oil prices. how much of that has been a headwind for this group and should it be a headwind for this group? >> i think the real headwind, melissa, had been the trade and tariff threats now that that's resolved, i think the outlook is pretty bright for transports here >> specifically which ones you have a broad swath of companies in your coverage transports, planes, trains, automobiles, package delivery companies, just to name a few. >> the rails, for example canadian pacific is meeting with investors today. and they just forecast i think 20% growth in this third quarter. and double digit earnings growth

for the next three or four years. so they're pretty confident in their outlook. norfolk southern is another railroad company with higher costs than average they've got a plan to work those costs down i see good earnings growth there too. >> caterpillar has had a tremendous surge in the last month or so. i'm wondering how much of that was in anticipation of some trades disputes being resolved and should there be more factored into the stock, given that the big dispute with china has not been resolved? >> well, you know, caterpillar has been working for a few years on reducing its cost structure as well. and they have further to go. so i think they're going to continue to generate earnings growth and if they can keep selling to the emerging markets, like brazil that's come around again, we have a buy on caterpillar i think it's pretty good too >> i see you have on your coverage list general electric talk to me >> umm, i like larry culp.

i'm glad he is now running this company. danaher is on our bye list danaher has a great record of generating free cash flow, more net income every year. that's a big problem for general electric, they're going to fall short on cash flow in this quarter. culp is the guy to turn that around >> what keeps general electric being a sell versus the hold you have it at right now >> the franchises they have. i know they're going to spin off health care. but they're so strong in aviation and i do think they're going to be able to turn the power business around. i think it's bottomed here i think there's a good chance for a new catalyst with the ceo, new ceo. but we're going to wait a couple of quarters to see if there's a progress in the turnaround of the power business, maybe before moving it back to the buy list >> i thought it was interesting, you said the transports have sort of rallied as the trade worries have eased a little bit. how do the easing of those trade

worries affect boeing? >> a lot boeing has got maybe seven years of backlog and a lot of that is to china. they sell very important products, right? it's not grain for canadian pacific. so likely they'll work down that backlog. but with the trade tensions easing, i think the backlog can grow >> all right, john, we'll leave it there thank you. john eade from argus the market selling off one day after hitting fresh highs. rising rates becoming a much bigger part of this market story. how do investors feel right now? joining success the vice president of the american association of individual investors and the new survey from them out today shows investor optimism at an eight-month high so it may be, charles. but you point out that investor optimism actually for the year

overall is sort of below average. >> that's correct. we look since january 1, there's been about 16 weeks when sentiment optimism has been above average and 24 weeks when it's been below average. even though it's high right now, in general we've really seen neutral sentiment be above average. that's been above average 31 out of the last 33 weeks not high levels of optimism overall, not high levels of pessimism, more just neutral sentiment. >> when you see a bullish sentiment jump like it did in the most recent survey by 9.4 percentage points to a reading of 45.7, what does that tell you, what does history tell you happens next >> when we look at it, it's not too telling in terms of what the market is going to do next we really look for atypical readings, really readings that are unusually high or low.

we want to see bullish sentiment being above 45.5% right now. when we see bullish sentiment being unusually high, we tend to see the markets underperform, not actually be negative, but have a lower return in the next six to 12-month periods. we're not in that range yet. there's definitely an improvement in optimism. whether that changes after today remains to be seen but it's not at a level that it causes us to stop and say the market is at risk of either over or underperforming >> if i can stick that through my translation program, charles, this is a contrarian indicator overall. and right now the fact that we're getting more bullish should tell investors that they should be getting more cautious on the markets >> not yet it does tend to be contrarian in terms of over or underperformance when we look at optimism but there's a range where the pendulum usually swings. as long as it's in that normal range, it's interesting, it gives you some insights and some color but it's not at a level that would cause you to stop,

look around, and ask yourself, are valuations too high, is there something going on with interest rates, is there something else in the market causing optimism to be too high and should give me pause for concern. we're not it will have been levels yet moving in that direction this week, but not at that level quite yet. >> i'm sort of surprised that the historical average bullish level is 38.5%, which tells me that more than 60% of your membership or the pollees are either neutral or bearish, and if they had followed that, they would have left a lot of money on the table, wouldn't they? >> yeah, they really react to sentiment. people react to their emotions in general and leave a lot of money on the table that number has a wide range in it when we got to, say, march 2000, it was, i want to say, near 60, 70%. i don't remember the exact number when we get to march 2009, it was in the low 20s, possibly the

low teens. so we do have big swings but we do see it average around there. but it's important to realize, that's the average there's a really big upside and downside to that number as well. >> bottom line here is, you say, not too hot, not too cold right now, right >> exactly getting a little bit warmer than it was but not too hot yet >> charles, thank you. charles rotblut with aaii. the yield on the ten-year note at 3.19% right now, wow, highest level in seven years rising rates making it more expensive to buy a house or borrow but will you finally be able to get a decent return on a savings icount or a cd, remember those? ist bad news for homebuyers but good news maybe for savers that's next on "power lunch.

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? a what now? a satisfaction guarantee. like schwab does. man: (scoffing) what are you teaching these kids? ask your broker if they offer award-winning full service and low costs, backed by a satisfaction guarantee. if you don't like their answer, ask again at schwab. a big jump in the ten-year yield, 3.191%, seven-year high as of today, that's impacting mortgage rates

diana olick has the story. hi, di >> reporter: hi, ty. the biggest jump since november of 2016, the day after the presidential elections, which bonds sold out big time. the average rate on the 30-year fixed is up 14 basis points in just the past two days to 4.94% according to "mortgage news daily. that's the average for borrowers with sold solid downpayments and credit scores. you're looking at 5% and above for the not so pristine borrowers. the highest rate in more than seven years. this comes in conjunction with still very hot home prices the gains are shrinking slightly as sales slow, but prices are still rising faster than incomes and in most major markets, home prices are already well above their last peak in '05 and '06 what does that all mean for average home prices out there? $180 per month on mortgage payment for a median priced house. lenders are strict about how

much debt you can carry versus income for some now, the math will not work on a loan approval. of course tomorrow could be an even bigger day in either direction as we get the all important september jobs report. back to you guys >> diana, thank you, diana olick in washington. one group of people excited to see rising interest rates, savers after a decade of earning next to nothing on their savings accounts, the tide appears to be turning. let's bring in greg mcbride, sear vice president at bankrates.com. greg, great to have you with us. chances are, according to my notes, the highest rates you'll find won't be at your corner bank, the jpmorgans of want world. these are online banks >> exactly, melissa. you have to shop around for the best deals you can't sit back and wait for those better returns to come to you because a lot of the bigger banks have pricing power and they've been stingy about increasing the payouts online banks, by contrast, are

in a bit of a price war, leapfrogging each other in terms of who can pay top dollars as savers and individual investors, we can exploit that to our benefit the top yields even on a savings account that's available nationwide, 2.25%. that's critically important, because the fed's inflation target is around 2%. for the first time in more than a decade, savers are in a position where it's like, hey, i can at least preserve my buying power. >> it seems like the obvious choice would be to go for the higher yield, you could see 3.33% for a five-year yield. but you don't necessarily want to lock that in, right >> i agree, this is not the time to be chasing yield. there's not much additional premium, for one one-year cd's get 2.6% you have to go to three years to hit the 3% mark. five-year doesn't pay much more than 3% and we're in a rising rate environment so you've got the risk of being long and wrong if you push out

into too far of a maturity, not getting much in the way of additional yield, then you watch interest rates race past you over the next year i like the idea of staying in something shorter, like a one-year cd, give yourself the flexibility to reinvest down the road in a higher rate environment. that may be a better time to look at those longer term maturities >> what should i be making on my savings right now? how dumb am i if i'm not >> i would set the bogey at 2% in reality, you can do better than that. but there are savings accounts that are available nationwide with no minimum deposit that are paying yields in excess of 2%. so everybody watching right now is in a position to take advantage of that. if you don't, you're leaving money on the table we talked about the inflation target of the fed at 2%. i think that's the other thing about that critical threshold, tyler, being able to preserve it >> what do you say to people who

remain suspicious of doing business with a bank that doesn't have a story front on the corner, that isn't one of the big brand names, some of those big brand names have not treated their customers all that well, we know who we're talking about here but whathere but what do you say to them about doing business with one of these online banks >> just because you've never heard of it is not cause for concern. they're regulated, they're federally insured just the same as any other bank. a lot of them, what you're seeing is the online banking division of another existing bank or financial services entity in a lot of cases you may be dealing with a much larger entity than just what you see with the internet bank. >> the flip side to the rising rates and collecting higher rates is on the mortgage side you want to lock in as soon as possible what tips would you have for people who might be shopping for a house and have not locked any sort of rate in at this point? >> if you're at the point where you've put the offer in and it's been accepted and you're going to get into that mortgage

process -- >> let's say you're just looking right now. >> if you're looking, you're not in a position where you can lock the mortgage rates i think you expand your home search a little bit because of the affordability issue. if mortgage rates move up by the time you put the offer in, you could get priced out so expand the houses you're looking at to allow for the fact that if rates move against you, you may have to reduce your price point. >> all right, greg, good advice. thank you. greg mcbride, bankrate.com well, the s&p 500, look at that, sea of red today, down more than 1%, but there are some bright spots we'll tell you which stock is the index's best performer on this down day and explain why it is going higher. that's coming up on "power lunch.

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one sunshine stock today, constellation brands frank holland has more on what is sending this stock higher. >> good afternoon, guys. constellation brands is reporting steady growth in its beer, wine and spirits business and reporting early returns on its investment in the cannabis space in q2. they are reporting a $639 million gain from its investment

in a canadian cannabis company they are posted a solid beat, st28 cents over the estimate from the sta street constellation is raising both the bottom and the top end of their projections to a range of 960 to 975 the stock up about 8% over the past year led by a strong quarter from that core business on the call. investors were optimistic about their partnership with canopy. later this month the deal gives constellation a 35% stake in canopy, expected to be finalized later this month by the canopy board. the company has options to increase that take to 50% in the future constellation brands on track for its best trading day of this year. >> let's be clear, the beat does not come from cannabis they're not seeing any results from this investment yet. >> they have seen a lot of growth in their premiere business they have corona premiere. 10% growth in shipping -- excuse

me, depletion, where the distributors are actuall selling it in the stores 8% growth in shipping to distributors so apparently a lot of people like it. >> frank, thank you. frank holland. and we'll hear from constellation's ceo rob sands on "mad money" at 6:00 p.m. right after "fast money. another group holding up today's sell-offs, the financials, including regional banks, they are rising along with rising interest rates are they a buy signal for those stocks plus we'll have much more on the allegations that china planted microchips and used them to spy on the biggest u.s. tech companies, including apple and amazon make sure you stay with us for the second hour of "power. when you're looking for answers, it's good to have help. because the right information, at the

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all right, everybody, welcome back will the rising yields kill the stock market rally and, no, it's not a plot to a james bond movie a new report says china used special chips to spy on u.s. technology companies what does it mean for national security where's the threat

plus, a look at the forgotten tech winner. it continues to hit all-time highs. it is our mystery chart. it is getting overshadowed by its trillion dollar cousin there are your hints. finally, markets may be selling off, but shares of gardent health are soaring on a trading debut today. the ceo will join us today, as "power lunch" hour two starts right now. welcome to "power lunch. i'm melissa lee. we've got a big sell-off on wall street with the dow falling about 330 points right now the s&p 500 now on pace for a second straight week of losses it is down by 36 points or 1.25%. treasuries are on the move as well today as tyler mentioned, the 10-year yield hitting the highest level since 2011 communication services and technology of your biggest decliners sectorwise

financials and utilities meantime are managing to stay in the green. the faang stocks are getting hit hard today bucking the trend, though, financials bank of america, wells fargo, zions and state street let's get straight to bob pisani live at the new york stock exchange hi, bob. >> hello, melissa. i'll make it simple. any time you get a sharp move in a short period of time in a major asset class like bonds, it unsettles the market that's exactly what we're seeing let's just look at some of the headlines and summarize why we've been moving down recently. the big story is global bond yields rising. we're the leader, but the rest of the world also seeing bond yields rise. that's putting pressure on emerging markets you heard melissa talking about the china issues, not just trade but tech spying as well. that's spilling over in the technology group so take a look at the sectors melissa is right, much of the damage is in the nasdaq down 2%. that's weighing on semi

conductor stocks but generically the whole market is down about 1% so consumer discretionary and health care and materials and industrials, the whole sector is down about 1% with the biggest concentration of damage in tech. interest rate sensitive, well, this is predictable of course. rates go up, emerging markets tend to get pressure there's your first one, eem down consumer staples also fractionally to the downside banks as melissa noted are up today. the yield curve has steepened in the last two days. they're up, but not that much. you might think given the underperformance of the financials the last couple of months there might be a little more umph associated with this it's there but it's not terribly exciting what's moving and what's holding up defensive names are flattish what you want to watch and what i'm watching, bond etfs.

enormous volume in the last few days in bond etfs in the seven to ten-year space, the ten-year to 20-year space and lqd, that's the corporate bond, watch for increasing spreads between corporate bond yields and comparable treasury yields not happening yet, but that would be another big signal to the market that's what i'll be watching going into the close guys, back to you. >> tbt, which is the inverse of those bond etfs, also heavy today. bob pisani from the new york stock exchange from the nyse to the nasdaq, now seema mody is there looking at the big moves we're seeing in technology. >> the nasdaq is faring the worst, an over 2% decline. this sudden rise in global yields has pushed traders to sell some of the big winners and derisk their portfolio all of the faang stocks are down led by netflix, which is off by around 4%. only one of these stocks is

lower on the year and that is facebook with today's losses, the social media giant is down now over 10% in 2018. and as earnings season ramps up, take a look at shares of snap. evercorp reduced its price target on snap, forecasting another quarter of daily average user declines and broader concerns about management turnover the stock is down 5% but lower by 47% so far this year. lastly, keep a close eye on travel names the closure of highlands, a $12 billion hedge fund, is likely causing some forced selling in hotel names like hilton and marriott back to you, tyler. so will a rise in yields put a halt to the rally for good or is this just a short-term blip let's bring in kate warren and jeff kravitz welcome to both of you kate, let me start with you. you know, we've moved from super

low rates to just low rates. we're told repeatedly that rates are going up for all the right reasons without much inflation the economy is strong. they're moving up in a measured pace and yet today you see this kind of neck-snapping reaction off of yesterday. what happened? >> i think investors are really just reassessing how much the federal reserve may have to raise interest rates and how long they keep doing it. and we're getting a typical reaction, which is something's changed and the knee-jerk reaction is always to sell that's why we think this is probably short term, not long term the fundamentals remain good so we'd be using this as an opportunity to add equities. >> jeff, how much of the selling today is algorithmic computer driven and how much is real human beings making decisions? >> there are a good deal of machine-driven selling today and that's because once you breach that 3% level on the 10-year, it

does become a signal but we look at this as a normal progression of events. the economy is quite good. if you look at the jobs numbers, they're superb, some of the best in decades inflation is squarely where the fed wants to be. we're right on the eve of upcoming third quarter earnings. so this is just a short-term blip of investors getting used to higher rates. >> kate, at what point do you start getting concerned? it seems like the market has taken sort of a defensive tilt, certainly in the third quarter with the leadership of health care so when you say to use these pullbacks to add, what sorts of additions would you be making? would it be a more defensive oriented equity addition or the high growth areas? >> it would be to broaden out your portfolio away from u.s. large caps into small and midcap stocks which we think are a little better positioned right now and they have underperformed recently

they're more tied to domestic growth, less tied to global growth where we still think it's strong and positive, but it's less strong than everyone expected earlier in the year what you want to do is broaden out. in terms of sectors, keep in mind that rising rates are bad news for both the very high growth sectors, and that's of course the fastest growing technology stocks as well as for the high yield sectors so what you want to do is be sure you've got some in the middle and a little of each of those, because if the rise in interest rates turns out to stall out, if we don't see a lot higher inflation and although the fed will keep raising short-term interest rates, the long-term interest rates are really more determined by the pace of global growth. so you want to have a little bit of everything at a time like this because it's tough to tell which direction things go. we do think stocks keep rising and that's why we're saying buy the dips, but be a little more cautious today. >> so jeff, let me turn the calendar ahead to tomorrow when the jobs reports comes out one of the bright spots and one of the reasons everybody says

the economy is doing so well is that the jobs numbers has been so good and that has been one of the reasons that the fed has felt safe mupushing up interest rates. this may sound peculiar, but would you like to see the job report be a little soft so that the fed and bond investors don't push yields up quite as quickly? >> well, what we're really looking for with the jobs report is a goldilocks report, as you mentioned. not too hot, not too cold, just kind of down the fairway of where we've been in the past several months you know, 100 to 200,000 too hot of a jobs report could actually scare the market a bit. and the reason for that is that investors may feel that the fed is actually behind the curve and they may have to hike rates faster than anticipated, you know, which would give them concern. so we're looking for a job report that comes right in line.

>> did goldilocks get eaten? i can't remember i forgot. >> that was little miss mu muffeftt. >> no, she didn't get eaten but i think the market will pay more attention to the wage growth and less to the creation of jobs the creation of jobs is good underlying news for economic growth and the continuation of solid growth we've been seeing, but it's that inflation worry that i think the market will be more sensitive to. if we see really strong wage growth that could lead to what my colleague just said, which is the fed having to be more aggressive in raising rates. that's where i really think the market will be paying more attention tomorrow. >> kate, thanks very much. great point to end on. jeff, thanks to you as well. >> thank you. the major indices may be lower today but one area bucking the trend are some of the regional banks the sector is on pace for its best week since july can these stocks continue to rise

joining us on the phone is kevin barker, senior research analyst at piper jaffray good to have you with us if the spread came back in from 32 back down to where it was before, somewhere in the mid-20s, would the banks still be able to stay where they are >> i think you'll probably see a little bit of a pullback in the banks given they have been so rate driven over the last three or four months the market has been hypersensitive to rising interest rates and the potential for deposit repricing. we've seen deposit betas or the repricing of deposits be a headwind for many banks. given that interest rates have been moving higher and that we were going to see a pause from the fed, a lot of the regional banks have pulled back and are now trading at levels that would be considered pretty attractive, below 12 times earnings. >> which banks are most

sensitive to deposit repricing >> some of the highest sensitivities are going to be citizens financial, ticker cfg and capital one that have online deposit bases and online offerings that tend to be higher priced so you probably see deposit repricing at a faster clip for those two in particular. >> how big a positive is it that longer term rates have been moving up finally? >> longer term rates are clearly a positive if you see rates move up across the board, it is positive for banks, given that we're going to see higher spread base revenue and higher margins across the board. i would caveat that and say a lot of the large cap regional banks have shortened the duration of their balance sheet and are therefore more sensitive to the shorter end of the yield curve as opposed to the longer end. traditionally when you think about the banking sector, a steeper yield curve was always the biggest benefit. so if the 2-10 spread was very

wide, banks would do well. given they shortened their duration so much since the financial crisis, looking closer to a three month to five-year spread as opposed to 2-10 spread. >> why should it be a shorter duration spread that drives this trade? >> i think you unfortunately have to go through another cycle or recession before we see how banks truly will perform in a downturn i will say that they are much more conservative in their underwriting regulators are much more sensitive to banks creating asset bubbles, and, therefore, i would almost argue that they're defensive in a downturn given the limited amount of credit risk that they have taken. i would also note if we start to see a downturn, the yield curve should steepen and spread base revenue should increase. so therefore, i think banks

ultimately right here, especially with valuations where they are, should be defensive if we do go through a cycle here. >> kevin, thank you. kevin barker, piper jaffray. it may not have the rock star status of some of the competitors, but microsoft was our secret chart, delivering all-time highs a look at this often overlooked tech giant. plus china reportedly behind a massive scheme to spy on american companies we've got the latest and the implications for u.s. national security. plus, shares of gardent health soaring in their debut today. the company hoping to conquer cancer in a unique way the ceo will join us, and we're all over this market sell-off with the dow down right now more than 330 points. microsoft, home depot, nike, those are the laggards "power lunch" will explore it all when we return in two. don't know what's going on. i've done all sorts of research, read earnings reports, looked at chart patterns. i've even built my own historic trading model.

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welcome back, everybody, to "power lunch." tech is in focus as the nasdaq takes a big hit, more than 2% lower, and on pace for its worst week in a month with some of the biggest names deep in the red and microsoft is among them. it is down nearly 3% but the company has had a very strong run this year

it is the third best dow stock of the year behind apple and boeing and is up 31% so why isn't the stock getting more love? joining us is an analyst at griffin securities one can make the case that it's gotten plenty of love, can't we, say? >> i would say so. the stock is up more than threefold since we began representing it so somebody has been buying it they have a very well defined and well executed strategy they have the largest cloud revenues in the industry for the last six quarters. margins are going up and ultimately we're going to see very strong cash flow, which will continue to drive the valuation. >> the stock is about 112 today. where do you see it moving to? >> well, three months ago we raised our price target as we have repeatedly for the last number of years. most recently we set it at 124 so that would still give it some upside from today's price. we'll see how they report in a

couple of weeks and as always adjust as needed. >> how should investors think about valuation. when i look at price to earnings, price to sales, price to book, enterprise value to sales, enterprise value to free cash flow, right now they are higher than their five-year average across the board at what point does it get too expensive or fully valued in your view? >> well, we don't think microsoft is too expensive the other stocks that we like in software as well we think still have appreciation potential. to your point about the metrics, all of those matter. all of those are important when you look at those, but the single thing that we look at and base our price targets on is cash flow. and we're looking for within the next two years a nearly $50 billion free cash flow number. we haven't gone past 20 yet in terms of our numbers you do a dcf, we get to our price target. >> how important is adelea to this company right now >> crucial

we think that he's been instrumental to defining and executing the strategy i'll point out that we were recommending the stock before he became ceo because the seeds of the transformation were in place, but he clearly built upon that and leveraged those things. you clearly see this multiple ways across the company. the cloud businesses, the margins, even the stability of older businesses that were presumed to be in decay aren't really in decay. and so in multiple ways i think his strategy is being very well executed. >> excellent at execution certainly. thank you so much, jay, we appreciate it. well, amd has had an incredible run so far this year but it's been slowing down to more of a jog lately and outright stumbling this past week they are hovering near bear market territory should you buy on this drop? the home builders sector seeing declines.

welcome back to "power

lunch. it is time for trading nation. check out amd, down again today after a dizzying drop from its peak last month. the hottest stock in the s&p 500 is still up 170% this year so is this rally broken or perhaps is there a rebound on the way? matt mailey a this is one of the most dramatic charts you're going to see on a big cap stock. what do you make of it at this point? is it the trend broken >> i don't think so. it's kind of funny on this stock. i sent two notes out on the stock in the last six weeks. both times i said ushtd take a little profit. the problem is the first time i did it the stock was at 27 and it skyrocketed to 33 but the reason why i pounded the table when it got to $33 and stayed with that take some profit stance was that it had gotten ridiculously overbought its osi chart, it got well above

90 whenever a stock gets above 90 on the osi chart it always sees a significant pullback and we've seen that now. the stock is still a little overbought but nowhere near as badly as it was. it's still up well over 100% on the year and higher than it was two months ago the thing is, i still like -- it's got to get a little bit more worked off and i like the 50-day moving average. that provides good support back in june and july that's down at $25.30. so once it breaks $26, you might want to add a little bit there and get more aggressive as it gets closer to that 50-day moving average. >> mark, obviously the semi conductor group in general has been on the defensive here how would you play this? >> well, we wouldn't be buying amd right now. they were really cruising until the wind got taken out of their sails. the biggest issue is stemming from the impact of their new graphics chips which were supposed to give them a six to 12-month head start on nvidia

and intel. so a lot of this catch-up was already priced in. now we find out intel is not as far behind as investors thought so intel is rallying at the expense of amd i wouldn't be a buyer. i prefer nvidia at this time nvidia's forward pe is 35% lower than amd quite frankly, their chips have consistently been better you know, they have been punished a bit over their exposure to crypt ocryptocurren. so we would prefer nvidia over amd. >> nvidia actually trades at a discount to another chip stock that's a little bit of a novelty. thanks, guys for more trading nation head to our website or follow us on twitter. coming up, china reportedly using microchips to infiltrate and spy on american tech

companies, including apple and amazon what it means for big tech and america's national security, next and now the latest from trading nation.cnbc.com and a word from our sponsor. >> a double bottom is a chart pattern that suggests a downtrend may be ending and ready to reverse sometimes called a "w" formation because it looks like a "w." a double bottom is two distinct lows on a chart around the same velel. traders often view a break of the highest high in the formation as a bullish signal.

let's take a check of the markets. we've got the dow, nasdaq and s&p 500 all down solidly by more than 1% at this point. the dow is down 336 points the s&p 500 down by 38 and the nasdaq is down by 181 points or 2.25%. chip stocks, they are falling hard micron, nvidia and xpi, all down 2% apiece. social media stocks also taking a big hit. the etf that tracks those names is hitting a 52-week low in

today's session. snap, twitter, facebook, they're all down 2% apiece in chinese tech names, also among the biggest laggards and they are each down 4 or 3% each. let's get to sue herera for a cnbc news update. here's what's happening at this hour, everyone. democratic senator dianne feinstein criticizing the fbi report on supreme court nominee brett kavanaugh, saying the investigation was far from complete >> the most notable part of this report is what's not in it as we noted by the white house, the fbi did not interview brett kavanaugh nor did the fbi interview dr. blasey ford. 6.5 million pounds of various beef products have been recalled by an arizona company because they may be contaminated with salmonella. the meat was packaged between july 26th and september 7th. at least 56 people in 16 states have been reported getting sick.

and first lady melania trump meeting with the first lady of malawi the two had tea and then walked through the gardens of the country's statehouse and watched a traditional dance performance as well. malawi is the second stop on mrs. trump's africa trip you are up to date that's the news update ty, back to you. the oil market closing for the day. let's go to jackie d. at the commodity desk. >> good afternoon, tyler crude pausing with the decline of almost 3% but it's still near the four-year high it's not a coincidence that stocks are pausing too the correlation between stocks and oil seems to be back in play here also helping crude lower, the market digesting the news that the saudis and russians have quietly made a pact to reduce output still straddling the $75 mark and likely to stay there until november 4th, the day the iran

sanctions are supposed to take effect. big moves in the bond market with the 10-year yield hitting the highest since 2011 and the 2-year its highest since 2 his 8. do these interest rates at these levels or the speed at which they have gotten there, do they give you concern >> i think it's one not the other, tyler the rates themselves don't bother me. as a matter of fact, i'm seeing some positives in these rates to be honest. it's the speed you saw about an 11 basis point move in the 10-year note, about a 15 basis point move in the 30-year note over the course of four days. we saw 12 and 15 basis points respectively in the prior month. so it's the speed of the move which is giving that actual push down to the equity markets nasdaq has the chip story as well so hence the acceleration of the nasdaq. >> and what does that tell you about the mood of bond investors or the markets or the economy?

what's the message of that -- of the speed there? >> well, it's twofold. number one, that inflation might be real. number two, there's enough economic cover for the fed to continue to push up these rates and have the yield curve steepen. what's not being talked about a lot in this bond move is we've now got the yield curve back to where it was august 1st, which prior to that had been shrinking and in september moved down a basis point. all the risk of the yield curve flattening has moved out just as quickly as the rates have moved up. >> how is positioning? it seems extreme according to the latest report, bob, as i'm sure you read. net short positions on the 10-year is at record highs what does this tell you about where we should expect the 10-year yield to go and what the snapback could be should there be something that jolts the mark the other way? >> there's always the concern of

the snapback short covering is the thing that drives a rally much, much quicker than longs do. when you look at it in the context of how long people have been long treasuries, this actually isn't that bad. record highs on the shorts absolutely but the length of time that people have been short the treasuries is very short i hate to keep using the same words. so that report while concerning, if there's a snapback there has to be a news event to cause that snapback, otherwise i think it keeps building. >> all right, bob, we'll leave it there. >> thank you. china has allegedly been caught spying on the u.s. according to a bloomberg business woke report chinese spies used a tiny chip inside equipment to infiltrate agencies, including apple and amazon both have denied the report and tech company super micro says they remain unaware of any investigation. how easy is it for a foreign company to gain access to

proprietary information in the united states. let's bring in the former technology officer of the state of new jersey and suzanne spaulding, who was also the former undersecretary for the national protection and programs director at the department of homeland security. thanks for joining us, both. how often, how frequently do you think this happens, suzanne? >> china is definitely a very aggressive actor in terms of economic espionage and we see it take place in a wide variety of ways but one that we have long been concerned about is the potential introduction of vulnerabilities in the supply chain. i think it is something that folks have to take very seriously. >> i thought that there were government contractors who often went through and actually took apart let's say servers and actually looked for any potential chips or things that were not meant to be in there before they actually got deployed into places like the department of defense or the

pentagon does that happen still >> it's really important, we've known that for quite some time, to have as much visibility as you can into what components are going into the equipment that you're putting into your i.t. network and it's certainly something the federal government has been doing and the prooichlt sect -- private sector as well it's criticallyimportant that you recognize that your immediate supplier may not be the one who is responsible for all the components that go into that piece of equipment, for example, that you may be buying. so transparency as best you can into who's supplying all of the components is critically important and making sure that you do due diligence to ensure that the cyber security of any company you may be acquiring or connecting your network to, that they also have appropriate cyber security. >> so, dave, how would the bad guys have known that this

particular server into which i am putting this malicious chip was going to that customer in the united states, whether it was a government customer or amazon web services or apple how would -- or did they just put them in all of the servers that they were distributing and then just sucking up the information? >> in this case we're talking about a piece of technology, a mother board for servers that are used in data centers that are mass produced. so in this case essentially it's the gold mine. i think suzanne made some really good points. you need to do due diligence on your suppliers, but it's also the supplier's suppliers and the suppliers who are supplying the supplier's suppliers you've got to go all the way down that food chain i think these supply chain attacks are not only the most coveted targets but the hardest targets for nation states to effect first of all, they're coveted because if you can gain persistent access very early on in the supply chain, that is

during the early stages of the manufacturing process, you can essentially have keys to the kingdom. it's not like a software product where you can put out an update and it will be fine. you'd have to recall this equipment and reinstall it which in many cases is cost prohibitive. but it's also very hard to do. these are very strategic targets for foreign intelligence services that they invest years in these accesses. >> so the bad guys would have known which servers -- into which to put these malicious chips or put them into all the servers that they were supplying these big data centers. >> in this case the firm and the suppliers that are of interest had a very high share of the market, so they are manufacturing these mother boards -- >> for. >> for big companies. >> like amazon. >> amazon and apple. we should note amazon and apple have denied these reports which is interesting because the

reporting is very detailed but up to 30 american companies were likely using this type of equipment in their data centers. >> suzanne, at this point, you're the u.s. government and find out this happens. you're amazon, you're apple, whoever it is that's affected, what do you do and how do you look at the other servers that you're still using that are in use? >> clearly you pull the thread for example, what other companies were being supplied by a given factory, and i'm not addressing the reliability of the facts in the reporting as dave noted there the companies are denying the reports. but hypothetically speaking, you would pull the thread and see where else but the reality is that these kinds of vulnerabilities could be introduced from so many sources in so many different places it's incredibly difficult to have 100% certainty about the security of your supply chain. frankly, that makes it all the more important to make sure that you're able then to detect

whatever activity that vulnerability may be enabling, right? so make sure that you can detect all the devices that are on your networks, whether it's your i.t. network or operating technology or wireless network. then make sure that you can detect anomalies if data is suddenly flowing in a direction it shouldn't be flowing, it should only be coming in, not going out, or vice versa, doing things that are unusual, make sure that you can detect those, because det t detecting vulnerabilities that may be introduced into your supply chain is extremely hard and you need to make sure you have backup plans. ultimately, you should assume you're going to be breached and you should make sure that you have a plan in place to either operate in a degraded fashion or otherwise reduce the skongsz consequences of a cyber attack. >> there have been companies that have been hacked and companies that will be i can anticipate your answer here as between this kind of

incursion, putting a malicious chip into a motherboard, and a software hack, which is more common and which is more dangerous? >> so the latter is definitely more common. the former is more dangerous in this case, you have reportedly or allegedly the chinese targeting an i.t. piece of hardware, right, a motherboard that sits on a server that resides in a data center the goal apparently was espionage, corporate espionage, getting government secrets the other side of the equation is actually attacks that could intend to create some sort of physical effect or sabotage. that deals with not i.t. equipment but what we call operational technology or o.t. equipment, industrial control systems that automate our factories, our power plants, and the like so in that case those are the most potentially dangerous threats because they put

people's lives at risk >> if it goes down, you've got a problem. >> exactly i can tell you having dealt directly with many of these companies, supply chain risk management is not a new phenomenon again, nation states will always have one leg up on these manufacturers, but there is a lot of great work being done in this industry. >> dave, thank you very much suzanne, thank you as well. coming up, a company hoping to conquer cancer with data conquering the down market today. shares are up 71% in their trading debut. the ceo of gardent health will join us next. then take a look at the heat map. communication services and tech are your biggest decliners right now. financials and utilities in the green on this day of rising interest rates what do advisors look for in an etf? don't just track an index, help me meet a client's need. is the fund built to sell

or built to last? etfs are only part of a portfolio. so make it easy to explain. give me a quality fund that helps me get clients closer to their goals. flexshares etfs are designed and managed around investor objectives. so you can advise with confidence. before investing, consider the fund's investment objectives, risks, charges and expenses. go to flexshares.com for a prospectus containing this information. read it carefully. today's senior living communities have never been better, with amazing amenities like movie theaters, exercise rooms and swimming pools, public cafes, bars and bistros even pet care services. and there's never been an easier way to get great advice. a place for mom is a free service that pairs you with a local advisor to help you sort through your options and find a perfect place. a place for mom. you know your family we know senior living. together we'll make the right choice.

a moment of joy. a source of inspiration. an act of kindness.

an old friend. a new beginning. some welcome relief... or a cause for celebration. ♪ what's inside? ♪ [laughter] possibilities. what we deliver by delivering. welcome back to "power lunch," everybody. as the market sells off, here's a look at some names that are bucking the trend as you see right there. eli lilly is higher by more than 3% national oilwell and chipotle up more than 2%.

biotech company guardant health bucking the downtrend soaring in its debut on the nasdaq it is up 70% it is a company that is helping to fight cancer using data from a simple blood test. it's priced at $19 a share above the expected range it's now valued at more than $2 billion. the company's ceo joins us now from the nasdaq. jaime, great to have you with us. >> thank you for having me. >> explain to us what this blood test is and what it helps patients do. >> the blood test we have on the market today is called guardant 360, it's a liquid biopsy. traditionally late-stage patients would need a tissue biopsy, physically cutting a piece of their tumor tissue for the physician to match them with the most effective therapies we can do that with a simple blood test in half or a third of the time why that's so important is a tissue biopsy in lung cancer costs $14,000, has a 19% complication rate and a 1%

mortality rate so to be able to replace that with a simple blood test is a big game-changer >> you would think that the blood test, liquid biopsy in and of itself, jaime, would be enough to drive this company, but it's the matching up of these results, correct, with data so there's two pieces to this puzzle where do you get that data and how do you match those results to data to help a patient inform themselves about what sorts of treatment might be available >> that's a great question the information that we provide is not useful unless it leads to an intervention that can change outcomes in that patient and so we work with data in multiple layers. the first layer, we do a lot of machine learning and processing to unlock the tiny signals that are in a tube of blood the second layer of data is being able to correlate those signals with the best possible therapies. not only do we work with large academic centers and a lot of

other partners as well as pharmaceutical companies, we also do some of our own research to help continue improving the quality and the actionability of our tests. >> i want to get -- i want to get you to smile >> there we go. >> i want to point out the stock, which is up 72% i got the smile i was looking for. i'm sure this is a very gratifying and satisfying day for you. in what cancers has this product been used so far and in what other ones may it ultimately have an application? >> it's actually been used in 50 different cancer types lung cancer is 45% of our volume it's whereby op sees are the most difficult and have the highest failure rate so lung cancer has been a really big application for us but the technology is generalizable and works for all cancers. today we're in late stage disease, but where we're going is taking this technology as as

we make it more sensitivsensiti can be yoosused for early detecn in the rest of us and that's where the power of this lies. >> where does the bulk of your revenue come from, mostly from the consumer side of it in terms of paying for tests? are you also paid on the other side when you're matching up patients to potential treatments >> it's two sides. there's the clinical side, so we get paid by payers, you know, private payers, insurance companies, for clinical use of the test but we also now work with over 40 biopharmaceutical companies that use our technology to help them find patients faster and speed up their clinical trials so they can bring new drugs into the market. >> how do we know that the matches aren't financially motivated? >> these are all in the clinical trial setting, so these are predrug approval >> helmy, thank you for your time >> thank you. >> the ceo of guardant health. one of the country's most

popular resort cities for short-term rentals is cracking down with a new law designed to prevent illegal listings miami beach will now require any short-term rental property on platforms like airbnb, booking.com and expedia to list the owner's tax receip they say the law is needed because of out of control illegal rentals. air bnb says it is disappointed on the decision to double down on a law that's not working. short term rentals only permitted in certain areas of miami beach. cnbc investigation revealed widespread listenings in prohibited areas, listing properties and turning hem into illegal short-term rentals facing a crack down this time from one of their own

why juul is going after its competitors. take a look at retail names sees declesin, coty, estee lauder and matel.

welcome back everybody to power lunch. the fda has been cracking down on e-cigarette makers like juul. now juul is trying to crack down on some of its competitors here are the details >> this is a juul. many of you are familiar with the devices. the company is asking to order 18 companies to stop selling versions of these devices. let's look at some of those copy cats it has filed a complaint with the international trade commission alleged they the design of juul's system. they want the agency to stop the products from being sold and marketed in the u.s. juul itself is a target in the

crack down of teen use of vaping devices. it could benefit it appears to be cutting into sales of traditional cigarettes. a juul survey looked at 19d thousand users and found 62% were smokers when they started using the vaping device. about two-thirds quit after moving to juul shares of those companies are down between 15 and 27% in the last 12 months since juul's rise since the fda invest into e-cigarette makers the stocks are rebounded or seen their selloffs slower. many are also talking about vaping on earnings calls much more often back to you. >> so maybe you don't know and maybe you do does juul make more money selling the device or by selling the vap juice? >> that's a great question i'm not sure about that.

they are certainly making a lot of money it is about $16 billion. they have nearly 73% of market shares about three quarters of the market belongs to them >> it could be a razor blade model but i don't know we can find out. thank you very much. >> you bet >> you bet comingp, u lots more on this market sell off. power lunch is back in two

jobs report tomorrow will be critical it is always critical but given the today's selloff, does good news mean rates go higher and even stepher head wind to these? >> and the difference is unemployment rate may decline. kate warren pointed out one of the things to look at is the wage growth numbers. that's where the rule of inflation resides. certainly over the last week with amazon and others raising minimum wages you are beginning to see happily for workers better wage growth than we have had in several years that is what bond investors and inflation watchers worry about most >> and positioning the bond market makes it if we have any sort of aheadline that counters this we could have a severe snap back on bonds right now.

it is at a record high so if there's that short covering aspect we could see a snap >> yes >> as we get ready to turn it over the closing bell we should point out the dow is 100 points off of the lows of the day as the bond deal hits 3.2 >> thank you for watching power lunch. closing bell right now ♪ good afternoon warm welcome to the closing bell i'm wilfred frost. >> and let's get straight to the market actions treasury yields have hit fresh multi-yield highs. s&p now down less than 1%. they were down more than 1% earlier in the session nasdaq down sharply almost 2%. yields have had a huge