second in front of the a joint session in congress. the big issues are nexts as "power lunch" begins right now your portfolio taking a big hit for the second day we are right around session lows, the dow and s&p 500 having the biggest drop in about five months as you might imagine, the so-called fear gauge is rising a bit today. and the story we told you about taking most of the health care stocks down, hospital stocks are you want and other win is as well clorox, at&t and phillips van heusen are among the few companies in the green >> thank you i'm michelle caruso-cabrera. here is what else is happening hardy davidson shares are dipping. the shipments lowest in six years. they expect a drop this year as well apple glassing the ios plan. home prices surging again. the case-shiller price index dipping. we begin with the market sell-off we're at around session lows, the dow down around 360 points bob pisani is -- with with more. >> just off the lows 2820 was the lows, be we're just above that that's a different story the other major trade, short volatility bet volatility would be going down the vix you showed there that's the highest levels we've seen since august. so long trades we might have the end of the month rebalancing. that's heart to figure out people are way too bullish right now, and peak earnings acceleration sentiment i want to emphasis very importantly is way too high both bank of america merrill lynch and goldman sachs have noted ten years in the case of god mall what that means is they indicators get to extreme levels like they are right now, usually the market will paw. it's just very difficult to advance when people are so bullish. indeed that's what's happening right now. guys, back to you. >> thank you, bob. joining us is chris zach relyi, wells capital management global, chris and kirk, hey, congratulations, you are on "power lunch" on a day when we're seeing the biggest market drop for a number of months, so something to talk about. stock going down is not a bad thing. if you go up every day, it's more concerning, but big drops have to start somewhere. >> does the last day and a half action concern you longer term >> no, it doesn't. >> i think this is normal. we've had good fundamentals, a growing economy. it's really been a lot of positives on the fundamental side, but stocks have been running really far, really fast this year. >> make it more rattling right now. >> people are getting used to the small moves, you really can't expect not to continue that's something that's unusual, and can persist for some period of time. but more volatility is what you should expect. we've been talking to clients about that for the last couple months it's completely normal you want to ride through it and stay calm, but ultimately you want to focus on the fundamentals it yield like the year old curve is not inverting, if anything it may by steepening. with those indicators showing the all-clear, i think it's way too early to panic. >> investors have been -- they wanted to buy the dips and there haven't been too many dips so is this the dip you buy, our court let it ride for a bit? the dow is now down 400 points is this the dip you actually buy? >> i think you want to be careful here i'm not surprised we have a 4% correction we called for that, our institute in december. i think that's logical don't forget there's a double latte stimulus here. you have the tax cuts, and i think you'll get more spend on infrastructure, so on the other hand, you have very stimulative fiscal policy. >> so is that a yes? >> i think a correction is to be expected, but on the other hand i think the economy is pretty strong. >> what do i do? what do i do when i see the market down? we have 6 one percent days, and what do i do, kirk >> i think you want to hedge your bet a bit what i'm interested in is the semiindustrials, we own stocks like the caterpillars, there seals to be a rotation there, so i think it's logical underway. which i think we'll do better when the market adjusts a bit. >> chris, you're not worried about rising interest rates? you think the yield curve is steepening, i like that for the financials, but at some point, do interest rates not go high enough a lot of -- is precisely because of rising interest rates >> well, it's interesting that -- >> well, you have a year of contradictions on the other hand, you have the dollar weakening, which is not something you would expect when rates are rising, so it will be interesting to see how this plays out. all things being equal, a weakening dollar is good for the industrials. >> chris, that's a good observation on kirk's part, but chris, it's the yield on the ten-year that ultimately provides competition. >> ultimately sticking with the market makes sense until you see the fundamentals break down. i'm seeing earnings growth continuing, seeing the economy continuing to grow i'm not worried at this point in time. stimplgts toby, it's always great to speak with you. >> nice to talk with you a big story. >> brent saunders was interviewed earlier and asked who should be named ceo of the new venture. he mentioned you have you been in talks with any of these companies. >> thank you for the flattering comment, but no, i haven't. >> would you be interested >> of course i'm always interested to talk about people that i think will help the u.s. economy and the u.s. health care right now u.s. health care is really the rising cost is a huge threat to the u.s. economy these three gentlemen i think are -- who i have enormous respect for, have an opportunity to begin to have an influence on this it's going to require a lot of the things that they have control over for example, the data. and we are swimming in data. we need transparency and fluidity, and that will help bring efficiency right now i think they look at, and hospitals are really quite different from those hospitals are now 20% of the hospitals in the united states are running in the red they're working very hard to take costs down, and enormous amount, and we need a more efficient system supporting us, and similar cost reduction and efficiency. >> they have to put wellness things in place. they have to begin to understand how people go to the correct providers. they have to begin to drive the efficiency of purchasing, and the private sector is very good at when it puts its mind to it i don't think we can depend totally upon government to begin to drive the cost of health care down we are headed in the direction of moving to value, and away from costs we just can't depend totally on the government to do that. when you talked about the fact that you're swimming in data and you suggested that you actually don't know how to manage it or use it efficiently enough to actually achieve better outcomes, when i read this first press release, i was skeptical, and i wasn't convinced it juans just technology. it's incentives, people using more than they need because there's no kind of price controls price control isn't the right world, but alignment of incentives you do make the point if more technology were brought to bear, what do you think if you could manage all that data what would it do >> let me just give you another example. a total amount of data and knowledge in health care is now doubling every 73 days there's absolutely no way that anybody can keep track of that we need a.i., new technology, machine learning to handle this data, and we need transparency of this data, transparency to the provider, transparency to the patient, transparency to the agencies that support all of this if we have this fluidity, we'll get a much more efficient system when i think about technology, i think of that is what is going to support reducing the cost and improving the efficiency. >> i don't know what the implication of what i'm about to say is, dr. cosgrove, but it seems to me that the system is so fractionalized with so many different providers and p purveyors of cares, basically all who want to make a profit. at of those hospitals running in the red don't want to be running in red you have mentality health insurers subcontractors to the main insurer, the pharma companies, device makers, radiology centers, recoveries institutions, all working at -- and pricing in different ways. there's very little systemizing of things. it's just so fractionalized. somehow there's got to be a way to make it more holistic. >> one segment, for example. let's talk about hospitals every community has a community hospital that it supported they were independent. that was in the days when there was not much you could do for somebody in the hospital and not great transportation now we have great transportation and very sophisticated care that we can provide in a hospital and therefore we need to have a consolidation of hospital systems across the country you're beginning to see this, more mergers and acquisitions in hospitals each yore that begins to reduce the cost of the things that support hospitals ultimately you'll see hospital systems start to come together with hospital systems that begin to reduce that you are already seeing the reduction in the number of beds in the united states, and probably you'll see a reduction in the number of hospitals in the united states, simply because we have great transportation now and we can move people to the right location for the right care at the right time. >> dr. cosgrove, these three guys can send out a vaguely verdicted pages and move tens of billions of capital cap. i don't know if that's respect for them or how much the at least the insurance industry is despised, but the bottom line -- will this lower premiums >> i don't think we can tell at this point i think it is drawing attention to the private sector to the problems that we have, and i have enormous respect for these three individuals. >> toby, a pleasure speaking with you thank you. thank you. a market flash on apple. >> one of the 2kr50i6g forces could be what's happening with apple response this is in response to bloomberg headlines saying that the u.s. government is probing apple over updates that slowed older i phones now it's the justice department and the securities and exchange commission that are asking apple about how it disclosed some of those software updates, the u.s. has requested documents from apple in an early-phase probe, according to sources familiar from that bloomberg report we have reached out to apple, have not heard back yet. we have also reached out to the justice depended and s.e.c. foismt comment the s.e.c. has declined comment, but that's one of the reasons the stock is moving lower, but bouncing off the session lows, as we speak. >> thank you, dom. the dow is still soaring since president trump was elected. we can expect to hear about that for sure during tonight's state of the union address what else will he say? should he say when he speaks to the nation tonight "power lunch" will be right back you know what's awesome? gig-speed internet. you know what's not awesome? when only certain people can get it. let's fix that. let's give this guy gig- really? and these kids, and these guys, him, ah. oh hello. that lady, these houses! yes, yes and yes. and don't forget about them. uh huh, sure. still yes! xfinity delivers gig speed to more homes than anyone. now you can get it, too. welcome to the party. this is the biggest drop we have seen in a long time, but the market nonetheless, is now up 42% since president trump was elected back in november something i expect we'll hear a lot about. let's bring in eamon javers, in front of the highway hi, tyler, we know that the president was making significant ed its, and he began working on it in december there's been a lot of prep ties that he will deliver at 9:00 tonight. this afternoon we're told he's meeting with some of the major anchors, and will meet with some of the first lady's guests the white house has put out a quick list here, including jobs and economy. infrastructure, immigration, it will be some of the pillars, gary cohen, one of the officials involved, was on cnbc earlier today, gave us some information about the infrastructure piece of it, including a possible price point. here's what he said. >> he's going to talk about two key principles, more importantly he's going to talk about streamlining the approval process on infrastructure. >> reporter: tyler, one of the interesting questions for the speech writers here going into this evening, as they watch the market close on a day, if you do have a significant dow day, do they want the president referring to the stock market specifically on this particular day? do they leave them in here, how did the president handle all that all that stuff as we'll what much for. >> who is the main speechwriter? do we know >> we know that m.r. mcmasters has been involved and gary cohn. the white house always set the president is the main speechwriter. >> we have another one of the cooks in the kitchen let's bring in larry kudlow. he was with the president yesterday. he points out the timing is difficult. >> a very relaxed president trump, spoke to us for, i don't know, off the cuff 30, 35 minutes? took questions and then he hung out with us for more, some night pics, and he's going to dwell a lot, i think, on the economy we're open for business in davos, a popular line, he has accomplished enormously. he's going to talk about tax reform, going to talk about regulatory reform. he was particularly yesterday insistent on going into the regulatory rollback, and eamon is right, with respect to infrastructure, the president made that same connection. you know, these approval processes, and other reforms are very important to get that stuff done he will go that whole hog. >> are we going to get dystoppian trump sort of semi-angry trump >> no. no >> things are pretty good over last year? let's highlight the positives? >> this will be, i think, the way it was yesterday an optimistic president, and we'll hear what i call a cooperative tone, not a hostile tone why do i call it cooperative because he's going to reach out on some of these key issues. immigration is very important, trade, nafta very important issue for him, infrastructure very important issue for him he's definitely going to go there. i don't know if he'll use the line from davos. another steve wrote it, but he wouldn't tell me yet he wouldn't fess up. the idea is america first, but not alone. i think he'll reach out. that's the kind of thing he'll do. >> what are going to be the things he says to appeal to his base >> look, he's going to stand firm i can think of two issues in particular one is immigration he wants very much to make a deal where the d.r.e.a.m.ers stay he's never wanted them to leave, but he will not accede to senator schumer who wants that as the only piece. he's going to talk about walls, barriers, security, and get red of the so-called diversity lottery, which i wholly agree with i think the democrats are in a hole america wants this stuff solved. >> you look at the poll numbers, and the support for increased border security is like 3 to 1 in favor. >> he is going to talk about that one other point on trade the president spoke some last night, he's extemporaneously yesterday on trade i can't quote directly, but here's the gist of it. he would rather negotiate with canada and mexico, but if it doesn't work, he will pull out the process may be elongated, he understands the integration of the countries and the industries, and he would rather negotiate. >> isn't that what he's doing? >> but -- actually the negotiations in montreal apparently we are better than has been the case. >> when you say negotiate, negotiate within the framework within nafta >> that's correct. to correct the procedures -- >> among other things, negotiations for how to solve contentious issues, okay arbitration, whatever it is. he wants to be sure that america gets its fair slot 20 years later, you need to redo it i call it refurbishing, but i don't think he will pull out. >> and we have to break at :27, larry. >> i took a beautiful pic with him. >> thanks, larry good to see him. rising rates one of the big factors for the sell-off plus financials could stand to benefit by interest rates rise "power lunch" will be right back you always pay your insurance on time. tap one little bumper, and up go your rates. what good is having insurance if you get punished for using it? news flash: nobody's perfect. for drivers with accident forgiveness, liberty mutual won't raise your rates due to your first accident. switch and you could save $782 on home and auto insurance. call for a free quote today. liberty stands with you™ liberty mutual insurance. nothey're not investing iney commoditiesies. or fixed income. what people are really putting their money into is what they hope to get out of life. but helping them get there requires a real refusal to settle for average. because when you approach investing with a tireless desire to beat the status quo, something wonderful can happen. those people might just get what they wanted out of life. or maybe even more. glue welcome back to "power lunch. check out what's happening with the homebuilding stocks. the etf down 1.35% in the asp trade, means it's working on the sixth straight day floor and decor and toll brothers up 43% over the last year, but now lost around 8%, brian, one of those winning trades that is reversing course. >> there's a lot of them dom, thank you very much the president tweets a lot >> this is one group in particular to focus on >> hey there, brian. they have have a need bump, the outperforming the broader s&p 500, second only to the tech sector the biggest winner cboe global markets, and stronger mark. and outperforming the s&p 500. the biggest winner is brighthouse financial, getting a nice 3w5078d be greenline -- the biggest laggard, a allstate down 6% >> guys, back over to you. let's get to sue herera. here's what's a happening at this hour, everybody the fcc says a hawaii employees who mistakenly sent an alert warning thought an actual attack was imminent it said that hawaii had been testing alert capabilities and mistook a drill for the real warning. he responded by sending the alert without a sign-off from a supervisor the worker was reassigned to a different job. >> could star has made significant progress to improvement efforts to combat terrorism. taken -- we look forward to building on this foundation. >> and the famed beach is getting a makeover 80,000 cubic meters has shipped in to expand the waterfront. it will be finished by the starred of the film festival coming up in may that's the news update this hour michelle, back to you. >> got it, sue thanks so much the dow is down about 500 points in the last two days health care taking a big bite ncn ouring stocks today, but coerabt si rates what is that signaling we discuss, right after this is the monolithic view of emerging markets obsolete? at pgim, we see alpa in the trends, driving specific sectors of out performance. where a rising middle class powers a booming auto industry. a leap into the digital era draws youthful populations to mobile banking and e-commerce. trade and travel surge between emerging markets. everyday our 1,100 investment professionals around the world search out opportunities for alpha. partner with pgim, the global investment management businesses of prudential. markets right now continuing their declines, the dow is now on pace for its biggi drop right now it's down by 386 points, down by as much as 100 s&p 500 down by more than a full percentage point nasdaq is losing about a percent. health care and energy are your lag guards the steel stocks in particular taking a heart hit this is the highest left sings august, getting whacked with more on this >> that story playing out as well, but on the price action here with cryptocurrencies, hovering right now just above the 10,000, so a clonalically significant level, that 10,000 market it did dip below there at a couple points in the last half hour or so hovering right around 168. so tyler, as we talk about the cryptocurrency side of things, they are not immune. back over to you >> from the crypto desk,dom, thank you. president trump has pushing for a 3% economy he didn't quite get there in 2017 steve liesman that are our -- >> he's going to be close enough to rock and roll, as we say. now looking at a year-over-year date but the survey shows 40 respondens, that the and you can see that the chance of recession next year, or in the next 12 months is now the second lowest we have ever recorded. the lowest was 13% in january 2015, now it's 13.7% that's very low for the average of this survey the shies, our respondents don't like them at all >> 90 per says the first hike is coming in march, the average is three, but 0.21, that 0.21 there is an expect ace of more growth. >> we're just 20 minutes at. there's a normalization of rates. there is been a very long time about to think about a 2.5 or 3% fed funds rate. >> that has to come into the calculation. >> it's a big, big change. thanks. >> a pleasure. rick santelli, how is the market doing year to day of at the yield curve, we are steepening a bit we're about seven, eight basis points higher. we have to go to breaking news all right. we're not going to breaking news what's interesting is the spread continues to narrow, even though we've sees the advektives in the sovereign global bond market for the first day this year, it's in any touched territory, because it settled at 87.26. let's look at the hyg going back to last month when it was nerve-rackinger we're getting close to that level. the lqd, the investment grade, it was really doomed from the start. it settled at the end of the year at 125.56 to 119.83 now, but you want to pay attention to the hyg. it's the transmission into the equity markets and fixed-income markets. obviously the equity markets have an opinion today. tyler, back to you. >> no sector of the economy impacted more when interest rates start to rise than housing. so let's bring in diana olick now. hi, di. >> hi, ty. homeowners are higher mortgage rates, rising steadily, especially this week with the surge in bond yields the average rate was just below 4%, now heading toward 4, a lot of you tweeting that is still historically low but today's pricey housing market is partially a function of record-low mortgage rates that's why home values were able to recover so quickly following the recession that an investor demand, but look at the latest read from case shiller the supply crisis is a big chunk of that. bidding wars are absolutely a root, even if we're historically low, any move will hit today's buyers, especially first-time buyers if you want another look at that rate chart, it's on the instagr instagram. back to you guys. >> we will thank you. let's here from jimmy iuorio i understand the rate story. it's a big deal, but i have cryptos down, gold down, stocks down inert, not much is being bought make except a bit around the margin what do you think is going on? >> that's why i think it's mostly a return to the -- mere up 41% the fed, if the worries about rates, okay, i will go with that a bit, because rates are going to be going up gradually the fed has several times over the last ten years willing to tolerate a bit of heat in the market before they raise rates to stop that we know that will hurt. >> jim, i hear you how about this if recent history is right, the dow will be up, and then tomorrow, what if the dow is down another 300 tomorrow. would you still say the same thing? >> no. i think this is going to be a contained correction if the dow is down another 300 tomorrow, that could change a little bit i think that a more 5% or 6% correction would be in the cards. right now i think just because it's hard to correction when we're in an earnings season where -- i think it's hard to correct in the face of that. so i'm calling for a 2.7 to 3% correction, tops >> you're focused on the short end of the curve, but it's really the long end of the curve which is what ends up giving -- gee, if i can get 2.7 over there, why would i risk it in the storm. right? >> no doubt about it, when we got to 2.73. >> if you want to get the -- i say have it, i just don't agree. >> jim, thanks so much >> despite today's big selloffs, they've been on an incredible run. 401(k) balances are higher, how is the indivuaidl investor feeling about this the result of the schwab the result of the schwab investortocks and bonds. they don't invest in alternatives or municipal strategies. what people really invest in is what they hope to get out of life. coming up nextrate and cross-pollinate many points of view that something wonderful can happen. those people might just get what they want out of life. or they could get even more. what they want out of life. (sighs) i hate missing out missing out after hours. not anymore, td ameritrade lets you trade select securities 24 hours a day, five days a week. that's amazing. it's a pretty big deal. so i can trade all night long? ♪ ♪ all night long... is that lionel richie? let's reopen the market. mr. richie, would you ring the 24/5 bell? sure can, jim. ♪ trade 24/5, only with td ameritrade. we have not seen this so far this year. the market is selling eve and big for a second straight day. the dow down more than 300 points we want to get a pulse of the retailer investor now. charles schwab is out with a new sentiment report showing that stock market caution is on the rise, but moth clients still feel good about their financial situations overall here for a "power lunch" exclusive is terry colson, charles schwab's executive vp and head of investor services. terry. welcome. good to have you with us. >> thank you. what does your survey show and when did you do it >> our consumer survey shows that consumers are still very positive, very optimistic about the market we did this back in december of 2017 and we ultimately know that clients feel they're better off today than they were a year ago. this is the very best numbers we have seen in five years. but at the same time -- go ahead. >> at the same time they're challenged 40% of consumers believed there could be some pullback there could be some market correction on the horizon. >> so it looks like they were right. there is a pullback today and yesterday. are they as bullish on equities in this survey as they were in the prior year, or has that then the prior year or has that come down a little. >> it's gone up in terms of their overall concern about the market that's gone up about 10% from a year ago. >> their concern has gone up let me make sure i'm understanding. >> yes. >> their concern has gone up. >> about 10% so there is a sense that a nine year bull market there needs to be some form of correction and people are anticipating this it's not going to make them make changes in their portfolio but they are aware of much of the uncertainty happening in the market today. >> are you getting a sense, terry, in days like today and yesterday that the retail investor is willing to buy the dip? a lot of retail investors have complained they haven't had the opportunity to buy a dip during this massive run since trump was elected. here it is are they certainly, we've experienced over 250,000 accounts in the last year and we continue to see investor engaged, asking questions and really looking at their portfolio for the opportunity to buy 52% of investors feel this is a good time to buy. >> they have certainly been putting money into etfs, i was looking at numbers from the ici indicating $27 billion of net inflows in the recent week are you seeing that among the products you sell that equities and equity etfs are the hot spot where's the money going? >> ultimately stocks and mutual funds as well as cash overall. now etfs are increasing as an option. >> so they're putting money into cash they're raising their cash levels >> yeah, as a matter of fact, millennials, that's always a hot topic, we're seeing more millennial millennials going into cash overall, year over year change now millennials are investing at the same time, but you start to see this with this cautionary optimism that's happening out there today. >> terry, thank you so much for your report, we appreciate it. >> you're welcome, thank you. >> brian you might have noticed stocks are selling off today and they are selling off pretty good in fact, we are on pace for the biggest two-day loss for a year and a half united health, goldman sachs, mcdonald's leading the dow lower. e maetgoing to have much more on thrks, procter & gamble thrks, procter & gamble the only dow stock and online equity trades are only $4.95... i mean you can't have low cost and be full service. it's impossible. it's like having your cake and eating it too. as highe broker if they offer award-winning full service and low costs. how am i going to explain this? if you don't like their answer, ask again at schwab. schwab, a modern approach to wealth management. now. we're back right after this. anything worth pursuing hard work and a plan. at baird, we approach your wealth management strategy the same way to create a financial plan built to last from generation to generation. we'll listen. we'll talk. we'll plan. baird. >> let's get to dom for our market flash stocks are having a rough start the whole idea of the selloff. the major u.s. average is down by a huge amount so far today. health care is definitely a big part of the story, but check out what's happening elsewhere with the energy sector overall. as we look at those stocks, those declinies are being led b names like chesapeake, cimarex and other oil names as well. that's tied to weakness in oil prices there are some expectations that we could see bigger inventory data coming out after the bell today and tomorrow as well so energy trade one to watch in the afternoon. >> thanks very much, dom apple is sliding coming up next, we'll have a bullish apple analyst. is he starting to worry about the iphone x sales and amazon, j.p. morgan and berkshire hathaway joining forces to fix health care. what can they do we'll talk to the former ceo of aetna, ron williams, joining us in the second hour of "power lunch. don't move here's what's on the menu. stocks in fell selloff mode as rates continue to rise the dow and s&p 500 having their biggest drop since may is this the start of a bigger pullback or a big buying opportunity? health care stocks slammed today as jeff bezos, warren buffett and jamie dimon announce a new health care company to fix the system and going off road, the ceo of atv maker polaris on earnings, tax reform sales and the stocks big drop. rev your engines, "power lunch" starts right now welcome to "power lunch," i'm michelle caruso-cabrera the dow is on its biggest loss since 2015 it's had a decline of more than 1%, it's been down as much as 400 points the s&p is lower by 26 points, nearly a decline of 1% and the nasdaq is lower than 57.75%. with this selloff, the volatility index crossing 15 for the first time since august. you can see the big pop there. interest rates are continuing to move higher, one of the reasons why seeing a selloff, the ten-year yield at 2.73%. the highest level in more than three years. health care is thebiggest drag that you heard from pfizer, united health worried about disruption from amazon and noble, apache, newfield and chesapeake are down 4% the semis are getting hit. intel, lam research, and the sectors index all lower. let's get to the floor of the stock exchange. >> 2028 is the important line in the sand for the s&p that was the low earlier told. we were just above that and were floating above that for several hours. if that drops i think they will be more concerned here remember the big big trades? one is go long the reflation trade, me scheele was referencing that those are things like energies, industrials, materials, stuff you play when the global economy is improve iing. that's notably weeker. health care is a separate story on the berkshire, j.p. morgan amazon story other big trade of the year, short volatility bet volatility would be going down not up, but the vix has hit 15, that's the highest level since august and that's getting some interest. what's the terrific? several the velocity of change, 2.5 to 2.7 in three weeks on the ten year is a lot. we may have end-of-the-month rebalancing for pension funds, they may have to sell stocks and by bonds sentiment is extremely high. the market tops out when sentiment gets to extreme levels and finally we have 2019 earnings estimates that indicate earnings will grow but maybe this year will be the peak for earnings acceleration put it together, what do we see a little bigger volume so the big etfs all having much heavier-than-normal volume and we haven't seen that in a white so a stew of concerns moving stocks to the down side. back to you. >> do you buy this dip or are lower lowers ahead let's bring in the chief investment officer of global wealth and investment management at bank of america it's a little firm, you probably haven't heard of it. jack mcintire is one of brandy j wine global opportunities fun. jack, let me begin with you and ask you a double-barrelled kind of question. what are bonds saying right now and what do you think of what they are saying about and to the stock market >> i think it's a case it's a little rare where good economic news is spooking the bond market because the connection is the bond markets worry things are too good, we'll get inflation but i think the bond market is mispriced the curve is telling us they're not that worried about inflation, the fed isn't behind the curve. 30-year yields can't get above that 3% level and that's more important because it's driven by inflation expectations i think inflation expectations, despite the strong economy, are very well behaved. >> tyler and i had a conversation ant this during the break. the ten-year is at 2.7 and the 30-year is 2.9 there's almost no daylight there. if the market were war ride about inflation you would see the 30-year creep up is 2.7 wrong >> no, it's not wrong on a cyclical basis the economy has been good for a while now. i just think it will be a controlled movement in inflation the story today, what's going on in health care just reinforces it. >> so the ten-year 2.7, is that the peak >> no, i don't think it's the peak i think we can get to 3%. but i'm not the camp to say 4% to 5%, there'd be too much wealth destruction in the bond market if that occurs. >> chris, you seem to be nodding there. let's turn back to the question we began this with this is a pullback, first time we've had two down days all year so far it's ban great month you'd take this for a year is this a time to start nibbling at some things that you see coming down? >> the knee-jerk reaction is to suggest like, oh, yes, this is the day, this is the day we've been waiting for and we were talking before about how many 1% declines last year we had. something like four. and we had one so far this year and back-to-back declines. this is a classic sign this is the day where you see the rotation in the market and you're searching for answers saying why is the market down. this is a repositioning for those who have been overextended in their risk profile. they have portfolio drift, whether it's the institutional side or the retail investor that says i've extended myself too far. i'm going to reposition. so for those not positioned accurately, this is a buying opportunity. we have reflation their tendencies as jack was saying in the short term all over the place but you still have a speck already a structural force at work on inflation. put those two themes together, you get low interest rates for a long period of time which can allow this cash flow to build an economy and not worry about a 19-time multiple. >> where are your targets of opportunity in equities right now? >> still the reflation their sector the one caution is not to put them all together. for instance, energy energy has a lot of supply/demand mismatch it's a little bit of put it into the bathtub of the rest of the reflation their assets but it will come and go i would look toward more classic cyclicals like financials and technology which is not overvalued despite hoump monw mh money has gone into the sector last year. >> thank you, we appreciate your time. apple shares after the stock closed down 2.1% yesterday and down 4.5% last week. the slide comes after reports of slashed production targets and weak demand for the iphone x and the justice department and s.e.c. are investigating apple over updates that slowed older iphones. let's bring in mike olsen, senior research analyst at pip r jaffray. i want to talk about the doj and s.e.c. investigation what could they be investigating? what could that mean for the stock or the company >> it's hard to know what they're investigating. there's concern around some sort of specific securities regulations that they may have violated as a result of this but it's hard to say it's speculation at this point i think ultimately as it relates to the battery slowdown issue it's really a thing that will have to be voted on in the court of public opinion, so to speak in other words, users will have to decide whether or not this is something that bothers them enough that they're willing to switch off the iphone ecosystem in the case that apple may be slowing down their batteries at the same time, apple's tried to remedy it with the lower battery replacement cost. >> you've done your own survey work switching to the iphone x because last week we had -- and the week before we had a slew of downgrades, estimate cuts when it came to iphone x shipments and we had the report that they will in fact take down their orders, their production orders for the x. what does your sur i have work show it sounds like you don't buy these reports? >> yeah, there's a lot of chatter out of asia all the time related to component suppliers and i think in this case where there's smoke there's fire in this case there's a lot of smoke so it may suggest something is going on with iphone volumes the point we're trying to make is that the iphone mix appears to be solid. in other words iphone x unit sales will equate to around 35% of overall iphone unit sales for the year and that's what our surveys of iphone buyers are showing so if investors are worried about overall volumes, i can understand that but as far as mix and what that means for average selling price, i think it should be intact and investors will be heartened by that if that proves to be the case. >> and the mix that you have, the 35% of all shipments, that's for the march quarter, correct the quarter that everybody is so worried about? >> yeah. that's what we're modeling for the full fiscal '18 ending in september. >> you said where there's smoke there could be fire. are you maybe worried that your particular survey work is not lining up with all the data points that seem to be falling out there pointing to weaker demand for the x >> i'm not necessarily worried about overall mix issues i think the iphone x mix will be strong i guess what i'd be more worried about is if there's any overages, just overall volume issues. >> why wouldn't you be worried about -- sorry, mike, why wouldn't you be worried about the mix issue. you said that twice. the mix issue gets right to average selling price, doesn't it in margins if the mix of x is not high enough, that margin number isn't going to be hit, the one the street has right now, will it? >> so let me be clear, i guess i'm not worried about iphone mix because we're confident in our survey work so we believe the iphone mix will be in line with our expectations what i'm not as positive on just given our surveyis overall iphone models but the asp is consistent with what we're modeling, that will be enough to make people happy given how low expectations have gotten in recent history. >> we'll find out thursday night, mike, thanks. mike olson, piperjaffray. tonight is president trump's first state of the union address. we'll hit what it might mean for your money plus, buffet, bezos, dimon. three titans of industry saying they'll take on health care. the former ceo of aetna is here to tell you whether they have a chance of changing things. and lots more of today's market selloff. one stock higher, that's procter one stock higher, that's procter & gamble and it's up 0.2%. how about some of the lowest options fees? are you raising your hand? good then it's time for power e*trade everything e*trade. the original place to invest online. we're back right after this. let's look at the nasdaq 100. it is a down day there are some winners today work day is your best performer, cernor up and wynn results using a ton of money on the sexual assault allegations is up a percent or two the big losers, maxim, walgreens and express scripts. president trump expected to tout tax cuts and economic growth during his first state of the union. he's also unswlail is next on his agenda, likely to be immigration, trade and frubl infrastructure will we see anything meaningful out of the speech tonight? sarah, i would expect and i suspect you would agree that the president will take a big victory lab for the economic performance and the tax cuts, as he probably should. >> i think he should everyday you see an announcement from another major company talking about their investments in america, in some cases millions and hundreds of millions of dollars and including money in people's pockets which is always something that creates energy a community, when people get bonuses and so forth so i think that's positive for him. i would expect him to take a victory lap. it would be prudent politics and it's warranted. >> christie, i think it would be unlike him to say this but i'd love to hear him begin by saying "tonight let's not talk about me, let's talk about the country and the state of the union seems to be pretty good. you're a democrat, what do you give him credit for on a night like this? >> i don't think any president misses the opportunity to say that line about that the state of our union is strong and i don't think that donald trump will be the exception particularly because he's someone that loves to take credit for things, including the lack of plane crashes in the last eight years but the tone of the white house for tonight is interest i interesting. they said he's going to be optimistic, it's going to be bipartisan in tone and when i hear that i can't help but think of one year ago when he was giving his inauguration speech and the thing that stood out to people at that time was just how dour and dark and what a scary fearful view of the world he presented. so it will be quite a contrast. >> one of the people widely thought to have been behind that speech, mr. bannon, is now obviously gone sarah, the big looming issue to me is what happens -- and there are some deadlines here -- on immigration one, there is a government shutdown looming and that has been linked in the pass with immigration and then there is -- i believe it's march 5 deadline on the daca or dreamers and there are a lot of hair balls -- to put it mildly -- in the immigration debate what happens with chain migration, what happens with the diversity lottery? what happens with the d.r.e.a.m.ers and so forth that is a big, big deal. do you think congress and the white house can get it done not by the date of the government budget deadline but by march 5 >> well, there's really no reason they shouldn't be able to, this is an issue that's been talked about for well over a decade, there have been multiple proposals. having said that as you pointed out there is a lot of consternation in both bases on this issue and they're far apart. i think something will get done. i think the democrats will have to accept some money for infrastructu infrastructure, call it border security, call it a wall, call it a structure, whatever you want, that will have to be a part of it for president trump to take a victory lab but the d.r.e.a.m.er issue has to get resolved and republicans, including conservatives in the house, are going to have to accept the fact that the american public wants to see that people who came nehere to h united states as children are able to live here, to work here and potentially be citizens so both sides will have to give it's possible but not guaranteed. >> christie, do you think the democrats are ready to give on some of the items sarah just mentioned? that would include some form of funding for border security, the wall. >> i think they were willing to give in on those things. i think that was part of the infamous deal that chuck schumer offered to president trump, that president trump apparently signed off on without having run it by congressional leaders. it got daca done and agreed to chuck schumer heard from the base that that was not acceptable it was not acceptable to go in that way and to not secure the deal for dreamers. so the democrats are in a tougher position to get something done i think they're going to have to come out with a hand that they can show their base as a winner for this it's something that's important to them. >> one of the things that's interesting to me about that is that you have robert kennedy's grandson doing the rebuttal for the democratic party, a very moderate to liberal member of the house, yet there are five additional folks giving their own rebuttals, that tells you whereabout the base of the democratic party is. >> i think that's always the case isn't it? don't we usually have multiple responses to the state of the union? >> not that many not that many. this goes to show you the energy on the left and it makes it tougher for immigration to get done. >> folks, we have to leave it there. sarah, christie, we have about six hours to go before we'll know, thanks a lot. >> thank you. we have a news alert on facebook and bitcoin here's the story. >> melissa, facebook announcing it's beening all ads promoting bitcoin as well as all cryptocurrencies and initial coin offers with a new policy saying ads must not promote financial products and services that are frequently associated with misleading or deceptive promotional ractices facebook saying in a blog post just up a few minutesing that the policy is "intentionally broad while they work to detect deceptive and misleading policies" going on to say enforcement will ramp up across facebook's platforms saying they plan to revisit the policy and how to enforce it as time moves on back over to you. >> julia, thank you. harley-davidson hitting rough roads. plus, the fallout continues for wynn casinos contessa brewer has the story live from las vegas. melissa, major conference cancels, the rating downgraded and yet the long time nevada insiders are starting to rally around steve wynn. i have it straight ahead on i have it straight ahead on "power lunch." with a $500,000 life insurance policy. how much do you think it cost him? $100 a month? $75? $50? actually,duncan got his $500,000 for under $28 a month. less than a dollar a day. his secret? selectquote. in just minutes, a selectquote agent will comparison shop nearly a dozen highly-rated life insurance companies, and give you a choice of your five best rates. duncans wife cassie got a $750,000 policy for under $22 a month. give your family the security it needs at a price you can afford. . the dow was down 411 points at the low, the s&p is also down by .9% right now look at the individual sectors, telecom, utilities are your leaders, health care and energy are lagging. notable turnaround in the financials which had been down by more than 1% now off by 0.8%. the fallout continues for wynn following sexual misconduct allegations against founder steve wynn stock rebounding but still down 14% in the past week contessa brewer joins us live from las vegas with the latest contessa >> and the flow of bad news continues here for steve wynn and the company he founded the republican governor's association was planning a conference for 2020 and they canceled s&p global has downgraded its rating of wynn resorts to negative because of the uncertainty about how the investigations will be resolved and the extent that the allegations could hurt the company's brand and impair the cash flow and jeopardize the company's ability to maintain its gambling license the massachusetts gaming commission will hold a special public hearing tomorrow and mohegan sun, which was competing fiercely for the license that wynn won told us in a statement that it's watching what happens closely. here in las vegas, a competitor describes the nevada gaming control board as being very proactive. i talked about that with former las vegas mayor oscar goodman who's known steve wynn for decades. >> i resent the fact that everybody is -- it's like a knee jerk they're all joining the bandwagon as soon as there's an accusation they don't want to hear another side. >> can wynn be successful without steve wynn. >> nobody's indispensable with all due respect. i've learned that lesson a long time ago sure he has a great staff, but he's a leader. >> that's something that s&p global tackled it said it could lower wynn's rating again if there's a change at the ceo level and if wynn resorts has to take out major debt in order to buy out steve wynn's stake in the company also, wynn boston harbor, analysts told me they expected it to be the most lucrative -- the most lucrative regional casino in the nation it's supposed to open next year but all questions now about whether it will be able to do that considering the massachusetts gaming commission getting involved, guys. >> all right, contessa, thank you very much, we appreciate it. warren buffett, jamie dimon, jeff bezos announcing plans for a company that could totally disrupt the health care industry could three of the biggest names in business change the way health care gets delivered and priced we will ask the former ceo of aetna next so what else is new? how's your mother? umm..she's doing good. she needs more care though. she wants to stay in her house. i don't know even where to start with that. first, let's take a look at your financial plan and see what we can do. ok, so we've got... we'll listen. we'll talk. we'll plan. baird. you know what's not awesome? gig-speed internet. when only certain people can get it. let's fix that. let's give this guy gig- really? and these kids, and these guys, him, ah. oh hello. that lady, these houses! yes, yes and yes. and don't forget about them. uh huh, sure. still yes! xfinity delivers gig speed to more homes than anyone. now you can get it, too. welcome to the party. hello, everyone, i'm sue herera, here's your cnbc news update at this hour. u.s. deputy secretary of state john sullivan saying there is no change on u.s. policy on afghanistan. speaking in kabul, sullivan says this is because u.s. policy is now conditions-based >> we support afghanistan's progress with our south asia strategy which sends a clear message that the taliban cannot wait us out because our commitment to afghanistan is not based on a timeline. the kenyan government declaring the opposition national resistance movement a criminal group paving the way for arrests following the arrest of odinga. he was inaugurated earlier today. after floodwaters peaked in paris on monday, the seine river continues to breach its banks, brought on by france's heaviest rain in 50 years the rising waters have flooded gardens and roads and raised concerns and conversations about climate change. you're up to date, that's the news update this hour. brian, back to you. let's give you a market update on your money the market is in full on selloff mode the dow and the s&p having their biggest one-day drop since august the dow is down 340 points we should note despite the two-day drop, the dow and s&p are still on track for their best monthly gain since march of 2016 think about that, we're down 400 points in two days and we're still on base for the best month in two years the volatility index jumping today to the highest level since august, health care a big negative on your market today. the xlv etf health care down 2%. we'll tell you more on why let's get a check on the oil market, it's set to close. good afternoon, brian. stocks closed under $65 a barrel, a loss of a little less than 2%. crude inventories tomorrow, expectations for a build as we enter the seasonal slow period before the spring and summer everyone will be watching the u.s. production number embedded in the eia report looking to see if tomorrow is the day that the u.s. tops 10 million barrels a day, that would be a key psychological level. now the dollar is still under 09 and red on the session but that's not enough to add support here with the rest of the market dynamics at play, guys. >> thank you very much, jackie de angelis behind the health carouska care, amazon, berkshire hathaway and j.p. morgan chase teaming up to lower health care cost for their employees. bertha coomes is here to tell us about about it. >> health care stocks are getting hit today because the new venture with berkshire hathaway and j.p. morgan chase to bring down costs could be just as disruptive large employers push to lower costs, what's different is the three are forming their own company to do this they say they'll use technology to create transparency and a better experience for their workers and drive down cost. to do that, they'll still need claims data which means they'll have to work with insurers analysts also say they're not likely to cut out the pharmacy middlemen, either. suppliers, in fact, today, aren't down as much as some of the benefit firms because of the need to secure drugs and have licenses for that. now, the industry is saying they welcome the news, got that from express scripts and cvs health still, as mercer benefits con l consultant tracy watts says, this puttins health care on not. >> let's bring in ron williams, the former ceo of aetna. thank you for being here. >> thank you for inviting me. >> what did you think when you heard the announcement today >> i was personally very excited. i think it's a tremendous opportunity to see three great companies come together and focus on a sector that clearly is ripe for disruption. >> the announcement says they'l focus on technology. when i read it i thought they'd sell insurance, they have a million insurers so they would have scale, additionally with amazon and its distribution strength maybe they'll be a pbm or work on drug distribution the reporting doesn't indicate that what do you think these guys are going to do? >> i think first i would say is that i don't think anyone knows outside of those organizations but i think clearly they have great capability in the consumer space and if there's one area consumers need assistance in, it's in simplicity also they have the employer work site, so they have an opportunity to apply the technology, the data, the analytics to the consumer experience using the work site as a means of amplification. >> there's nothing, zero, nothing in the way health care is delivered today and paid for today and billed back to the consumer need is anything approaching simple it's ununderstandable and that's one of the areas i hope this initiative will address. we're seeing a big selloff in health insurance stocks and a less of a selloff in pharmacy management companies why do you think that is is the entire health care business afraid of the big bad wolf amazon? is that why they're off so much today? >> let me first say, i would agree with you that no one would design a health care system the way our system works it's evolved and it's not simplistic and there is an opportunity to improve the fundamental customer service interaction and get the patient involved with health care. in regards to your question about health insurers, i don't see this as a significant issue to well-run consumer-focused health care companies. now there's a bell-shaped curve like there is in all companies and i think the smart companies working to serve the consumer and figure out how to transform themselves from a business to business capability to a business to consumer interaction will look at this as an opportunity to collaborate and an opportunity to learn. >> technology is what they're going to focus on when it comes to lowering costs. is that enough, ron, or does the whole third party payer system which means that i actually never get to see the price in advance, can't choose what i want to do there's a lot more here than just improving technology, isn't there? >> certainly, and one of the things at the center is the primary care physician one of the trends you'll hear talked about is value-based care which is giving the primary care physician the financial resources to manage the patient populati population as opposed to being paid on a piece work basis so i think there's a huge opportunity to get primary care physicians engaged and have them manage the overall health of the population. >> why hasn't the health insurance industry already done that are you expecting that these three organizations and large corporations can somehow achieve them >> i think the last five years i've spent looking at innovatio there's enormous innovation going on one of the benefits of the aca was legitimizing the transformation of the health care system. this is one of many initiatives led by three successful companies but they're joining a chorus of companies trying to transform the health care system. >> it seems to me, mr. williams, tell me whether i'm right or wrong, that some of what's going on in health care and consolidation is that providers and the payers, the insurance companies and providers, are fusing, coming together. that's what seems to be happening with the cvs/aetna de deal cvs is a provider of health care services, drugs and in their minute clinics aetna pays for it. you look at companies like keiser or north will health that are big medical system bus have insurance companies embedded in them so there is a fusion going on here. is that part of the solution >> i think it is i think what you're saying is we're in a period where innovation is exploding and in that period, different companies are trying to entry grate integ patient to improve their cost position and attract a bigger market share with the cvs aetna deal, that's one example. we've seen hospitals who are looking at manufacturing generic drugs. we see companies like united health which has close to 30,000 primary care physicians that operate in clinics that it supports and owns many of those clinic so clinics. so we've seen the health transformation alliance which is major corporations who represent five million members coming together and focusing on how they can transform health care so this is one of many initiatives but one led by some of the most able companies in our industries. >> yet these three guys feel like they have to come together and do something different because clearly they're not satisfied. ron, thanks so much, good to have you on. >> it's a pleasure, thank you. coming up in march of this year cnbc will host its first-ever health care conference it's called the healthy returns conference the cnbc special event will feature top ceos, news maker, investors, entrepreneurs speaking on the business of health care. mark it on your calendar, wednesday, march 28, in new york city for more information and to get tickets, go to cnbc.com/healthyreturns. does the off road vehicle market have a rough ride ahead we'll talk to the ceo of all terrain vehicle maker polaris about earnings, the stocks big selloff, tax reform and more let's look at the dow's big losers on this down day led by the aforementioned united you your insurance on time. tap one little bumper, and up go your rates. what good is having insurance if you get punished for using it? 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(sighs) i hate missing out missing out after hours. not anymore, td ameritrade lets you trade select securities 24 hours a day, five days a week. that's amazing. it's a pretty big deal. so i can trade all night long? ♪ ♪ all night long... is that lionel richie? let's reopen the market. mr. richie, would you ring the 24/5 bell? sure can, jim. ♪ trade 24/5, only with td ameritrade. shares of harley-davidson following more than 70%. the company beating estimates on revenue but showing a weakness in retail sales across all markets. the bike maker's biggest sales fell 11.1% in the fourth quarter compared to a year earlier the company announcing it would close a plant in kansas city and cut about 800 jobs. shares of harley-davidson competitor polaris also taking a hit, down more than 13%. fourth-quarter earnings met estimates but retail sales of off road vehicles in north america disappointed on the dealer level here for a "power lunch" exclusive, the chairman and ceo of polaris, scott wine it's a bit of an odd quarter i'm looking at your numbers, sales of off road vehicles and snowmobiles which are 70% of your revenues were up 13%. but deliveries or units to dealers were disappointing so is this a production issue rather than a consumer issue. >> well, brian, you're right, overall the quarter was good, up 17% in revenue and 20% in earnings so strong earnings overall. we had good sales in our off road vehicle segment but the retail sales, what our dealers sold to customers, much like when you go to wisconsin and buy a razor, that was below expectations, we had production issues that caused dealers to have an unavailability of our key products but we worked through that and found momentum in december that we expect to carry forward in january. >> so, scott, does this mean the dealers were overly optimistic in buying from you and unable to sell it to customers what's the disconnect? your numbers were good but the dealers weren't. where's the issue? >> dealer inventory was down 6% for off road vehicles so we're -- the dealers would prefer to have more inventory of certain products and we're working through the first quarter to make sure they have everything they can. but with our lack of snow across much of north america, the central region and the mountains, it was the snowmobile that were down more than 10% for the quarter that brought down overall retail. >> what can you tell us about the demand you're seeing now has tax reform impacted the consumer that they're more willing to buy these vehicles? >> tax reform was a tremendous benefit to polaris. we do expect the economic reality when you put thousands of dollars back into consumers hands that will help business and industry january has been good but we have to wait and see how that plays out through the rest of the year before we raise our guidance on. >> it back to the gross margin issue it was a disappointment. is it because you have to discount to get rid of inventory? you've been trying to work down higher than optimal inventory levels for quarters now. are we seeing that take effect by discounting >> actually our inventory and aggregate is in good shape we are no longer trying to take inventory out of the channel in fact, we were trying to put inventory into the channel in the fourth quarter the margin story had a couple factors. we're still reserving warranty accruals for issues we think we might have to pay for so in the entire year, over $50 million of incremental warranty costs that we accrued far we didn't expect to have. that was the largest drag. but we did have production issues, commodity costs were higher and going from here, we talked about 40 to 60 basis points improvement next year and we feel like the earnings power of the company is quite strong at this point but we did not demonstrate that in the fourth quarter. >> and scott, listen, you are the company the president likes to talk. you're just opening up a new production facility in huntsville, alabama, so you're adding workers in the united states, benefitting from tax reform if you had one thing you wanted to hear from the president tonight or one question you could ask the president tonight, what would it be >> right now i think again tax reform was very good for us, the regulatory reform has been very helpful to us. the most important thing for polaris is that nafta get revised in a positive manner as opposed to a punitive manner to many american company such as polaris that would be damaged if nafta changed to the negative. >> so you want to keep nafta >> i think certainly an opportunity to make nafta better but we want to keep it. >> scott, pleasure to have you on stocks still up 36%. thank you. >> thank you, brian. our two day selloff of the markets, what ar your brain is an amazing thing. but as you get older, it naturally begins to change, causing a lack of sharpness, or even trouble with recall. thankfully, the breakthrough in prevagen helps your brain telling us that'prevagen has been shown telling us to improve short-term memory. prevagen. the name to remember. the energy conscious whopeople among usle? say small actions can add up to something... humongous. a little thing here. a little thing there. starts to feel like a badge maybe millions can wear. who are all these caretakers, advocates too? turns out, it's californians it's me and it's you. don't stop now, it's easy to add to the routine. join energy upgrade california and do your thing. u.s. airlines are declaring victory in a long-term deal with qatar airlines fill lebeau. >> this is a big win for u.s. airlines essentially the united states has negotiated a new deal with qatar. it comes down to this. remember, u.s. carriers have been complaining for years that the persian gulf carriers are subsidized by their governments, makes it uncompetitive to fly to certain parts of the middle east under this new agreer with qatar, qatar air will limit flights from certain areas, like europe they can't add a light, say, from rome to new york. there will be greater transparency to show there are no subsidies or fewer than have been alleged in the past we talked exclusively with delta ceo ed bastian earlier and he said this agreement makes delta will start thinking about returning to the middle east. >> we need to have a presence in the middle east. we need to have a presence in india or other parts of southeast asia, which we've been run out. and by shining the light on the scope of the subsidies and providing transparency, it's going to allow us all to make long-term investment decisions to go into markets knowing that our government is standing behind us. >> in the wake of this news, airline stocks all moving higher not all of them. ual -- i should say, american slightly lower today but they were all up earlier in the session. again, guys, this is a big win the question is now, whether or not the u.s. can work out a deal with emirates when it comes to the uae and how they operate those airlines but, no doubt, this is something these guys have been -- the u.s. carriers have been complaining about for some time. they all say, hats off to the trump administration because they said they needed something to be done and something has been done, at least when it comes to qatar back to you. >> level playing field >> level playing field >> time now for trading nation and today, what else, we'll take a look at the broader markets given the selloff. down 374 craig johnson, mi you've been calling it melt-up for a long time. you've been spot on. do you remain optimistic given the last two days of action? >> we changed our tune a little bit. in january publication we called it a hop, a pop bs and a drop. i think the hop has already occurred and i think the pop is starting to unfold we saw the gap down at the open. certainly concerning given how stretched they have been the entire s&p 500 at least 14% above its 200-day moving average and it's gone parabolic. in fact, 25% of the names in the dow you don't even want to buy right now because they're parabolic. i see support levels coming in now and a retracement simply back to the 50-day moving average would mean another 4% downside if you were to correct to a support level you have 8%. a correction now at this current point to the 200-day would get you back to about 11% downside i think we'll see some further consolidation and profit taking in here. this is all, in my opinion, based on the charts, a healthy process but does not change the longer term secular bull market thesis it's just a reset. >> longer term still bullish short term a little more pain to come michael, i'm sure you got calls from clients i didn't think stocks were allowed to go down cnbc says we're down 353 points. what do you tell them? >> this is a natural and healthy pullback for what's been a monster month for all the markets. you saw the s&p 500 hit 14 record closes this year, which is the most since june of 1955 we continue to watch earnings growth and economic growth, one theme we're keenly focused on is with volatility coming back, with a pit of a pullback, could the indexing euphoria be over and should investors turn more towards active management? keeping a long-term perspective is the main focus we're just telling our clients now in the market. >> 1% drop is a big deal used to not be a bigdeal, but it is given the recent market we've seen it's kind of like the patriots losing doesn't happen much. i'm no patriots fan. go eagles. thank you. for more trading nation go to tradingnation.cnbc.com check please is next >> announcer: and now the latest from tradingnation.cnbc.com and a word from our sponsor. traders short stocks when they think they're going lower the number of shares sold short is called short interest short interest is often used to gauge market sentiment a rising short interest can mean investors are becoming more bearish on a company however, when short interest reaches extreme levels, it can often be a ctry ditoonarincar because traders are often forced because traders are often forced to buy back their short stoc big thinking in the finger lakes is pushing the new new york forward. and that can drive the stock much higher. that extends the shelf life of foods and infrastructure upgrades that help us share our produce with the world. all across new york state, we're building the new new york. to grow your business with us in new york state, visit esd.ny.gov successful people have onthey read more.on. how do they find the time? with audible. audible has the world's largest selection of audiobooks. for just $14.95 a month, you get a credit-good for any audiobook. and you can roll your credits to the next month if you don't use them. audible members get free, no-hassle exchanges... ...and use the mobile app to listen anytime, anywhere. start a 30-day trial and your first audiobook is free. listening, is the new reading. text "audio 4" to five hundred five hundred to start listening today. as a business owner, you need to comply with countless regulations and laws to keep your workers safe and happy. but if things go wrong and an employee takes action against you, legal fees to defend yourself can be huge, even if you're not at fault. employment practice liability insurance helps cover these costs. trusted choice independent insurance agents represent multiple insurance companies and customize coverage to help protect you and your business. announcer: to find an agent, visit trustedchoice.com let's give you not a check, please, but a market check, please 350 points is good enough for a 1.4% decline all market indices suffering 1% at this time. >> thanks for watching "power. you have to watch "closing" to see what happens with this market don't move. hi, everybody. welcome to the krb c"closing be. i'm kelly evans. >> i'm wilfred frost in for bill griffeth the market having its biggest 200% drop since 2017. >> let's get to bob on the floor. >> a lot of things affecting the market the most important thing is let's call it

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