Edwin star, war, what is it good for. Welcome to power lunch, im Tyler Mathisen and i date myself proudly, ladies and gentlemen the dow at its low, now down 123 or about a half percent. But why . Well, its basically boeing and caterpillar. S p 500, it is higher by about a fifth of a percent and nasdaq higher about a half percent. Those are sitting at record levels the nasdaq, i should say, despite the hurdles facing big tech as the doj takes aim at the industry more broadly launching a broad review of Big Tech Companies over fresh anticompetitive concerns. Elon moy with more the Justice Department plans to look at three areas of concern. Are the Big Tech Companies stifling innovation or harming consumers . The doj said there are widespread concerns about practices related to search, social media and some retail the doj does not name specific companies, but google, facebook, am amazon and apple could get caught up in this. Without the discipline of meaningful, marketbased competition, digital platforms may act in ways that are not responsive to consumer demands the doj is not the only agency in washington responsible for regulating big tech. The ftc is conducting its own scrutiny of the internet giants, both over antitrust issues and over consumer privacy. Just this morning, the ftc announced a record 5 billion settlement with facebook over alleged privacy violations that agreement requires Ceo Mark Zuckerberg to certify facebooks privacy programs directly with the ftc each quarter and creates a new, independent Privacy Committee on the board of directors. The ftc argued that the new structure significantly diminishes zuckerbergs power, but this decision split the ftcs board of commissioners along party lines 32. So guys, that shows how much debate there is about big tech in washington, even inside of the regulators back over to you. Thank you very much, ylan for more on facebook and the headwinds facing big tech, lets bring in mike isaac, New York TimesTechnology Reporter and kevin arcwit who is at kasowitz, be Benson Torres thank you for being with us. Kevin, lets start with you. Lets talk specifically about this possible antitrust investigation by the doj how unusual is it that what is being investigated here is not a case of consumers being injured by pricing issues . Well rather by Something Else . Its very unusual, but thats the challenge of applying antitrust to hightech in the first place. Because a lot of times the products are free. Yes. And these companies are not monthsnary institutions so they have to achieve revenue through other means which is maybe through some of these practices or advertising so antitrust does have to reach out to places it typically doesnt go equally unusual is the fact that the doj is doing this investigation at the same time as was mentioned that the federal trade commission is doing. Unusual to have both going at these companies over the same things ask then you have the house subcommittee on antitrust that has a third. Three federal investigations its pretty daunting for any company. If you were the leader of the investigation at the department of justice, under what sort of theory and grounds would you be going after these companies, most importantly okay. For antitrust to apply in the case of mondaylization, we dont apply just because its big. So you have to look for conduct that is not what made them big, but what artificially keeps out those who would want to compete from being able to do it and i think for the companies, the challenge is to find is to identify their conduct and have it be part and parcel of the innovation because the agencies dont want to kill the goose that laid the golden egg they want to allow that to continue so to the extent the companies can tie the two together as related, i think theyre at less risk. Were going to ask you to stick around, along with mike isaac for more on ftcs decision on facebook, we bring in Rebecca Kelly slaughter, one of the two dissenters, staying in a statement, in order to support it, i would have to be confident its combined terms would effectively deter facebook from engaging in future law violations and send the message that order violations are not worth the risk i do not believe that is the case rebecca, welcome to the show thank you so much for having me you actually believe that the ftc should have gone the litigation route why didnt it . Well, i think i let the majority speak for themselves. What they argued is they think this deal was the best they could get. And you also make the point in your statement that the ftc is unique in that it doesnt have an independent litigating body you would refer this to the doj. It is now in a way in the hands of the doj the doj has opened its own broad investigation. Are you hopeful that the doj takes action, are you hopeful that perhaps the ftc will go on and take further action on facebook and maybe some other big tech names well, i think thats actually a separate issue what the doj announced yesterday sounded more like an antitrust review with respect to our particular privacy case, the doj joined the announcement today, saying they would file it. And while i objected to the settlement and i objected to the release of liability that it had in it with respect to privacy violations, it didnt release the company from any antitrust or competition investigation so to the extent that those exist, either the doj or at the ftc, those could continue uninhibited. So what happened what happened in terms of the ftcs decision, the 32 decision, it doesnt preclude the ftc from taking further action. So in other words, even though you may view this as a slap on the wrist for facebook, it may still face further investigations by the ftc specifically it doesnt preclude the agency from taking investigation from taking further action on antitrust issues or on Consumer Protection issues outside the scope of the order that we were trying to enforce. But it does immunize the company and its executives from any further enforcement with respect to any allegations of violations of its previous order, where it promised not to make misrepresentations about user privacy. Any standard 5 billion is a lot of money it may not be a ton of money with respect to facebooks revenue stream what would you have liked to have seen by way of remedy for the conduct that is being sanctioned today what would you have preferred . So what i said in my statement is that i feel strongly that a remedy would need to give us confidence that facebook is not going to engage in the kind of behavior that led it to be under order in the first place or that led it to violate the order in the second place. And for me, that included at least two key provisions the first for some limitation, some substantive limitation on how facebook collects, shares and uses data. And the second is public transparency and public accountability and while the order does require a lot of internal reporting to facebook, and reporting to the ftc, all of those things would be nonpublic and i would prefer to see public accountability, if not in the order itself that i thought litigation would be a really effective way to ensure that public transparency and public accountability on capitol hill, rebecca, this seems like a bipartisan issue. You have senators and Congress People on both sides who want to see facebook held accountable in some way, and yet this was a decision at the ftc right along party lines, 32 youre one of the two, obviously, democratic commissioners who dissented. What can you tell us about thinking within the ftc and how this sort of political divide within the agency could shape further pursuit of facebook . So candidly, i know it was a party line vote. I dont think of this as a partisan issue or a political issue. I think each of us looked at the facts and the case and the law and arrived at our own independent conclusions about what the agency should best use should best do. Im someone who advocates all of the time for the ftc to have more resources and more authority. And i think we do need a federal privacy law and nothing today changes that but i also think that today we should use the authority and the resources we have to their fullest extent, and i would have preferred to see us take facebook to court. Rebecca, thank you so much for joining us we appreciate it Rebecca Kelly slaughter. Thank you so much for having me. Of the ftc. Lets go back to mike isaac as well as kevin. Kevin, ill go to you since youre a former attorney whats your take on what you just said . I agree, these things are not along party lines but people think a certain way ideologically. Its not really a surprise i think with any of these remedies, whether its this or antitrust remedy, that because these Companies Got large because of innovation and consumer choice, is that one has to be careful that the cure is not worse than the illness before action is taken, it would seem to me in any of these cases that the agency should consider very carefully, what is it theyre trying to achieve . If these monopolies were achieved naturally, splitting up or telling them not to act a certain way is inefficient, going to cause chaos in the short term so you better be sure there is net harm before you get to the remedy phase and mike, im just wondering, one of the things she said jumped out to me where she said, you know, i wanted public accountability, not just internal accountability at facebook the media has actually been successful in changing the behavior of a lot of these companies, incrementally over the last many years. Even if the ftc didnt go as far as might have wanted, could we still see facebook wanting to respond with something more like that, like a periodic report on its actions . I think commissioner slaughter made some really good points about accountability. I think part of why folks are saying facebook is getting a kind of slap on the wrist here is two things. One, a lot of these processes are going to be internal, and really, we dont they dont typically share more information outside of the company than they need to or are forced to by law or by s. E. C. Disclosures but i think the other really important point here is that they essentially negotiated a blanket indemnity cause for any violations that happened before june of 2019 that shields not only Mark Zuckerberg and sheryl sandberg, but any other directors and executives at the company. And thats a really big deal it kind of says, we dont really even necessarily know whats going to come out after this or if theyre going to be further violations that even we didnt foresee now but it kind of doesnt matter, because we paid our 5 billion, and were safe in the long run if youre an investor, kevin, you know, you take a look at the stock, and its amazing, because when the news broke in the after hours session, facebook shares were down by as much as 1. 8 or so and now theyre virtually flat, look like theyre going to turn positive so its simply headline risk at the same time, when you think about what facebook might be handicapped in doing, going forward, while its under doj and ftc scrutiny, it might be, you know, preventing the company from fully monetizing whats app or fully monetizing instagram or so on. And that could then impact the Revenue Growth rates for this company. How do you think investors should pick apart how this could affect facebooks growth yes, well, i think it is not so much the final remedy thats imposed. As you say because in many of these cases, there wont be a remedy imposed. But its that cloud that hangs over the company during the course of an investigation and ive represented companies in these sorts of situations and its daunting. And there wont be any major decision made by the company, whether its to do an acquisition, create partnerships with customers, suppliers, without this being the elephant in the room. And by its just inherently the case it will cause them to pull back a little bit when they know everything that they are saying and writing is going to be reviewed by a government antitrust agency. Mike, same question to you. Yeah, i mean, look. I think theres a reason why the stock jumped immediately after the news leaked a few weeks ago that that cloud of uncertainty that kevin was talking about is essentially lifted and i think, you know, again, tyler, as you said, 5 billion is a lot of money by any stretch. But its also onetenth of facebooks annual revenue last year, and each quarter they report earnings in about two hours. Each quarter seems to be subsequently a new record for them so i think investors are essentially and, look, the bottom line is, it really didnt rein in any Data Collection practices that they have so i read this as a lot of essentially a speeding ticket to are them to continue doing a lot of the things that made them so lucrative of an investment in the first place. Thats right. And they do report after the bell today guys, thanks very much really appreciate it mike isaac. Thanks for having me. Thanks to you both. Tesla shares trading higher. Is now the time to buy or bail we have a full bear debate. Plus should the disappointing results today from caterpillar and boeing worry investors or is the decision next week the only thing that notters right w . Thats coming up after power lunch comes right back. With Xfinity Mobile you can bring in your own phone, switch wireless carriers and save hundreds of dollars. Its pretty much the easiest way to save since sliced bread. Sure is. Because savings is as savings does. And sometimes youve just got to stop and smell the savings. Im sorry, i think you mean roses. Oh right. You need to stop and smell the roses of savings. Bring in your own phone, switch to Xfinity Mobile and save hundreds of dollars a year. Now thats simple, easy, awesome. Get 100 back when you bring in an eligible phone. Click, call, or visit a store today. Welcome back to power lunch. Some of the earnings euphoria wearing off. The s p 500 and nasdaq both in the green right now. Bob pisani is on the floor of the New York Stock Exchange. Has a drilldown on the current numbers. Hey, bob. The loss adjusted 5. 82 per share, melissa that is the Second Quarter it was the worst quarterly loss of for boeing. It was so big, it even moved earnings estimates for the s p 500 look at these numbers yesterday we were reporting estimates for the Second Quarter s p 500 earnings expected to be up 1. 1 overall. Today its down almost 0. 1 . This 0. 2 decline is due to boeing, a big problem overall. You can also partly blame caterpillar, which came in nearly 10 percent below expectations on its u. S. Oil and gas business, as well as weakness in china. But there is no weakness in china for Texas Instruments. They get about 40 of their sales from china, reporting better than expected numbers, and said we dont see anything unusual this quarter now, well see, melissa, if xilinx says the same thing after the bell today they get 30 of their sales from china, as well so you can see here, melissa, very complicated crosscurrents. And, of course, industrials is a different space than semiconductors well see what they have to say. Back to you. All right, bob. Thank you. Bob pisani. So todays its earnings dragging down the doi. But is the market only concerned with the decision from the fed lets settle this tug of war joining us are michael farr president and ceo of Farr Miller Washington and zach from the Global Wealth and Investment Management at bank of america. Matthew, these are either the best of times or worst of times to be a fixed income guy because you on the one hand, have people owning, you know, treasuries for the upside. I mean in fact, i recently read, it was a bammel survey that the most crowded trade of anything in the world right now, but they have been a great return, but yet these prices are wacky, to say the least. So how should investors tread in your space it could be worse it could be a european fixed income analyst that would be more difficult. Exactly. Trying to explain how negative yields would be a good buy for people so youre right. Yields are certainly lower than they have been historically. But in a global context, actually, the u. S. Looks pretty darn good. Around 2 on a u. S. Tenyear versus negative almost 40 bips on a european bond things look fine were pretty much relatively neutral across assets. Not really strongly overweight or underweight on anything right now. What do you think about next weeks meeting so the wide expectation is a quarterpoint cut. What happens if they dont do it for some strange reason like the better data. What happens if they go 58, whats the setup like . We think there is a very large chance theyre going for a 25point base cut next week. William and clarita said twothirds and the new york fed came out quickly to quash that that gave a pretty good sense they dont want 50 if they wanted 50, they would have let the market think that they have been very close to micromanaging markets for some time now making sure people are not surprised. Yeah. So we think its going to be 25. So youre not worried about it being you just say were priced for 25, going to get 25. Thats our belief however, if it was 50, we think that would be good right . We think the market would take that well. If they didnt cut, that would be not good. But in the longerterm picture, as long as the fed sticks to their script, which is they want the economic expansion to continue, inflation is not there, were relatively less worried about is it 25, is it 50. Okay. So michael, you say that the market, to your standpoint, is mildly overvalued. But that there are individual stocks that are anything but overvalued i would like you to name some of those value plays that you see right now, and you cannot name johnson johnson. You know, you always go there, tyler. Yeah, i do. Because you always go there. Well, its always its been a pretty safe place to be for a long time. Health care but not lately. No, it hasnt you know, health care, as a group, is up, you know, maybe like 6 or just shy of 6 yeartodate and a market up 20 . So one of the things that you want to do as an investor, certainly as a contrarian, is not chase the stuff thats become most expensive, but perhaps find