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tv   The Exchange  CNBC  June 13, 2019 1:00pm-2:01pm EDT

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on a friday that it's a good time to own them now it's a week later. be in it >> weiss >> boeing. i like buying stocks that are down also. i don't like buying stocks that are -- >> ford. >> the exchange starts now thank you, scott hi, everybody. here's what's ahead, an oil attack two tankers in the strait of hormuz were suspected in torpedo attacks today. fears are rising across the region we will get you the very latest. also another meat maker going meatless tyson is now the latest company that says they'll produce plant-based protein. is it the end of the honeymoon for beyond meat? we'll ask. there is a plan for tariff boosts with restoration hardware and netflix is turning to games and what's in a name a lot. that's all ahead in rapid fire >> kelly, the name of the game today is snapping a two-day
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losing streak for the major indices, because if you look at the dow, the s&p 500 and nasdaq we are pretty much towards the higher end of the range so far today about a half a percent gain for each of these major indices and one thing that we're not showing you here and you should pay attention to is the small cap russell 2000 index it's more than double the performance of the large cap s&p 500 and pay attention on the small caps on the macro bigger picture side of things and check out what's happening both with the consumer discretionary and the consumer staple sectors. on a month to day basis, they're among the performers and these guys are outperforming and indicating the consumer and still a focus and holing ding u well in this environment and one place we will look we don't often feature small to mid-cap stocks and check out shares of callaway 14% to the upside this after activist hedge fund takes a more
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than 9% stake in the company and they'll push management to unlock shareholder value and they've fallen 40% from their highs over the past 52-weeks and they've been stuck in a range here callaway has responded they say they typically, kelly, do not respond about individual shareholders, but it is their board and executive team's prerogatives to hold discussions about trying to unlock value callaway golf and it is the u.s. open at pebble beach >> i know you're reluctantly mentioning that, don thank you very much. welcome to "the exchange," everyone, i'm kelly evans. import prices fell in may. priceser down 1.5% over the past year and that's actually the largest drop since august of 2016 meantime, the latest business roundtable survey falling for the fifth stra month the ceo plans for hiring and expectations for sales dropped, and oil prices are jumping today after two more tankers were attacked off the coast of iran near the strait of hormuz. the incidents renewing fears of
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conflict in the middle east following a series of strikes last month and that's where we begin today with cnbc's dan murphy in dubai for us dan, what do we know this hour >> hi there, kelly a major story developing here in the middle east. you need to look at these pictures to understand just how severe this was. this was shot early morning off the coast of oman. it's around 6:00 a.m. when authorities first received this emergency distress call responding to what is believed to be simultaneous sabotage attacks right near the strait of hormuz right on the iranian coastline. this first ship is believed to be the japanese-owned panama-flagged tanker that was moving methanol from saudi arabia to singapore. as you can see here it suffered serious damage to its hole on the star board side and that sparked a major fire reports suggest that the damage was so significant it's consistent with a hit by a
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torpedo or perhaps another projectile, but that has yet to be confirmed at this point all 21 crew onboard, kelly, were forced to abandon ship and had to be rescued by a noosh vessel. thankfully, they escaped with just minor injuries. the second vessel is the norwegian islands flagged which was also transporting highly flammable products to asia and fortunately the crew escaped with minor injuries. kelly, this has raised tepnsions in the region and caused crude to spike 3% higher back over to you. >> dan, thanks very much a acting u.s. ambassador cohen telling quote, that it's unacceptable for any matter to attack commercial shipping and here to assess the situation in the strait of hormuz and the impact, is john kilduff who is founding partner of capital. my first observation to you is
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oil prices are not as up near as they might have been and is that because the u.s. production is not as sensitive to events as they once were or are people waiting for information about what took place here >> the u.s. production is providing a cushion against these geopolitical risks that otherwise back in the day would have sent prices north of 80 and 90 and $100 a barrel, no doubt about it we are staring down a global economic slowdown particularly in the economies that are energy and refined crude oil and refined intensive. >> we've revised it down this week and the demand in terms of barrel a day. >> the opec monthly report was out overnight and the iaea is out tomorrow morning and they'll probably cut it's looking sloppy out there right now and that's why you saw the price slide early this week until this morning >> so, paul, let's talk a little bit about what just took place is there any doubt in your mind that iran is responsible for the attacks last month and today >> we don't know who did this
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particular attack and we'll have to wait and see what evidence comes out, but i do think it's part of a pattern that might endure for many, many months the u.s. has slapped maximum pressure sanctions on iran iran considers that an act of economic war they said that they would inflict pain for pain, and pain on saudi arabia and the uae and allies in the region and that if iran could not export their oil, other countries in the region would not be allowed to export their oil either there was an attack yesterday by the houthi militias and this was a major escalation i don't know if this was their attack or not, but i think we're in the situation between the u.s. and iran and both sides are not likely to back down.
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this may happen more often as the week goes by. >> paul, what you're saying is fascinating. what you are saying and we are speculating about the culpability here, but if it is as it appears to be that iran is torpedoing tankers carrying the global oil supply and the u.s. is expected to give them export relief on their oil as a result? what if they don't in. >> let's say again, we don't exactly know who did these attacks. that needs to be very clear, but from their perspective, as they said, if iran is not allowed to export any oil, they have said we don't want others -- why should others export oil at a time when we're not? i think they're trying to put pressure president trump. >> yeah. >> they know that president trump does not want a war, and he's made that very clear. they also know that president trump doesn't want a spike in oil prices and that he would want to find some accommodation. one way that maybe shinzo abe
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might be proposing is some wiggle room is the waivers that the u.s. has gone through with in may, so there is wiggle room, but i'm not sure that the president is in a political position to back down at this point, but i think the iranians are making it very clear that they consider this economic war and they'll keep escalating until something gives. >> and they're behaving in a non-economic manner, as well >> paul, appreciate it thank you as well, john kilduff. >> turning now to tariffs. the word is starting to pop up more and more in corporate earnings in just the last week at least five companies ranging from soup to furniture citing tariff and in discussing ways to cope with them, bob pisani is on the floor at the new york stock exchange hi, bob. >> hi there, kelly american eagle, lululemon, restoration hardware, campbell's soup, brown foreman and oxford industries all commenting on tariffs in just the last couple
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of days. for example, restoration hardware said they would be raising prices they'd also be looking for concessions from vendors and even possibly re-locating some operations out of china. oxford industries which owns tommy bahama and lilly pulitzer said tariffs could add $5 to a $100 shirt and they could be changing their sourcing out of china and it's not just china, by the way and there are spirits maker brown-forman that the tariff burden was substantial and they had 60% of the american whisky business that is in europe they estimate tariff costs were up to $125 million on an annualized basis and the president is threatening tariff -- >> bob, thanks as you just heard, tariffs have been popping up in earnings reports whether it's hiking prices for the consumer or absorbing the cost or taking a hit to the bottom line, is this a sign that the tariffs would
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become a bigger risk to the markets. jason brady is ceo of thornburgh asset management and the c investment officer of american century investments. >> jason, is this priced in yet or not and does it depend on whether this is passed along or absorbed >> i think it is getting priced in look, what you mentioned is a lot of companies that are goods producing and so much of the economy is a services economy. so let's think about how that might play through in the dynamic and there will be much more focus on those types of companies. looking at the pricing overall i can't say that markets are struggling with these news and we're really close to all-time highs and in the second half, if this rhetoric intensifies, yeah we'll see more, and i'm much more worried about the effect on the global economy and how that would affect a broader array of companies. >> rich, same question to you. people buying stocks here, can you be comfortable that there's pessimism about the second half outlook or do they need to tread
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carefully because it could be a minefield every earnings season for the next few quarters? >> oh, yeah. nobody knows at this point and it's up to the administration and these tariffs can be removed as quickly and as easily as they were put on. as far as pricing goes, very difficult to increase prices in this economic environment. which was already weak before the trade war started with little or no inflation boethd at the consumer level and the corporate level it will be difficult to see strong growth for the rest of the year until the trade war is taken off the table and that's anybody's guess. it could be worse. >> would you invest in companies that you would perceive to have that pricing power >> that's one way to do it there are many different ways. valuations are still fairly attractive in certain sectors, so it's really a sector by sector issue for us, and in particular on. >> such as >> value sectors and financials which have gotten beat up here
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and your telecom and the defensive value sectors have been beaten up for years, if not the last few month, and they represent a real opportunity if you're in the stock market >> you agree on some of the financials like j.p. morgan, is it for the same reason >> i think with j.p. morgan there is a few things to think about. one, valuations are not demanding relative to the market and relative to itself i think you look at j.p. morgan, yes, there is a global franchise there and it's not the same effect as citigroup which is much more dependent on their global franchise and it's a strong domestic base and to the extent that you do get tariffs rolling into inflation, and a steepening yield curve may be hard for them and financials may be more of a safe haven than we can imagine and huge amounts of regulation and huge business change and huge capital structure change and that's really interesting especially where valuations are today. >> finally, rich, we had a 30-year auction at the top of
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the more and it is softer as a result whether or not it actually hurts the way that they do business, the financials trade ter usually in this low-rate environment and each though jason is staying we might have a steeper curve, what if we don't? >> clearly, the market is pricing in one, if not two discount rate cuts later this year due to a weakening economy. the curve should steepen at that point, but it's anybody's guess. you know, i mean, at this point monetary policy by itself, and what goes on with the tariffs. >> amen. guys, thanks appreciate it. good perspective from you both rich weiss and jason brady we have a news alert for you larry kudlow speaking right now saying the overall economic burden of the trade war will shift more to china than to the u.s. he added that the white house intends for the president to meet china's xi at the g20
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meeting later this month, but nothing has been formalized yet and you can see the markets as the headlines cross the more we get from mr. kudlow, the dow is up 95 points here's what else is coming up on "the exchange. coming up, from fake meat to hiring artists to cybersecurity to pet food. the ipo parade keeps going at what point will investors no longer buy into money-losing companies? plus, pay the premium. that's what one analyst says about the homebuilders right now. he'll break down why >> and the one area of the retail market that could be ready to see a price spike >> this is "the exchange" on cnbc sales, supply chain, inventory - ♪ ♪ it needs to track it all, from cincinnati to singapore. ooo!
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journal. great to have you both here. maureen, let mae ask ye ask your reaction as someone who covered this for a couple of years now whether it's a jeans maker or crowd strike, fiber, so many types of companies are having great ipos why do you think that is >> it's pretty amazing investors are clamoring for access to these companies. they're fast-growing and a lot of them are not profitable, but in them they see a path to profitability and we're seeing companies that are seeing the sales force deal. >> so i think they want that growth and they want exposure to it. >> and the ones doing the best are still early stage, it feels to me and leslie will bring you in on that, too, but unfortunately, uber and lyft are the odd men out here and is that because investors just don't like the business model or what else do you think is going on there? >> oh, was that to me? sorry, kelly >> go ahead. >> i think it is because wall
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street is concerned with the ride hailing space and they're concerned about the path to profitability for both uber and lyft and they have no bearing on which one is first and which one is second and you're right with being in the faster stage of growth that a lot of these companies are experiencing, investors like to get in when the life cycle is kind of in that upswing and they feel like with a lot of these unicorns who maybe haven't done as well, namely uber and lyft that they missed that stage of growth and they passed their peak and investors are kind of waiting until the valuation settled down to kind of hit back on the upswing when things become more realistic for them. >> it's amazing because crowd strike yesterday, this now, maureen has done so well, its market cap rivals that of symantec which is decades older. it has 5% of the revenue that semantic has does it start to feel frothy for you, these reactions >> it's trekkiicky
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they say the growth is ahead of them and they're selling so little of the company and that's another issue. it's the -- they're selling about as little as they have on record, historically >> scarcity value drives it up, as well. but it is. it could potentially start looking overheated, but again, investors are discriminated and we're not seeing this in uber and lyft and leslie, at the same time, this is what jim cramer was talking about, as well and it's not what cybersecurity had been that hot of a place we all remember when hack was the etf of the year and that was five years ago and they hadn't each done that well. so why do you think, same question before we go, why is it that these ipos are attracting so much interest and doing so well at least early on >> i think a lot of it is investor psychology and the fact that they're seeing a lot of these deals work we've had 13 deals this year that are up more than 50% on their first day. 5-0, 50% on their first day of
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trading so investors see that, and i may not know what something like this does and the fact that they're comparables are also down in the market, but this has worked for me in the past and i'm going to keep doing this until it stops working because it's clearly generating alpha with the renaissance etf >> that's the place to be, that's for sure. leslie picker and maureen farrell. appreciate it. hacking bacteria could provide key breakthroughs and the ceo behind the technology will explain coming up. shares of restoration hardware are soaring after its transformation and the luxury ifestyle brand soared andt's about to cost you more and we'll tell you why in rapid fire
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welcome back here are some of the movers at this hour. shares of disney are climbing after morgan stanley boosted its price target on the stock today to 160 from 155. a modest boost, but at 4%. the firm saying the company's streaming service will rack up users more quickly than previously expected. investors liked that narrative the stock is trading around 141. airline stocks are rallying as j.p. morgan points to another round of fare increases in the united states. american, southwest, delta and united continental all higher by 3% and in american's case nearly 7% and all of this coming on a day, by the way, when crude oil is up 2% to 3% core is initiating coverage
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on uber and lyft with an outperform rating saying they're bullish on the ride sharing industry as a whole. both of those stocks up 2% now over to sue herera for a cnbc update. >> thanks, kelly here's what's happening at this hour, everyone house speaker nancy pelosi blasting president trump saying he, quote, does not know right from wrong, end quote. she was responding to an interview from abc news last night where the president said he would accept dirt from foreign governments on his political opponents. >> everybody in the country should be totally appalled by what the president said last night. should be totally appalled, but he has a habit of making appalling statements this one borders on so totally unethical that he doesn't even realize it >> firefighters continuing to make progress on containing the 2,000-acre mcmillin fire in california the brushfire broke out
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wednesday afternoon and the fire is only about 50% contained. nasa renaming the street in front of its d.c. headquarters, hidden figures way in honor of the female african-american mathematicians who were key in helping to get humans to the moon and that is the cnbc news update at this hour. kelly, back to you >> i might actually watch that movie. >> it's a great movie. >> melissa is saying the same thing. >> i've seen it twice. i love it. >> i enjoy my melissa lee with just 30 minutes to go until power lunch. >> we'll talk about hidden figures -- just kidding. >> a special series on power lunch called going to work and today we will take a look at the single dad who wrote this post on linkedin that has gone viral. he says basically don't apologize to me for not being available to fly on sunday don't tell me why you have to leave early to pick up your kids don't tell me why you're not going to be online after dinner. you have to have work-life balance. >> he was saying burnout is
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real i haven't read the whole post yet. >> it is recognized as a medical condition by the w.h.o. and it is real and it does have real consequences, health consequences don't apologize for being human and we'll talk to this dad and why it's resonated with so many people >> being looking forward to it we'll see you then here's what's ahead on "the exchange." >> ahead, target tries to play catch-up to amazon chicken nuggets with no chicken? netflix isn't satisfied with just movies and tv shows so it's branching out. and a new member of the what are you thinking club? when it comes to corporate name changes. that's ahead in rapid refi kes i. state-of-the-art technology makes it brilliant. the visionary lexus nx. lease the 2019 nx 300 for $359/month for 36 months. experience amazing at your lexus dealer. man: stand up if you are a first generation college student.
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the most personal technology, is technology with the power to change your life. life. to the fullest. >> welcome back. let's catch you up on a couple of stories that should be on the radar today. it is rapid fire and here to brake down the headlines we have seema modi, dominic chu and kate rogers welcome, everybody formerly restoration hardware and this will go back to the names thing later on it is surging today after a big earnings beat and they raised the full-year outlook to how confidence and momentum would continue ask despite the tariffs, they are saying they'll
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have to raise prices the stock is still down 27% over the past year, but seema, it does feel like a lot of the focus is on the company that everyone knows is most exposed to the tariffs and that's what they delivered >> that's exactly what we've been discussing in the last couple of weeks and the raise in tariffs have put all of these retailers, whether it's apparel or furniture in a challenging position so now they have a choice, put out this proactive strategy and reduce their exposure to china, raise prices or sit on their hands and hope this whole u.s.-china trade discussion will result in eliminating tariffs. >> did they say where theyould move production? they did not exactly specify where they're moving across asia and at the same time while reducing exposure to china whil at the same time raising prices on selective goods what puts restoration hardware in this different category. >> $4,000 for a table and much more for a sofa.
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this is a company that does have pricing power because they are aimed at the higher aimed consumer. >> the higher they charge the more people want to pay for it >> and diversifying with the restaurants that they're starting to open within the stores that look nice, higher end and have a drink while shopping for furniture and everybody kind of -- >> in greenwich? >> they don't have that in the greenwich one. >> the meat packing. >> i did see one when we were down in palm beach while on vacation there was a restaurant bar facility much like tommy bahama has the restaurants and this is becoming a lifestyle brand and this is speaking to the point they charge a lot of money for their goods and whether or not they can preserve their pricing power because they can charge 10% more for a $3,000 couch >>. >> the lifestyle branding does resonate and people rolled their eyes and people are having taco bell weddings. >> there's a taco bell hotel
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now. >> exactly >> the emersive gallery and specifically the one in the meat packing and this is about getting the millennial, and i'm not buying anything from restoration now, but i hope to when i get a house give me a food and beverage option which we enjoy and let them lounge. >> i have christmas slippers from there and they were 20 bucks and they're so soft and that's what i recommend. in a bid to compete with walmart and amazon so walmart is target is saying that customers can get a fee for this $9.99 an order the company is using shipt for same-day shipping and this is fairly competitive with what i've seen on amazon. how big of a step or deal do you think this is? >> this is the streaming wars' retail style what i mean by that is we pay
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for all of these hulu services and you pay for amazon prime and netflix and people eventually run out of money and you make choices. we know amazon prime is we all use because of the two-day shipping and imagine if all these thing his membership fees for them you'll make a choice as to where you will spend that money and the first movers have a real advantage because if target does do same-day shipping for a fee maybe i will pay the $99 for a year on top of prime and everything else. >> this brings up an interesting point. in order to get same-day shipping from target -- >> no. you're right i don't want to sign up for any other memberships. >> right >> it's just where your money is going and what's it worth to you? paying for amazon prime, you know, i don't think about it until they charge me once a year, quite frankly. if it gets to the point where you have so many subscriptions and what's worth it and who is doing it best and i actually like to go into target and
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overspend on things that i don't actually need. >> give me a differentiated product offering and then maybe i'll sign up for the program. >> i have noticed a few different things like things for the nursery and random styles of things and the hurdle has been i don't want to enter my information and they have to get us in and keep us in >> amazon has their own same-day shipping. >> for a price >> tyson foods, the largest meatpacker is unveiling a new line of plant-based nuggets. it is part of a new brand called raised and rooted and this to compete with beyond meat xerox was exciting when it first came to market and then there were a lot of copycats >> i would say that each before tyson did this they were an investor in beyond meat and each before that morningstar farms had this chicken nugget that was vegan product.
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i tried it and i could do it again. so the barriers to entry thing is huge, but the brand recognition will be key for a lot of these guy, but the moment up they can have. >> it goes to the taste test the only way beyond meat maintains it is it you, dom, tried the beyond meat burger said i will seek out that one and would that be true >> i don't know. i would say this i would say that the opposition i've run into a lot from covering these stories and not from the people who say it's plant based, it's about the people that say it's about the slaughtering of animals and the aversion to that that they're turning to plant-based proteins. >> half the point for a weight watchers day >> sue herera told us that where a traditional burger is 25, 20% and all carbohydrates. in a day and age when the keto diet is the rage, all of this is appeal >> you look at beyond meat and
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very successful and this is the right time for tyson to participate with the industry and come up with the new offering. >> they extended the plant-based burger partnership with mcdonald's. >> in all of the restaurants are obviously very interested in this there need to be options and the euro monitor says 60% of consumers are interested in meat alternatives so it matters >> don't forget to tune into power lurch. june 20th we'll have the cfo of tyson foods and we'll be sure to grill him about that >> topics for netflix announcing that it will release a new mobile game in 2020 based on the stranger things universe >> it's similar to pokemon go and they'll use the a.r. feeling. i don't know, are they trying to become disney? are they going to have a line of action figures next and theme parks. now that disney is getting in on their turf and what do you think it signifies >> stranger things has been a huge success and now that they
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can offer a mobile game that gets each more users or customers in the door, great, right? >> ecosystem, ecosystem, ecosystem. what you want them to do is be stocky and you want them to identify with the brand and this is another way to do it so you don't have to watch it on netflix and you are carrying it with you all of the time >> you can live in that world. >> and wear it h&m, i believe, has a stranger things clothing line gaming was the number three thing that gen z upper income male teens were spending on and hit an all-time high of 14% of their wallet this past quarter it matters a lot. >> what did netflix say its biggest competition is >> fortnite, bingo >> bb & t and suntrust have announced a new name for their bank and we had to cover this. this is my region of the country and now it will be truest, guys.
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here's nate becker from "the wall street journal," proving yet again that the industry most ripe for destruction is the corporate name consulting business >> even if the parent company will be called truist, it will be bb & t and suntrust for the foreseeable future so people don't get messed up by it. kelly, you and i had the conversation when mastercard became just the lego and not the name or anything else and these things are resonating with folks over social media. i don't know if i would change my banking habits there. >> i think you're handling people's money and you need a recognizable name if people trust and believe, and i don't know if truist is that. >> and give us six months and truist, and i took some money out. >> name wise includes mandalese and oath, the yahoo verizon one, what else? >> blackberry, but that was
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because that was their marketing stunt. >> people were, like, what is this this is so sill. >> and when they did ihop and then it worked that was the worst part. verizon when they came up with the name and everyone pooh-poohed it and is it verizon and here we are 20 years later and we're surrounded by it seema modi, don which you, achue rogers democratic hopefuls and it's down to take down the big tech train, but want all of them and we'll hear from new jersey senator cory booker on why he's not all in on regulation and we just spoke about restoration hardware tomorrow, don't miss the company's ceo on "mad money" at 6:00 p.m. eastern. lots more on "the exchange" just ahead. exactly. sounds like a case of analysis paralysis. is there a cure? td ameritrade's trade desk. they can help gut check your strategies and answer all your toughest questions. sounds perfect.
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john harwood sat down with the senator from new jersey and asked if that was because mark zuckerberg was there when he was mayor of newark. >> i hope they know the story, as a mayor who had no control over my schools and it was taken over by the state. i'm one of the mayors was taken over, and he was a philanthropist and facebook is problematic. they're doing things that are -- that all of us in america, we just saw a mueller report that pointed to how foreign adversaries were using platforms like facebook. you're not willing to say facebook should be broken up. >> i'm willing to say that we need to look at tech companies in general, because we have a problem in this country with corporate concentrations of power that are undermining basic free mark and basic democratic
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ideals and so if i am the leader of this country which i hope i am, i'm going to be coming after hard, these large monopolistic companies. >> but the fact that zuckerberg was a supporter of your initiative of newark with a lot of money, that's not the reason why you will not specifically like elizabeth warren break up that company >> it needs to be done in a sober, systematic way. >> sober and systematic way, john, but i mean, warren has pretty detailed plans and it wasn't clear to me that he was trying to differentiate himself there with >> exactly, kelly. one of the will cha efchallengen a graduate of stanford and a contemporary of the big high-tech figures and a senator from new jersey, he's tight with people on silicon valley and wall street and he's walking
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that line and he's in a progressive party that's critical of big tech with privacy and monopoly and concentrations of power and critical of wall street on income inequality and he doesn't go as far as others and not just on tech and also on taxes, rejects the wealth tax that elizabeth warren has rejects the financial transaction tax and as for aoc's proposal for a 70% personal income tax rate, he says of course, i won't go higher than 50%. so he's trying to break through. he is distrusted by some on the left, but he's got a lot of talent and we'll see how well he can build some momentum here two weeks away from the first debate. >> john, great stuff john harwood, for an extended version of the interview subscribe to the speak easy podcast. >> shares of lennar popping on an upgrade and we'll talk to the analyst beheine the note about why investors should be llwiing to pay a premium and that's
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weveryone, looknk isn'tat your phones. the design thinking, the digital engineering, security, blockchain, and we will be first to market! yes. when we do we launch? unfortunately, in 2 or 3, hours. why the delay? cognizant is helping banks use digital technologies at scale to advance speed to market.
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joining me on the cnbc news line is jay mccanless you are had lennar in 2005, is that right >> yes, probably pretty close. we think with mortgage rates at the lower end of the channel and with potentially positive tailwinds with improving sales in california that people should be willing to pay a little bit more now than we were recommending before. >> is it true that at the peak last cycle, before the crisis hit, that lennar only traded at a maximum of around seven times forward price to earnings multiple. >> yeah, and the builders tend to trade to a smaller p-e as they move up through the cycle so yeah, it's kind of the opposite of the way other groups trade, but yes, that's where lennar was trading at that point. >> we were at the bubble we were in a frenzy and then the
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whole thing collapsed and then obviously sentiment against the builders had been bad for years. is that turning? how has the performance been year to date >> the performance has been pretty good year to date for both the distributors that we covered as well builders i believe lennar was up as of yesterday and we think that can continue because of lower mortgage rates and also, something we referenced in the note today that purchase mortgage applications saw a nice pop last week of up 11% versus single digits. it seems like consumers are taking notice of lower rates and we believe that will translate into better orders >> you liken oto california? >> we were cautious until we saw a turn in the numbers and now the home sales comparisons in
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california are becoming less negative and what we've heard from other builders is that incentives are starting to dial back there may not be completely out of the woods. >> the countless endless dialogue about not enough starter homes in the country how to address that challenge? >> we believe lennar is an affordable home exposure around 35% to 40% and we think they'll continue to grow that percentage over time. we don't have an exact number but we think they, like other builders in the industry, realize we need more affordable product and that's where they focus their energy. >> raising price target today to 50 thank you, appreciate it jay mccannless it's called living medicine. one company's genetically modifying bacteria to deliver drugs to treat rare diseases got that 'lgein tt xtwel t tohane ♪
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welcome back bioengineers are programming bacteria naturally found in our bodies to create living medicine in the hopes of treating
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complicated diseases cnbc ginkgo is betting big on this medicine announcing $80 million investment and long-term plan to collaborate with companies today. the ceo of ginkgo bioworks living medicine. how many people in the space right now? >> almost nobody it's this exciting idea that your drugs could be alive. >> what's that mean? >> gone to the grocery store with a bottle of probiotics, one of those little pills. >> yogurt. >> there's living bacteria billions of bacteria start growing in your gut and help your digestion what we're doing is reprogramming the bacteria to treat disease. >> wow. >> you can program them like a computer >> how effective have they have been so far? >> early on in the process but these things are essentially little machines in there and eyesing it to treat metabolism
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and missing an enzyme. they trying to suck it up like a vacuum cleaner to suck it up. >> your traditional pills, those kind of things what does this do that can't do? >> so the most important thing is a living cell can sort of sense and respond to things. think about how your body naturally fights disease it's live cells finding things, killing them that's the original drug right? and we come along in the 1900s, develop chemical drugs like aspirin in the '80s and protein drugs like insulin but really, i think it's time to have live cells, now that we have the ability to program them and do it like like your body does it. >> if this works, what would be the application about this down the road >> the most exciting thing is in
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cancer so when you have a tumor, it's basically hiding from your immune system. that's why it's growing out of control. they inject tumor and then the bacteria sends up signal flares to attract it and it could be a whole new way to treat cancer. >> which would be great. any early response from the fda or the scientific community on the viability of this. >> the first two trials in phase one now. those are the first two, this would be the first two engineered microbes. just at the beginning of this whole thing. >> it could be a long drawn out process or you could be like elizabeth taylor overnight success. depending on how those go. i want to ask you about fake meat again more and more headlines about the products tyson today, of course, kfc is now saying it will test some different things are we just at the beginning of seeing different kinds of innovation in terms of meat
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products there or what are the biggest hurdles right now? people saying, hey, beyond meat is the only way to play this space. is that true >> definitely not the only way to play. i think the most exciting thing to me is why is beyond meat so much consumers saying i want alternate options. healthier, better for the planet and not afraid of technology with food. it was a long period of seeing, i don't want to see tech in my food we have big problems i want to eat healthier. technology helps me in other parts. why not in food? a new generation that's okay with that and i think that's what you see with beyond meat. >> i wonder if they get more comfortable with it or, wait, is this gmo stuff that i'm consuming and if i'm trying to avoid it in my cheerios, do i want it in my burger those kind of questions. >> we'll have to have those conversations but the industry now has learned to be transparent about that, talk what's in the product and get people excited and explain the benefits that consumer that's what you're seeing with these new products. >> absolutely.
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you have anything else up your sleeve on that front >> nothing we can talk about yet. >> fair enough you're focused on living medicine and curing cancer which is just fine thank you so much. great to see you >> thank you >> jason kelly is the ceo of ginkgo bioworks. president trump talking to reporters as he meets with governors a little while ago the president saying canada and mexico are completely in line on the new north american trade deal and that's up to the u.s. to get it passed the usmca is much needed for farmers and tim cook was at the white house. we'll have lots more on the president's coming up on "power lunch. check out the comments from larry kudlow at the top of the hour and move session stocks, holding in that range from the dow up 100 points and keeping a close eye on oil today as we mentioned, up about 4% this morning on the tanker attacks. it's since come down to 2% or 3% gain i'll be following that for you as well. i'll join melissa on "power
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lunch" to kick things off for the next hour. it begins right now. >> thanks, kelly see you in a moment. i'm melissa lee. new at 2:00, spiking up on the busiest shipping channel and warning from opec. where prices could go from here. sector having the best month in four years trouncing tech will this rally keep going and special series, going to work. a single dad says to stop apologizing for having lives in a viral post he starts "power lunch" right now. let's get a check on the markets at this hour nice gains on wall street. dow up 140 points trying to avoid first three day losing streak and higher right now by 98 points. all three major averages on track for second straight week of gains kelly? >> we begin with oil this hour two tankers believedo


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