>> f.o.l.d they came strambling in through the show people are buying it aggressively. >> microsoft but i got to throw in micron. unbelievable that thing is going to $65. >> good stuff, thanks for watching power lunch starts right now here's what's on the power lunch menu it's off president trump canceling his big summit with north korea's kim jong-un. is this all part of the president's negotiation strategy what does it mean for u.s./china talks? a deep dive on where we go from here. stocks are off their lows for the day. why is the market bouncing back? has the president's comments calmed the fears the amc ceo is going to join us what's up with their chinese owners power lunch starts right now

welcome to power lunch i'm melissa lee. the dow, well off session lows it was down 280 points at its lows today would be the dow's fourth drop in 16 days. gold hitting its highest level in more than a week. check out the etf that tracks the ewy. it's on pace for its worst day since may 15th sarah? let's begin with the big breaking story president trump calling off the planned summit with kim jong-un. we're live at the white house with an update >> reporter: that's right. we heard from the president a short time ago here at the white house in an unrelated event. he said he hopes a summit could be scheduled at some point in the future there's great opportunity that lies ahead also that the military stands ready. he's discussed military readiness with the south korean and japanese sides

the president has contemplated on who pays for the cost of any military action that could take place on the korean peninsula generally. here's what he said just a short time ago at the white house. >> i have spoken to south korea and japan. and they are not only ready should foolish or reckless acts be taken by north korea, but they are willing to shoulder much of the cost of any financial burden, any of the costs associated by the united states in operations if such an unfortunate situation is forced upon us. >> reporter: at the same time the president sought to reassure the american people and public generally that the risks of a confrontation were not high. he also indicates a level of detail there in terms of thinking this true and planning who pays for the costs of any

new war on the korean peninsula in terms of the financial burden he just talked about we're getting some headlines now from the south korean side in terms of their reaction. south korean president moon saying, quote, we're perplexed and regret the fact that the june 12th summit will be held. he will vow to pursue dialogue and also saying the sincerity of those who are trying to resolve the issue hasn't changed south korea hoping to pull this back from the brink and have a negotiation that leads to a summit the president himself keeping the options open speaking of the president, we may hear from him soon on camera he just called the white house press pool into the oval office. it's an unrelated event relating to the pardon of jack joackson he might be getting a posthumous pardon moerltalmentarily.

we will see him likely on camera here in a few moments. >> all right thank you for the rundown. the north korean meeting is off. is this part of president trump's negotiating style? where do we go from here joining us is a former cia analyst, now a senior fellow at csis professor, let me start with you. what happened today? is it possible that this summit actually hachd is this really done? >> the letter is noteworthy for its tone it reads like a patronizing college rejection letter thank you for your interest and your efforts but we're sorry to inform you and please try again. please apply again in the future it reads like several tweets cobbled together it's very authentic. there's a little bit of condescension and explicit threat as well but trump did leave open the possibility of a summit in the

future i think it's more likely than not that the meeting one day will actually take place perhaps as early as this summer. why? because there are tremendous political gains to be had by both men, trump and kim jong-un. >> dr. terry, same question to you? are they going to meet >> i absolutely agree with dr. lee. i think that letter is written by president trump that was noteworthy to me, the words he used. beautiful. some of mr. trump's favorite words. he used it it's noteworthy for some discipline i know it might not look that way. i saw discipline in his messaging. he did definitely live a window for future possibilities as dr. lee said, there's an incentive by both parties to come to the talks to have this meeting. >> professor lee, i mean, the way you characterize the letter, it sounds like perhaps the president of north korea could be offended by this. what do you think his next move could be in response to this

if the letter is that condescending. >> i'm sure kim did not see this coming why? because over the past 70 years of u.s./north korea relations it was always north korea playing that game, playing hard to get and having the u.s. chase it north korea has walked out of meetings, right in the middle of meetings canceled numerous scheduled meetings kim probably did not see this coming at the same time, i think both men understand that this is a long term game kim has to continue to play to put -- to roll out his two act play of provocations and peace ploys. there will be another sequel, perhaps even this summer i think at some point president trump will take the bait i think he belatedly realized he was walking into an elaborate trap it was very impulsive the manner in which he accepted kim jong-un's proposition for a date i think this was the right move for now.

>> dr. terry i don't think there's any question north korea overplayed their hand. what happened next on the china front? >> well, it will be interesting to see what happened if north korea overreacts to this and there are future provocations, then we don't have a whole lot of options to put full force on the sanctions front. there are a number of things we can do -- >> what about china? >> you will be involving chinese entities and banks you will worsen the relationship we have with china we have to continue to press china. we've seen loosening of implementation of sanctions on china's front. we're going to pursue -- continue to pressure china, i'm sure >> dr. lee, south korea, how much do you trust the intentions and the motives of the south korean president are they exactly the same as the

u.s. they've been such an enabler in this process i'm not quite sure how it all is -- they all fit in. >> south korean president moon has played a very important roll in kim jong-un's image makeover going from a universally reviled international pariah to a global statesman from a maniac, mad man, to a very honorable and gracious statesman south korea's interests are de-escalation always that's the default position, preferred option, to de-escalate. to appease north korea don't be surprised if you see vladmir putin glide into the fold that's what happened when kim jong-un's father attended the first meeting. in july, putin paid kim jong-un

a visit in pyongyang trying to thrust, reassert himself, russia's influence in the korean peninsula. >> hasn't the horse left the barnat this point in terms of putin swooping in, dr. terry it would be a real about face if all of a sudden they said we're not going to do the summit, not going to entertain the idea of de-escalation. >> but i do worry that in terms of implementations of sanctions both from russia and china, it's going to be hard, just the political will is not there anymore. but can i just comment on the south korea's position i think south koreans were caught off guard by this president moon jae-in was just here i think officials were convinced president moon was able to convince president trump to have this summit. i think they're probably scrambling and having a panic moment right now they're as surprised as north koreans are too. i agree north koreans are surprised by this. they didn't mean to scrap the

meeting when they were making these statements they're used to getting away with it. i think everybody is surprised here a little bit. >> yeah, professor lee, that's what i wanted to ask what -- if you're the south korean leader, you're just here with the u.s if you're the prime minister abe and you've invested so much to try to get a relationship with president trump going golfing, and you wake up to a threat of sanctions on auto imports, south korea and japan among our top importers and then you get the letter the summit is called off, what do you do how do you react >> it's a sleepless night in seoul. they're having an all night emergency national security council meeting. prime minister abe is probably letting out a sigh of relief because he felt a bit marginalized as kim jong-un was lining up world leaders for a series of summit meetings. putin's probably smiling xi jinping is probably concerned now, the chinese president

now he can foresee more friction in terms of trade relations with the united states. i would say today is not a really big day of risk or cost for the united states. president trump acted for a change, presidential >> thank you so much a pleasure news alert in the bond market right now, seven year notes are up for action what do you see for demand, rick >> reporter: i gave this one a b minus. really it was the best of breed with regard to the three auctions it was $30 billion, seven year notes. it completed $99 billion in supply the yield at the dutch auction, $2.93 million. last seven year auction was $2.952 million those are the two highest dutch auctions going all the way back to the spring of 2010.

$2.62 million bid to cover it's the best since january of 2018 $65.5 million indirect slightly above ten auction average. the only lightweight was the direct bidders at $12.9 million at 14% 21.6% go to primary dealers. supply is done anybody who participated in earlier auctions, whether it was the two year or the five year, of course, you're in the money considering yields have moved down in the market we'll see how this playalis out. it proved to be a good buy back to you, melissa lee. thank you. well, the cancellation of the summit with north korea may not be having a big an impact on stocks as you may thk, sulinhod investors be more worried? power lunch will be right back this is a story about mail and packages.

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welcome back we are watching the markets' reaction to president trump's decision to cancel his summit with kim jong-un the market is taking a sharp turn lower when the news first came out, but the dow has recovered. >> here's the deal, we are well off the lows of the session. the dow had been down 281 points

at the lows. now off about 76 global markets really reacting to this cancellation of the summit between president trump and kim jong-un. check out the south korean etf, which drops as soon as we got word that the meeting was off. down by 1.5% geo politics heightened trade fears is hurting sentiments. growing concerns around opec plus the surprised build in the iea reports. chevron is leading the dow lower. 1.5% retail is a bright spot led by l. brands. medtronnic beat on earnings as well emerging market sells there rose 17% and the segment accounts for 15% of the total company then there's ge jumping after it

announced it has no plans to cut its dividend u.s. automakers are getting a lift the news is taking a toll on the global auto sector volkswagen, toyota, honda, all lower, guys, back to you. >> thank you very much it seems like investors are tuning out the noise about the north korean summit. let's bring in tim holland this morning's dip to the low of the session down 280 on the dow felt like the perfect storm of a desire to take risk off the table ahead of long weekend. what was your interpretation >> i think anytime that people think something will spill into trade problems, they're going to take the market down a little bit. certainly this north korean news, which i certainly think this summit is going to happen

at some point. i don't know when. that fed into the hey, are we going to have trade friction with china based on this somehow. that's why the market traded lower. i also agree with you, too, a long weekend people want to take a little bit of money off the table the market's been a little dicey here for us, you know, this 200 day moving average which we've been trading close to or bounced off of about 12 times since february 9th has been a good buying spot. we'll continue to suggest that our clients do that. our macro outlet is good it's not great, but it's certainly good and we think stocks are going to finish higher. >> tim, how are you positioning? >> i think brinker capital may have cracked the code. to put it in language we understand, what did we hear all the time do as i say, not as i do with this president it's do not as i say, do as i do

rhetoric should try to be looked through. this political discourse, what's reality? an accommodated fiscal policy that's not going away. an incredibly pro business regulatory concept and a tightening job market. we like the u.s. economy -- >> you don't think we'll see tariffs? >> sure. >> do you think the others are a threat >> we have and we haven't. everyone was exempted against the chinese, russian and japanese we're probably going to work through that we have tariffs all the time i think what spooked the market back in march when we talked about steel and aluminum was it was arbitrary. what happened? two weeks later we walked it back we'll give everyone an exemption except a couple of countries even the talk around autos, that's a multimonth process. you have to try and look through that and look at what's taking place in terms of policy. >> when it comes to policy, we're always talking about what

the fed is going to do yesterday's statements seemed dovish, but at the same time, ultimately they're tightening whereas for years they weren't how does your view of interest rates impact what you think is going to happen to stocks? >> i certainly for one thing don't think that at 3% is any kind of red line for stocks. what we've been telling our clients, really since early 2017 is, this year is all about what the fed does with rates in 2018. if they hike more than three times you know, we consider that a mistake. i don't think they're going to hike more than three times i don't think they're going to make a mistake this year, we do think this ten year yield will be somewhere between 3% and 3.5% by the hend of the year. that's based on an adjustment. we have slightly higher inflation, not surging inflation. we have a slightly better economic activity. and in my ind, you know, a ten yo year, around 3% or higher than

that, that reflects that we're not worried about interest rates running up we're not worried about inflation running up we're watching wages there will probably be a little bit of pressure there. >> it doesn't sound like you're worried about anything. >> no, like i said, this is a good macro forward outlook it's not great our target, our midpoint of our target is 2550 that's very doable i think it makes a lot of sense with what the underlying fundamentals are. >> i'm curious about your strategy don't follow the rhetoric. tune out the noise and just watch what they do and not what they say i wonder how far that applies? for instance, are you buying technology companies which are now the latest political footballs into the midterm elections with both democrats like bernie sanders and the president bashing facebook >> we don't pick individual securities we allocate capital to specific strategies we are overweight domestic

equities and small cap in particular we think a lot of the dust up around e.m. is overdone. >> why >> if you look at the spread, it's a couple hundred basis points year to date. one is hostaoff more than the o. just about everything class is trading at an 25 year average p.e. >> what about interest rates, same question? when interest rates go up, e.m. gets hurt. >> they get hurt more when the dollar goes sglup. >> do you think the dollar won't keep climbing? >> we think rates will keep climbing we think the dollar, the bounce here is probably overdone. if you look at the budget deafsudea deficit that tends to go hand in glove. >> why wouldn't i want to take a really secure 3% here versus some wacky place in the world -- >> yeah, my mom told me to avoid wacky places as well

we wouldn't go there there are certain countries that have terrible governance profiles if you look at turkeyy in particul particular it seems like argentina are still in the imf's good graces that's a part of the world where active management can add value. >> thanks to you we want to note in terms of the market action we saw the nasdaq try to go positive moments ago. we're at the flat line right now. it's something we're watching. coming up, kroger taking another swing at walmart and amazon in the grocery wars. netflix stock keeps going up its market cap keeps growing we'll tell you which surprising name netflix managed to surpass today. power lunch will be right back if this is what you think a mercedes-benz

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mercedes-benz. the best or nothing. checkout shares of kroger. home chef, which is the country's biggest private meet kit company, kroger paid up front. home chef is third in terms of sales among meal delivery companies behind hello fresh, which is public in europe and blue apron, which, of course, had that recent disastrous ipo this is a trend. albertson's bought plated. amazon is partnering with martha stewart and marley spoon walmart is starting to go at it alone. the big picture here, guys, is

the grocery model is changing before our very eyes. the big three are battling it out for online supremacy amazon with whole foods, walmart and kroger which just last week partnered with the uk company that automated online delivery for groceries to set up shop here. this market is completely up for grabs. less than 2% of the $800 billion grocery market in this country is online. clearly, all these guys see it as the future. they see the meal kit as part of the equation it's going to be a battleground. >> blue apron we should mention, obviously, it's been a monster that was kevin o'leary's pick. he's number two now thanks to blue apron in one month that stock is up 60%. we gave him -- remember, they had earnings -- no, i'm sorry. during the stock draft it popped >> because he said it -- >> he kept the closing price. >> exactly >> he doesn't get that. >> his premise was that it was

going to get bought? >> just like his own firm got bought out. >> plated. >> so that's the story here. that's why blue apron shares are popping 4% some are thinking maybe walmart needs to get more aggressively into this. maybe they could buy that. it's been a tough business to go at it independently. these companies have to pay so much for marketing to get new customers. >> and the acquisition costs are high. >> yeah. coming up next, inside the feds' head, what do policymakers about the economy think right now? we'll head to -- we're going to hear from the philadelphia federal reserve. as the cost of college gets more expensive, it's more important than ever to start saving early how you save is just as important as how much. we'll explain, coming up on power lunch. never owned a business. there's nothing small about it. are your hours small? what about your reputation, is that small? when you own your own thing, it's huge. your partnerships, even bigger. with dell small business technology advisors you'll get

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senate foreign relations committee. he said north korea did not respond to repeat querequests officials to discuss logistics over the now canceled summit. >> over the past many days, we have endeavored to put preparation teams together to begin to work to prepare for the summit we have received no response to our inquiries from them. >> an international team of investigators says a russian military system was responsible for the downing of malaysia airlines flight 17 over eastern ukraine nearly four years ago. they said detailed analysis of video image and photos establish the missile that brought down that plane came from a russian based military unit. you are up to date, that's the news update at this hour ladies i'll send it back to you. thank you very much. we want to take a quick check on the markets. stocks here are making a bit of a comeback the dow had been down by nearly 300 points

down by just 75 points s&p 500 down by five the nasdaq is up by a half a point. general electric, nike, as well as mcdonald's are your laggards uber reporting a big sales jump in the first quarter and boosting its valuation to $62 billion. revenue at the company jumping 55% from a year ago. losses also narrowing. sales of existing homes dropping more than expected in april, falling 2.5%. a shortage of inventory was to blame. the northeast seeing the biggest declines there. and the justice department is reportedly launching an investigation into whether traders are manipulating the price of bitcoin and other crypto currencies. the probe is focusing on practices like spoofing, where the marketplace is filled with fake orders that are later canceled to manipulate others to buy or sell a particular coin. bitcoin prices are down today. thank you. less than 24 hours ago here on power lunch we heard that the

federal reserve might be willing to let inflation creep up as the economy grows. that came out in the minutes of their last meeting that was so yesterday. steve is joining us ahead of the philadelphia federal reserve to see what he thinks today take it away, steve. >> reporter: thanks, michelle. we're at the federal reserve conference on disruption and technology and the economy but you're right, you took the first question out of my mouth right there. i'm here with patrick harker, philadelphia fed president let's talk about what michelle brought up the minutes yesterday suggesting there may not be so much further to go when it comes to hikes rates. and second that there's nmore tolerance for inflation. >> when i began this year, i had three 25 basis points from this year to last year. i think we're getting close to neutral. neutral say about 2.75% to 3%. if we see inflation start to

accelerate, then i would be open to a fourth increase this year i'd have to see evidence of that first. >> reporter: when it comes to symmetry and inflation, how high is your tolerance for higher inflation? >> i don't think of it so much as a number around the 2%, although that's part of it it's the acsuceleration if we're creeping up to 2% and we creep up to 2.25% that's a different story than we're accelerating past 2% i think we behave different. at least i would as a policymakers. >> i want to >> is 2019 the end of it in your opinion? >> could be, it's possible. >> reporter: do you see a need to become restrictive and slow the economy, go well above neutral? >> not particularly. if we can hit neutral and stay around therethere, of course yo always going to be moving here or there it's not a fixed point then i'd be comfortable with that i wouldn't want to just go far

over neutral and then have to put the brakes on. >> reporter: there's an obvious question that comes from that. typically the fed has cut as much as 500 basis points in a recession. if you stopped at three, you'd only have 300 to cut. >> it's what we're discussing at this conference. will technology lift productivity we've not seen it for a long time if it does, then of course we can increase the neutral rate. ff it doesn't, i think we are where where we are. >> reporter: that's a great segue into the conference. i think this is the second or third conference i've been to on this very topic. why is the fed so focused on this issue of technology and disruption what does it mean for the overall macro economy? >> a couple reasons. just trying to understand its impact on things like productivity, inflation. trying to understand the variables that we try to control. right? our dual mandate with unemployment what is happening with respect to technology? that gets to the second point, particularly for me, allow the

work we're doing in philadelphia around workforce development right? what are the skillsets that are needed in this new economy not all jobs are going to go away the machines aren't going to take away all our jobs. >> reporter: in the first instance, i want to make sure everyone understands what you're saying if all this techno stuff around us creates high productivity, it means the economy can run hotter and with less recession? >> we have to see it play out. >> reporter: right now you don't see it >> my biggest concern is yes, we'll see productivity manufacturing and electric utilities. the economy is a service economy. so until we see the needle move say, on healthcare productivity, we're not going to see overall productivity the problem is we don't know how to measure healthcare outputs. we can't measure that. >> reporter: let's get to the second part, the effect on the wor wor workforce. there was a conference before we

spoke that we're in trouble here the chinese can beat us out on production, but also the idea that your typical engineer -- i have friends whose kids are graduating engineers, they think they have a lifetime of employment there are substantial high paying salaries in areas that are at risk here. >> the only way they have a lifetime employment going forward is if they have a lifetime of education. they have to commit themselves now to a lifetime of education constantly refreshing their skills >> reporter: are you concerned that technology gets to a place where vast numbers of people are unemployed and unemployable? >> i worry we'll have segments of our society that that's a situation, whether it's geography or skill set i'm not worried about it overall. we always create new jobs. right? as we were talking about earlier at the conference. associate's degree level for cybersecurity. we started this when i was the prest of the university of delaware with the army and j.p. morgan chase there will be new jobs that will be jobs that will come out of machine learning.

we don't -- go back 20 years ago. >> reporter: people get hurt along the way though. >> they do we need to have job retraining programs in this country. >> reporter: thanks for joining us a topic i think we'll be discussing a lot michelle, melissa, back to you guys and sarah it is interesting to hear central bankers talk about machine learning america's student debt crisis is growing. it costs an average $35,000 a year for a private four year college. 529 plans have become a popular way to ease the pain of saving for education. but there are some crucial things you need to know about them who is eligible? what are the pitfalls? you'll hear straight talk from experts next let's build a better world for investing. let's always put investors' needs above our own. as investment management professionals, let's measure up.

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still nervous [about buying a house? a little. thought i could de-stress with some zen gardening. at least we don't have to worry about homeowners insurance. just call geico. geico helps with homeowners insurance? good to know. been doing it for years. that's really good to know. i should clean this up. i'll get the dustpan. behind the golf clubs. get to know geico. and see how easy homeowners and renters insurance can be. let's stop talking and actually be more diverse. as investment management professionals, let's measure up. cfa institute. it is college graduation season and the cost of those newly

manipulated diplomas is higher than ever. the average cost for private four year college has risen to $34,000 740 from just 20 years ago. 529 plans have become popular to save for college there are pitfalls you need to know joining us is the president of bona fide wealth and stacy francis, president and ceo of francis financial. guys, thanks for joining us to talk about the 529s. it's an interesting time to invest in 529s because there are new changes. >> there actually are. there's never been a better time to invest in 529 plans the world has opened for those funds to be used k-12. i just started private school to my son and now we can tap into that plan. >> it used to be college

education? >> exactly. >> using it for k-12 -- >> even in general, 529s to save for college? >> i think it's below 20%. >> why is that is it because we're told it's so important to save for retirement >> i think it's hard to save for a multitude of goals and often saving for college isn't on the top of the priority list we have cash reserves, retirement, things like that. >> so just run us through quickly how it works, what we need to know about putting money in a 529. >> absolutely. an individual can put up to $15,000 into a 529 plan per year that money will grow tax deferrdefe deferred and will come out tax free >> all states have their own plans and rules and minimums around this? >> you got that. every plan, every state has their own plan what plan is right for you it depends on number one, does your state plan offer tax benefits i know new york state, if you put in up to $10,000 you can deduct it on your new york state

tax return, which is a no brainer. if your plan does not have a tax deduction in it, then look at the other plans out there. there's a great website called savings for college, it helps you rate and compare which one is knowing to be the best one for you. >> what are the pitfalls >> you have accessibility problems if you're trying to get it for not college education that money would be penalized and taxed if you took the growth portion of the contributions out. be careful before you start putting money into these plans as there are some consequences you'll have to deal with taking them out prematurely. >> or if your son or daughter doesn't end up going to college? >> that can happen but the good news is there is a lot of flexibility you could use it, a grandparent, an adopted child there's a lot of flexibility with it. if they get a scholarship, that's a big concern let's say it's a $30,000

scholarship. you are allowed tod take $30,00 out without paying a penalty don't worry about what happens if my child gets a full ride, this is wasted money you can get that dollar amount out. >> does it prevent kids from applying and receiving scholarships if they have this money in the bank? >> it might not prevent them from getting shacholarships that are performance based. it might not help if you're trying to get financial aid. >> any other tax incentives inning into this >> the tax incentive is you're putting money away that's going to grow double, triple, quadruple. you get to take it out tax free. there's no other investment you can save for college for that. you're right, you do have to think about the fact that it might impact your financial aid. but it will probably only have a 5% impact. just the wonderful growth, the

tax free growth often will make up for that. >> we're looking at the top performing plans ohio college advantage how about that >> it changes. >> i need to take that one out for my son. >> who knew ohio >> thank you very much for that education on 529s. melissa? switching gears here, netflix is moving higher today at more than 80% this year it's passed disney in market cap we should put some caveats out there. this is fluctuating constantly the difference in market cap is very small, but it does seem like a milestone in how investors perceive the value of these two companiecompanies. >> it's worth noting how different these companies are. also, if you look at a media giant like disney, just how varied its assets are. to compare a company like netflix, which streams video to over 100 million people around the world and then you have a company like disney which has physical parks it has a movie studio.

it has tv networks it has espn. it has a real variety of assets i think it's worth noting this comparison is meaningful because netflix is changing the way that disney and the other media giants do business we have seen disney make a big push into streaming with their espn streaming app they have a disney streaming app they're getting ready to launch. the big question is how that disney streaming app impacts netflix. it will have some of the content that is currently on netflix. >> you know, it's playing a role in terms of what's going on with this fox/disney/comcast drama. one of the parts of this is h u hulu everyone wants a piece of netflix's valuation in the stock market >> exactly i think it's interesting because what we're seeing right now with this rush to try to do content acquisitions, the rush for

comcast and disney both looking to buy fox it's about two things. one, the value of hulu and how much more valuable hulu could be if it's controlled by one owner. we have to remember that hulu has three owners there's the question about valuable content netflix is investing a huge amount in content, up to $8 billion this year they signed a deal with president obama and first lady michelle obama you have this on top of signing tv deals with ryan murphy, so it's not about hulu, but this rush for valuable content. fox has a lot of that valuable content. >> there's been so much competition there. thanks, julia. all that home entertainment options like netflix, it was supposed to be harder to get people to go to the movie theater. a couple of blockbusters may by disproving that this year. we'll talk about the future of the movie industry with the head of amc right after the break

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super hero block blusters have dominated and the new "star wars" would bring in more business for theaters. amc is also making international headlines recently, being the first cinema to expand into saudi arabia not all good news, though. amc's biggest shareholder under pressure by chinese officials for its rapid spending and debt. joining us now to discuss all of this is amc ceo adam aron. hi, adam thanks for joining us. >> michelle, ahead of a very bernie sanders supporte busy memorial day weekend, nice to be with you >> let's start with wanda. the troubles of that company, your largest shareholder, are very well documented are they affecting you in any way? >> actually, dalian wanda has been a spectacular shareholder for amc. we are completely independent companies. we trade on the new york stock exchange we have our own balance sheet. but they've been a fabulous shareholder and we're lucky to be affiliated with them. >> i guess some shareholders might be wondering, though, at

what point do they monetize their stake in you, right? they have been monetizing real estate assets to deal with their debt issues and you're a much more liquid position, say, than the half built tower in chicago, for example. and if i'm a shareholder, i'm wondering, is that the sword of damacles out there, is all that supply going to come out on the market >> those are better questions asked of wanda, of course, than of us, of course, but i have every confidence they won't do anything foolish >> you opened the first movie theater in saudi arabia. very recently, last month. i assume 40 years of pent-up demand means decent sales. >> we did, in fact, on april 18, we opened the first movie theater in riyadh, saudi arabia, in 37 years, thanks to a new vision for that country by its ruler, the crown prince of saudi arabia, and yes, we were jam packed from the opening night. we sold out our first

performance in less than 15 minutes, but that's because people didn't know how to find our tickets. once they figured it out the next day, we sold out in 45 seconds. demand is quite robust in saudi arabia, and we're going to add a lot of theaters in saudi arabia over the next three to five years. >> adam, you've been a vocal opponent of movie pass and in fact in the last conference call, i think that you actually took out the calculator and said something to the effect of if you tally up how many passes they've made, it's considerably less than what they're actually paying you, implying they're losing money and in fact they are losing money but there is a another competitor out there to movie pass, even, a company that seems like the competitors are all around i'm just wondering if that is sort of siphoning off customers who would have otherwise paid full price for a ticket at amc and what your plans are to launch your own sort of subscription model for frequent movie goers. >> we actually believe in the subscription model we have one in the united

kingdom. it's very popular with more than 100,000 members. what we've seen from the very first day is the price point needs to be economic sometimes in life when things seem to be too good to be true, they're too good to be true. but we're booming right now. we run our company we don't run their companies while they may have issues, amc is booming at the moment >> but have you seen customers go to movie pass instead of paying full price at amc you may run your business but you also may see impact on your business from these competitors. >> well, as you may know, they're buying tickets from us at the full retail price, so the monies that they take in and the monies they disperse are not relevant to us all we know is we're selling the tickets at full price and the vast majority of our customers come to us directly, of course, and they've been coming to us in very large numbers recently. we've been setting record after record after record. >> so how is the box office

slate these days i mean, it's been a rough period, generally, overall, with the competition from netflix and everyone else on streaming >> well, actually, you're a little out of date, because what you're describing was was the conventional wisdom of last summer, may to august of 2017, when in actual fact, the movie industry hit a bit of a slump. but since september of '17, we've been roaring hot september, december, february, april, were all the biggest september, december, february, april in movie history may either will be the biggest may in movie history or just short. "black panther" was one of the biggest openings of all time, but those records that they set lasted only about eight weeks because "avengers" came out and became the biggest opening of all time "deadpool" just came out as the second biggest r-rated film ever, second only to the original "deadpool." i'll tell you about the stock in

a second and as we look ahead, the summer blockbusters are just amazing, what's coming out. >> it does feel like we have these big successful launches and franchises coming out and we've covered that but the stocks have been under pressure, and you do still have that narrative going through the box office that generally, there is weakness because of the competition from tv and from streaming. >> well, look at what's coming "solo" is coming this weekend. it might be the biggest memorial day weekend ever we'll know on monday, of course. behind that, "ocean's 8", "the incredibles" the sequel to "antman", got "hotel transylvania 3", another "mission: impossible" segment. we've got big movies that have been having people flock to our theaters recently and we have big movies coming over next two months sometimes investors are just wrong. i'm a bull and i think the bears have it wrong. and i think there's a lot of

money to be made because i personally think this is a buying opportunity for amc >> all right lot of confidence there, adam, thank you so much. adam aron. >> lot of big movies coming, that's why >> and i love the new comfy seats. so i'm there thanks coming up on "power lunch," morgan brennan investigates the emerging battle between illegal short-term rentals and the law it's a cnbc exclusive, airbnb, unwelcome guests plus much more on the reti tthacono e cancelled summit the second hour of "power lunch" begins right after this.

i'm melissa lee. the president calling off his highly anticipated summit with north korea's kim jong-un. was it a good move and where do we go from here? the justice department reportedly launching an investigation into bitcoin price manipulation but bitcoin already down 41% this year, how worried should bitcoin believers be. and inside the world of illegal short-term rentals our exclusive cnbc investigation airbnb unwelcome guests coming up "power lunch" starts right now

and welcome to "power lunch. i'm sara eisen stocks moving lower but certainly off the session lows the dow had been down 300 points earlier and it has climbed back. russell 2000 is negative nasdaq near the flatline energy and financials, also tech, those are the biggest laggards today exxon and chevron, worst dow performers ge leading after posting its worst day yesterday in nine years. netflix hitting an all-time high, now up more than 80% this year best buy falling as online growth slowed and l brands actually leading the s&p 500 as earnings beat another retail winner, michelle >> thank you, sara i'm michelle caruso-cabrera. we begin with president trump calling off his leader with north korea's kim jong-un. eamon javers live at the white house with the latest. >> reporter: that's right. we've been talking about that throughout the morning the president speaking on two different levels here, one -- on the one hand, sort of

threatening the north koreans with the size and strength of the u.s. nuclear arsenal and revealing that he has had conversations with the japanese and the south koreans about how to pay for any military conflict that could erupt now on the korean peninsula but on the other hand also sending a reassuring message to the american public and the public internationally. here's what the president said earlier today here at the white house. >> hopefully everything's going to work out well with north korea. and a lot of things can happen including the fact that perhaps, and we'd wait, it's possible that the existing summit could take place or a summit at some later date nobody should be anxious we have to get it right. >> reporter: so the president there saying that nobody should be anxious and it's possible that this summit gets rescheduled and of course in "the art of the deal with the t -- the president wrote that you

have to be willing to walk away from the table >> thank you earlier on our show, dr. lee of the university said he thought the president acted presidential for a change. he also had an interesting take on that letter itself. listen >> the letter is noteworthy for its tone it reads like a patronizing college rejection letter thank you for your interest and efforts but we're sorry to inform you and please try again. please apply again in the future >> joining us is ian equilibriumeequilibriu, founder and president of the group you've been somewhat complimentary of the president's foreign policy in the past noting some breakthroughs, including on north korea do you agree with the strategy today? >> yeah, i think he had to pull out of it. i'm not -- i'm not very happy about the way he did you know, threatening sort of, you know, nuclear strikes or how big my, you know, arsenal is, that's not helping, and i kind of wish that the president had

sat down with the south koreans in advance so that they wouldn't have said we have no idea what the president's trying to do it's not the way you want to treat your allies. but the fact is that nuclear -- denuclearization, unilaterally, was never on the table from the north koreans and trump set expectations too high. another thing, which is important to recognize, is that while the south korean president always was happy to give trump every bit of credit for -- i'm glad you've done all this and we're so thankful for you, kim jong-un was not willing to do that he got a little angry that trump was taking credit for kim jong-un's diplomacy with the south and with the chinese and the invitation to meet with trump, which kim jong-un wants to take credit for, so you had two players for very different reasons with pretty significant egos, and i think for both of those reasons, it went south you finally had the point that

the north koreans themselves were sending some pretty negative messages over the last several days, and if trump thought there was a reasonable or growing likelihood that north korea was going to pull out themselves, much more embarrassing for the u.s. to get dumped by north korea. >> yeah, that's how it is with boys and girls, right? no, i didn't dump you, or you didn't dutch mmp me. i dumped you what does this mean for china and trade negotiations >> bigger problem. that's something the market needs to pay attention to. trump has made it very clear that one of the reasons why he has wanted to cooperate on trade, he's not particularly happy with is because they've helped him on north korea. he offered that to the chinese to xi jinping directly during the mar-a-lago summit, their first meeting just several months after president trump became president, xi jinping said yes and they worked together in the past two weeks, trump has started saying publicly that the chinese have been reducing their sanctions on north korea, that

when kim jong-un met directly with xi jinping in beijing, that they coordinated a tougher line against the united states. now, clearly, that means it's going to be harder to get to a better place with the chinese on trade and technology, which has bedevilled this relationship since trump became president i think it's going to be much harder to avoid significant tariffs, at least the first round, as a consequence of the summit being called off. >> we'll see what happens on that front ian, thank you for calling in today, ian bremmer, the president of the eurasias group. the markets fell nearly 300 points they have cut their losses in half, though the industrials lower by about 84 points, the nasdaq lower by almost 3 points and the s&p lower by a little more than 6. eric freedman is chief investment officer with the u.s. bank wealth management and mike santoli is cnbc senior markets commentator. mike, first tell us, give us your assessment of what the market is telling us today

relative to what the president did with stopping the summit with north korea >> well, michelle, we see once again that kind of reflex twitch lower whenever you get one of those headlines which i guess in the market's estimation, around the edges, makes a little more trade hostility with china slightly more likely but then you see this market has been much more difficult to rattle on an ongoing basis i would point out it's not as if the market rallied for days on end in march when we heard there was going to be this summit so i don't think the market expectations for results were all that high. i think the market's caught up in its own things, bond yields coming down, and i do think, like i said, around the edges, it maybe muddles up the trade picture a little bit but the market is willing to kind of wait and see how this plays out and not make any strong moves. >> eric, it seems like you've gotten more cautious in your own portfolio. >> we have, melissa. we came into the year with a really pro-growth bias across our portfolios, about 600, 800 basis points overweight, equity,

global basis particularly in the u.s. and developed international. we've really scaled that back. we're still in the bullish camp. we still think that over time, you will make money in global equities but we've taken that back some to start this year >> do you have more of a domestic focus, eric >> we do we felt that the european data, a lot of the high-frequency data is rolling over. we think the european a renaissance is not a renaissance, it was a nice recovery but we don't see sustainability we're looking at e.m. right now but for now, more of a domestic bias >> domestic is working mike, which stocks do you look at, which groups on tariff fears? when you walk into the office this morning, and you see that the president is looking at putting a tax on imported autos for national security reasons, where do you go first? >> well, interestingly, the auto stocks themselves, sara, didn't have very dramatic moves so i

don't think the market was trying to game out where that one goes but in general it's the very big ticket industrial, boeing, caterpillar have been the beneficiaries when the market decides to focus on the possibility of a favorable trade resolution with china or some kind of progress or just a cooling off of the rhetoric so those are the ones that i do think will pull back most if we thought some more belligerent action was out there so i would say those in particular but today, as i said again, energy down, banks down, it to me isn't telling you that the market is really caught up entirely in the trade question >> eric, i wasn't entirely sure why you were less constructive on stocks. you mentioned europe is europe reflective of what you think or it's the reason you are less optimistic? give me the rationale for why you're reducing some positions >> michelle, we think that the european data in particular is just getting weaker on balance i think a lot of people came into the tail end of 2017, the early part of 2018, thinking that europe was more of a

sustainable growth story we've actually already seen earnings recover quite a bit and we think that is really last year's story, so the reason for our caution is that on balance, the macrodata we look at is weakening so outside of the u.s., again, not to be ethnocentric but in the u.s., things are actually strengthening and we're seeing that across sectors and demographics but if you go to places like e.m. or places like europe, on balance, the data is weakening, particularly on a consumer side. so, those are some of the things that we think the market hasn't fully discounted quite yet and again the reason why we're a little more domesticicly focused right now. >> thank you, guys thanks, eric, thanks, mike >> thank you coming up on "power lunch," the justice department reportedly opening an investigation into manipulation of bitcoin we have the very latest on that story straight ahead then the irs planning to crack down on states offering workarounds to a specific area of the new tax law, what states are doing, what the irs is planning to do about it. and the nfl bans kneeling

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interesting story, melissa the justice department reportedly launching that criminal probe into whether traders used illegal market moves to manipulate the price of bitcoin and other digital currencies, methods like spoofing or flooding the market with fake orders or wash trading, when traders buy their own orders, creating the illusion of high demand. so far, both the cfcc and the doj have declined to comment but this all follows a string of recent regulatory crackdowns on the cryptocurrency space, including a coordinated effort called operation crypto sweep, which has launched investigations into potential scams. bitcoin tumbled to a six-week low. since then, it's recovered coinless founder andy is welcoming this further move on regulations saying it's good for the market back to you. >> thank you, seema. for more on what this means, let's bring in fast money trader brian kelly.

brian, good to have you with us. >> good to be here, emily. >> so it's interesting, a lot of crypto trading happens in exchanges overseas is this going to be like whack-a-mole where they move the activity elsewhere >> i don't think so. i think what we're looking at is really a global coordinated regulatory approach to this market because we've seen it in multiple different jurisdictions. so certainly there's going to be bad actors out there you liken this to the fx market or the libor market, we saw banks manipulating those markets and they've been fine for that and that's a global market so i think they'll be able to have regulators coordinate to the extent that regulators can coordinate with different regimes, and they'll be able to at least clean it up a bit >> so, even though right now the report is that the doj has launched this investigation, you

believe that regulators around the world are actually coordinating their efforts to really clean up all the exchanges. >> it wouldn't surprise know see that and we've seen just this week with that operation crypto sweep that you just talked about, that was canadian and u.s. regulators. we've also seen south korean regulators come in, japanese regulators come in, so it does appear whether it's an official coordination or at the very least everybody kind of getting together and saying, you know what, institutional money is likely to come into this market, here are the steps we need to take to make sure it's an asset class like every other one >> you go back in time and you go to bitcoin's record high, close to 20,000 in mid december and you wonder if manipulation played a role in achieving that milestone. are you concerned that we won't see those highs because those highs were not achieved in an organic fashion? >> no, i'm not concerned that we went see those highs again i mean, manipulation works both

ways it can work -- so, you know, we could go low or we could go high, but, you know, i'm not concerned whatsoever about not reaching the highs in fact, i think i would, you know, i look at this and i think you said andy of coinless suggested this is one more step toward the maturation of this process and if you can have clear regulatory guidelines here, and remember the s.e.c. said one of the steps toward getting a physically backed egf was to have a market that is not manipulated, not any problems so this is a step toward that you will start moving towards that direction and then those new highs are going to look awfully juicy. >> brian, isn't this an easy market to manipulate, even easier than some of the other ones you mentioned it's so anonymous, no monitoring by any governments that's been one of the appeals of bitcoin >> well, it's a smaller market, that's for sure. so it doesn't take as much money necessarily. but again, it's all relative and i would say it's not as

anonymous as everybody thinks and certainly not as anonymous as it used to be i trade on most of the exchanges in the world and i have to give them all my information and frankly, i don't want to trade against a counterparty that doesn't do an aml and kyc. so, maybe five years ago, that was the case it's less the case today in my view >> anti-money laundering and know your customer >> sorry, yes. >> bk, thanks for phoning in, we appreciate it. brian kelly, ceo of bkcm still ahead, the irs has set its sights on states offering workarounds to the new tax law what states are doing d w iris planning to stop them that's coming next

welcome back to "power lunch. the irs zeroing in on states that offer the workarounds to the new federal cap on state and local deductions robert frank joins us now with the details. hey, robert. >> hey, michelle well it's a lot of bad news now for the millions of taxpayers who were hoping to get around higher taxes, the irs issuing a

notice that it will soon issue rules for the treatment of sedate and local taxes but it's suggested that the work arounds proposed by many states are not going to fly last year's tax law limited the deduction to $10,000 high tax states like new york, connecticut, new jersey, have already passed legislation trying to avoid those limits by creating charities that allow taxpayers to get the state and local tax credits in return for those charitable deductions. the irs saying, no mas despite these efforts, taxpayers should be mindful that federal law controls the proper characterization of payments for federal income tax purposes, not the states and with $650 billion at stake over the next 10 years, we can kind of guess how they're going to rule. so what should you do? whasht taxpayers do for now? advisers are telling clients not to contribute to these charities or schemes until the irs specific rules come out. we don't know when that's going to be, maybe a few months.

if they want to try these workarounds, you're going to have to disclose it in a cover letter to the irs and expect that you could essentially wind up paying your local tax twice because you're giving to that chair, not getting it back if it's all denied. >> is this really that much of an issue because, for example, tyler mathisen says i went through the whole exercise of doing my next year's taxes and because personal income tax rates are now lower for much longer, his taxes don't go up that much, even though he can not deduct the state and local. are we going through all this for nothing. >> everybody's situation is different, and if you're in that 39.6 that goes to 37, that helps. but for a lot of people who were making, let's say, lucky enough to make millions or tens of millions a year, and the structure they were already paying a fairly low tax rate and that 37% isn't much of a cut for them >> so states like new york, connecticut, new jersey, famous for wanting to tax millionaires are now trying to protect the millionaires >> or at least -- >> and they're not going to be

able to. >> or at least showing they're trying i think deep down they're not going to be successful one thing the irs hasn't said anything about is the payroll tax treatment. which is to say companies which do get the tax deduction can essentially take it through the company and then pass it on to the employees. the irs is going to have a hard time refusing that, but the question of whether companies are going to want to go through all of that exercise to help some of their wealthier earners e yet to be seen but i think we're going to have to accept this is going to g through some people millions of people are going to have higher taxes this year. >> thank you, robert >> oh, well. thank you, guys. coming up, mcdonald's facing pressure over the use of plastic straws shareholders just voted on whether to ban them. did they the answer next. plus, morgan brennan with a new look at a new cnbc investigation. morgan >> hey, melissa. the emerging battle between illegal short-term rentals and the law. we spent months investigating. you won't want to miss the cnbc exclusive. that's coming up after the break.

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welcome back to "power lunch. i'm sue herera here's your cnbc news update south korean president moon holding an emergency security council meeting in response to president trump canceling the north korean summit. a bit later, he put out a statement saying denuclearization and lasting peace on the korean peninsula cannot be abandoned or delayed u.n. secretary general antonio gutierrez says he's deeply concerned by the cancellation of the korean summit in a speech at the university of geneva, he urged both sides to keep the process moving forward. >> i urge the parties to continue their dialogue, to find the path to the peaceful and verifiable denuclearization of the korean peninsula meantime on the corporate front, a shareholder proposal to pressure mcdonald's to stop offering plastic straws was overwhelmingly voted down. only 7.5% voted in favor of that

proposal mcdonald's has already said it is working on finding alternatives to plastic straws you are up to date that's the news update this hour sara, back to you. >> sue, thank you. the oil market is closing rights now for the day let's go to jackie at the cnbc commodity desk >> hey, sara well, crude oil a little lower today but seeing some support at $70 a barrel on the upside, session high was $72 even so same range we've been in, in the last couple weeks. brent making another run for $80. that was at its high today, falling short at the end of the session. oil moved today on several bearish themes the notion that opec might raise output in june the third, that stronger dollar. but even despite these factors, are rbc telling cnbc brent could see $100 this summer that implies upside for wti as well and ill prices impact gas

prices those are up $2.95 is the average according to aaa just ahead of the holiday weekend >> glad i already filled it up thank you, jackie. a turf battle is under way between cities and the upstart tech companies like airbnb that have been capitalizing on the wild west landscape of the sharp economy. airbnb is a six-time cnbc disrupter, coming in at number three on this year's list but gigantic growing pains, growth means big growing pains. morgan brennan joins us now with "airbnb: unwelcome guests. this is a cnbc investigation into that clash between illegal short-term rentals and restrictive regulations. >> hi. well, valued at $31 billion, airbnb is currently worth more than most of its publicly traded hotel rivals home sharing is here to stay but lawmakers across the country are moving to crack down on rentals that are against the law airbnb says it's worked with cities around the world to craft reasonable regulations, but not in miami beach where the fight seems to have no end in sight.

♪ >> it's 9:00 on a saturday night, and we're riding along with miami beach code compliance on the lookout for illegal short-term rentals code compliance officer has seen it all large, noisy, late-night parties in residential neighborhoods, commercial video shoots are scantily clad women in a home investigated for short-term rental complaints and unwitting tourists who say they unknowingly booked airbnbs in prohibited areas >> i shouldn't be able to do this this is messed up. >> all chaptured on body camera videos recorded over the past two years. some are so blatant as these house rules show what to do if someone asks they're told to lie by saying they're a friend and certainly don't mention they rent this place. >> you're not allowed to rent this house for less than six months and one day >> everybody has to leave.

>> this party needs to clear up. >> miami beach, one of the country's most popular resort destinations is also a popular city for short-term rentals. it's also one of the most aggressive in the country for going after illegal rentals with stiff fines. only certain sections of the city like south beach permit rentals less than six months and one day. large portions of the residential sections of the city are not permitted. >> and you would say when you hear that story -- >> to miami beach mayor dan gelber, the issue is clear cut >> they may work in some places but they don't really work here because at the end of the day it's not the mom and pops that we're seeing here. we're seeing commercialized predatory companies that are trying to commercialize our residential communities. >> predatory seems like a really strong word. what do you mean by that >> it is predatory because it's not about a mom and pop or a grandmother wanting to bring in a college kid to make him chicken soup at night. it's people taking very nice

properties, buying them, and turning them into essentially a flop house >> from south florida to southern california, short-term rentals have turned some neighborhoods into next door nightmares different cities encounter different problems across the country, in los angeles, we found large homes routinely advertised on airbnb for mega parties, prompting noise complaints and a proposed ordinance to restrict short-term rental use at a loud party in california, in the san francisco bay area, shots rang out guests seen on surveillance cameras running down the street. airbnb says it has zero tolerance for this type of behavior and permanently banned the guest. airbnb says these incidents don't represent the overwhelming number of satisfied hosts and guests in 81,000 cities and 191 countries. and it has successfully worked with lawmakers around the world.

back on the streets of miami beach, it's not long before we roll up on a group of vacationers. the building has telltale signs of an illegal rental two of the units advertised on airbnb have lock boxes and key pads >> do you live there >> we do >> how long have you been living there? >> we're actually just rented the airbnb >> the guests say they booked the airbnb for two nights through a host named rachel. it's the same rachel in this listing we found online. >> are you guys surprised to hear that it's not legal here? >> yeah. because it's something that's, you know -- >> it gets even more interesting when the officer calls rachel. >> i was just speaking with the occupants here and they told me that they rented your unit the city has an ordinance which prohibits short-term rental. are you aware of this? >> they're actually my guests or my friends >> they told me e -- >> they're staying in my apartment. >> so, are they staying here for free is that what you're telling me

>> yes >> i can get them on the phone to talk to you right now because they just told me they paid approximately $950 for the weekend and it was rented via airbnb >> oh, no, no, no. that shouldn't -- no let me double -- let me check with them again. >> hello, sir. i think you guys had a free apartment. rachel told me you guys are friend and you didn't have to pay to stay there. is that true >> that is not true. >> she's on the phone. maybe she wants to give you a refund >> rachel says she's associated with a company that's well known to city officials. vacayo is a new york based management company that rents properties and then leases them via airbnb and other rental platforms to short-term tenants. both vacayo and the property owner who was staying in a downstairs unit were each issued a violation notice which carries a $20,000 fine the owner didn't want to talk to us the city's fines range from

$20,000 to $100,000 for the fifth offense. the total fines for vacayo and its cofounders amount to $700,000 at four properties in miami beach. >> these properties on airbnb -- we wanted to get some answers from the airbnb host, rachel >> i'm sorry about that. i'm really sorry i can't take this call right now. >> vacayo's c.o.o. and cofounder says her company has since gotten out of the leases where these short-term rentals aren't allowed and has not paid the $700,000 in fines. >> our lawyers are resolving that they feel like it's unconstitutional, the way they're fining there's many, many different groups fighting the city and it hasn't been resolved they're not collecting the fines that they're issuing >> are you just going to wait and run out the clock and see if laws change in miami beach

>> right now, we're just not accepting any homeowners in miami beach. we get about 30 to 50 requests a day to lease property on our website. >> do your investors know that you have these outstanding fines in miami beach >> our investors are fully aware of everything going on, and they know that we, you know, stuck our neck out for a lot of owners, and that we are tackling a really difficult problem in general with our property and with basically accepting single family homes >> are you saying that you will continue to break the law in some of these properties >> i'm not saying that we want to fight and that we're going to enter properties now knowing that the law has changed and we're not allowed. >> she confirmed that rachel is still one of vacayo's hosts. she said the renters were friends, that they weren't paying anything, which was false. so she lied to code compliance are you aware of that? >> no. but how do you know it was false? i do let friends and family use our places >> this is the violation

this is the customer receipt >> yeah, i mean, she probably was just put on the spot and she was probably scared and i didn't -- i wasn't aware >> responding to our investigation, airbnb says it has removed listings associated with vacayo from the site. in an interview atairbnb's san francisco headquarters, chris, the head of global policy, strongly defended the company's track record >> i've yet to see a program being run by any mayor, any elected official, in this time of economic inequality, that's generating $6,100 for a typical middle class family, all without the expenditure of a single taxpayer dollar. >> should airbnb be responsible for what is in that market illegal activity on the platform >> i think what seems to me that would be a common sense solution for miami beach, happy to do this, if they actually really want to sit down and have a constructive conversation, is you could take that 35% of the

city that's a residential area, make that an exclusionary zone allow the activity to be able to take place in the 65% of the city that's actually explicitly zoned for this type of activity. >> in the meantime, you have illegal listings on your site. >> well, first of all, i think if you actually look at the underlying law, in the city, in miami beach, right, the miami beach allows for this activity to take place, $20,000 fines on someone making their home available a few times a year to actually help make ends meet does the city actually want to make this work as well as possible for as many people as possible >> he says airbnb has more than 400 partnerships with places around the world, including the proposed restrictions in los angeles. >> in markets like miami beach, where you do have illegal listings on airbnb, why not block those? >> we've worked with cities all over the country we put in something called a pass-through registration system cities can determine whether

something is in the permissible area or not. >> he takes aim at the hotel industry airbnb's competition, which he says has been shown to be closely aligned with regulators. >> miami beach hasn't been interested in doing that because miami beach, up to this point in time, has just not had a serious desire to really want to engage on this, because at the end of the day, as the information that has come out reveals, they're effectively working hand in glove with the hotel industry, which is incredibly powerful, and the hotel industry that really doesn't want to see everyday people to be able to use their homes to make extra money. >> the american hotel and lodging association tells us that instead of supporting common sense regulations, airbnb has opted to deploy a massive obstruction campaign of dirty tactics, deceptive messaging, and personal attacks against anyone who raises a concern. >> so it is an increasingly complex issue, and for more of our exclusive investigation, go to cnbc.com now where we talked

to cities around the country about illegal short-term rentals. >> airbnb isn't the only home sharing platform out there what are the other companies doing? are they complying with the law? >> it is an issue to varying degrees in varying cities that involves all of these different companies. so whether it's airbnb, or booking.com or home away, which is owned by expedia, all of these companies are having issues in different cities to different extents. we would know. we spoke to officials in many of these cities around the country, and whether it is miami beach or whether it's new york city or los angeles where you do have new rules that have just gotten preliminary approval, whether it's boston, there are these issues, overwhelming, though, everyone we spoke to in these different areas did say far and away, the company that kept coming up in conversations was airbnb, and in miami beach, specifically, officials there emphatically say that is the

platform with which they have the most issue i just think it is also worth noting again, as we talked about in that package, though, that short-term rentals and home sharing is legal in parts of miami beach, places like much of south beach in these commercial zones. there's a very clear map that shows where it's allowed, where it isn't and for the most part, the places where it's not allowed are residential areas and that is a similar situation in many of these other cities where you're seeing these tensions play out. >> i think your piece is a wake-up call for local authorities who really need to start cracking down. >> yeah. and i think there are -- listen, when we talked about it in this package, there are many areas where airbnb says it is working with local regulators and they are adhering to the laws and there are these regulations on the books and things are going really well and the home sharing industry is growing up but it's these other cities like miami beach or new york city >> places where people want to stay, actually >> right >> and the hotel rooms cost a lot of money >> exactly >> so each city is its own situation. more on cnbc.com

that was a lot of work nice job the president says the nfl is doing the right thing by banning players from kneeling during the national anthem bc the team owners agree cn caught up with some of them last night you'll hear their answers straight ahead anyone can get you ready, holiday inn express gets you the readiest.

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welcome back to "power lunch. the nfl's new policy to ban players from kneeling during the national anthem sparking a lot of controversy how do team owners feel about it eric got the chance to speak to some of them last night. what'd they say? >> we were actually at the sports business awards last night in midtown manhattan we talked to nfl owners who had just got there from atlanta, from those owners meetings, we asked them about the national anthem and the new rules here's what two of those owners had to say >> this is not about players and it's not about owners and it's not about the nfl. it's about legitimate issues that live across the united states in a variety of settings, in a variety of ways that we have to recognize and now, i think, the players and owners in the league, et cetera, are working together in partnership and collaboration on moving that ball down thefield

>> i think we're very supportive of what we came out with today in atlanta as far as the league and really respecting the fact that players on the field should be standing for the anthem we have a great respect for what that flag means and we're very supportive of the policy, and at the same time, our players -- we're working a lot with our players. they do so much good in the community and we're working with them on social justice issues and i think this is a good resolution >> it was a unanimous vote but 49ers owner abstained and the raiders owner and the 49ers are going to halt concessions during the anthem they say, if everybody has to stand, we're not going to try to profit during this the jets owner said he would play for the players who get fined or if the team gets fined, he would represent that money. his brother is the current uk ambassador appointed by president trump so there's a little bit of tension there and as we know, president trump talked about it again this morning. so it's an interesting one they lost a lot of sponsors and

ratings. they're trying to figure this out but it's not clear if it's going to work. some players say they had actually moved on from the protests but now because of this, they're planning to figure out some way to protest just because of the rule. >> can they fight back on the rules with their union >> this is interesting so, the collective bargaining agreement doesn't require the union to agree to a rule change to the game operations manual, and this was a rule change in the game operations manual >> so they don't have that power. >> they can just change it just with the owners without the players' consent and that's been another part of the debate was how much do the players get a chance to give their input the owners said that they had input but like the 49ers judd work said, there wasn't enough input and that's why he didn't vote for it. >> thank you, eric >> going to keep going the cancellation of the north korea summit sending gold back up to $1,300. will that rally continue trading nation is next

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let's check on gold today, jumping 1%, back above $1300, and announced after president trump called off the summit in singapore with kim jong un mark is here and stacey, today, a reminder, why people like gold in the geopolitical lly uncertan environment. do you like it >> we do we prefer gld over the gold minors we have a position in the client portfolios, and we hold it because it's a noncorrelated asset class. miners have a correlation with stocks still here's our take on gold. it makes sense to hold it. it's a pure play because of the geopolitical risks out there it's a calamity hedge, but the benefit of gold is who you look at periods of stagflation, and we're not in that kind of a period right now, but our research projects recession in mid-2020 followed by a period of stagflati stagflation, on average, the average holding period return of

the s&p 500, one to six years long, is 14% average return of gold in those periods are 85%. that's the best time to hold gold as it stands right now, it's a noncorrelated asset class. >> also in the time of a strong dollar, not good for gold either sta stacy, what do you see in terms of options and gold etfs >> sure, sarah i would say that the world tends to agree with mark here, that this is a great asset to own for the situations, but we're not seeing any activity to say investors are piling in more here look at etf year to decade, 3 billion in inflows, but most of the money came out of the strong u.s. dollar, and, obviously, the raise in crude has also contributed to that. when we looked to the options, what's interesting about gold options relative to the s&p 500 options is that right now, the market's anticipating that the s&p 500 could see more movement than gold. this is a-typical to what we typically see. in general, the market is range bound and not seeing a ton of

value here >> not a lot of enthusiasm, guys, thank you for joining us on gold. for more, head to tradingnation.cnbc.com follow us on twitter @tradin twitter @tradingnation wilf now has breaking news for deutsche bank. >> coming to a close, the chairman survived a vote against removal, 9% voted to remove him , 91% voting in his favor, but a heated, long drawn out meeting today, and investors not happy with the last year of deutsche bank's penkrformance or today a announcement because they underrealmed 7,000 job cuts and 90,000 not enough they want to see more of a retrenchment of the investment bank, cutting the balance sheet,

only by 10 f%, main reason shar are down today, but the chairman survives >> wilfred, thank you. you were paying attention to all 11 hours check, please -- >> morgan stanley said 17 minutes, much better >> all right, more at the top of the hour, check, please, is coming up next on "power lunch." >> and now, trading nation from cnbc.com and a word from our sponsors because short selling involves unlimited risk, you must have a plan first, screen for important stocks showing weakness versus the broad markets. second, look for the stocks with the poorest technicals in atth group. finally, incorporate risk management techniques into your order to limit the potential losses how do you gauge the greatness of an suv?

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check, please. >> major league baseball released an 84-page report, panel of scientists, they concluded since 2015 baseballs have more lift and contributed to the serge of home run they do not know why this happened to baseballs. >> are you looking at us >> has the physical baseball changed? the manufacturing process? >> i have not read that. they said no clear reason why. i presume they explored those

things >> maybe it's a deflate-gate in baseball >> something's going on. >> it is curious >> i have something curious. mine is also about mlb there's a report that nike is close to taking underarmour's deal to make uniforms. report says because of the problems, this would save them money. >> i don't have a baseball lunch check please, so thanks for watching power >> closing bell starts right now. welcome, traders react to two white house wild cards, cancellation of a summit with north korea and new trade tensions i'm eamon at the white house, the president is makie inine iis on two fronts calling off the summit with north korea, and hardening the line on what could become a trade war >> at the new york stock exchange, when the smoke clears, how will stocks react to the 10-year yield under 3% again i'm morgan