accumulation >> starbucks will report next week it has been slowly going higher. >> a name we rarely mention. svb financial group. >> yes >> thank you all >> thank you >> the exchange starts now thank you. welcome to the exchange. turning to alternative measures measureses as the shutdown rolls on tim cook says we should all be able to look at what she proposing now. >> content arms race can netflix afford to maintain its dominance? there's dom and there's dominance. >> i understand where the confusion came from. we are floating around 35

points for the dow jones well off the lows. we were off about 118 points at the lowest levels today. up by 1% also checking an industry focus today, defense stocks, the missile defense review a lot of names in focus here up about three quarter of 1% this is up about 13% since then. one stock to watch today a real blood bath. it is a parent company behind cay jewelers it reported weaker than expected holiday sales and cut the full year 2019 forecast and the fourth quarter forecast. these shares have fallen by about 63%, certain lay stock to watch today. back over to you >> thank you u.s. markets are trying to shake off weakness overnight

after china made another huge liquidity injection. brexit is weighing across europe low jobless claims and a rebound in the manufacturing index we'll have more on that in just a moment let's get to bob who is at the new york stock exchange. they are starting to get that old fomo back. >> yes i'm reviving the old term, fomo, fear of missing out. a lot of fund managers are under dp performing for the year here. you can't underperform in 2018 and underperform on the upside in 2019. that's a problem the markets are cheaper. earnings expectations are much lower in the numbers at least where the finances are coming in despied the miss by morgan stanley. you want to watch an important

level? how about 2626 that is the 200 day moving average. remember when we dropped below that the markets started moving down >> that's an easy one to remember it is now day 27 in the longest government shutdown on record tomorrow we reach another milestone, a second missed paycheck for many workers. lack of key economic data. we got this morning was fairly upbeat we have more on all of this. welcome to you both. >> a little built of mixed data. >> what do we turn to without the general data i put together all of the med manufacturing indexes. it is not a lot of manufacturing. it is a lot in the economy no single index does a great job. here is all four of them

note that's a january number we empire state, that's new york plunging dallas plunging. we can expect that richmond also down in the december a slow patch one other thing we did, looking for alt data we counted up the use of the word slow, slowing, slower you can see that ramped up a little bit you can see it was in 25, 26, 27 earlier when the economy was doing well can i show you one other chart >> check this out. let's play find the government shutdown in the chart. >> yeah. i see a big one maybe way back >> october 2013. >> a big spike

>> yeah. >> in the special category of claims by federal workers. no spike this time we are already three weeks in. >> why is that >> we don't know i talked to him with economics he thinks, you know, when you get the money and you get paid later? >> yeah. >> interestingly we have seen no spike in the private sector claims >> right >> what's going on there >> it is the one thing that's not happening for everybody that thinks there's an economic slowdown you were saying we could see a big jump in the unemployment rate if it acts through saturday still, jobless claims are pretty quiet. >> yes right around 215,000 i think it tells you labor demand is very strong. we saw that yesterday as well. finding qualified workers is the biggest problem. i want to add quickly, why haven't we seen it as much as we

did? i think a coupleov of things you think about that first week where they were eligible to file we only had three business days. >> the holiday >> it is one aspect. the other thing is they make you wait until you're eligible to file aclaim. >> commerce is not so we are getting some of that kplik data as well. >> yes >> what are you looking at if you don't have -- like yesterday we missed the retail sales report >> today i think what we'll start looking at is the red book index. >> that's terrible >> it's all we have right now. >> you agree with me

>> it shows retail sale sales were strong around the end of the year i think it's ben official. >> one that i particularly like right now is the cast freight index. you want to know what's going on in the economy >> what is that measure? >> it is measuring shipments of straight >> it is old school. >> yes >> boxes and freights. >> yes >> that's how we use today measure the economy. >> people would argue we are more tech driven i don't buy that necessarily >> i would tell you 75 to 80% of all goods that are shipped they still come in card board boxes

you would have seen -- >> and you used the phrase holding up okay? >> it is doing well. >> it was one that we thought are we telling you something about the economy or do we have your own problems? >> when you look at that what they are telling you is moderation in the economy. it's the step down >> last word >> all of this is critical and important and i think it is fantastic. i worry that the market gets carried away from earnings without the balancing weight of the data >> absolutely. >> so somebody comes forward, you had a how slousy corner we turn to the date to for our view or --

>> okay. and that's investors and economists are a little frustrated they feel like they can't figure out the forest from the trees. >> i think that's right. we are missing it. >> you'll have more on that. >> thank you both. just to note, the house ways and means chair has written a letter to steve asking him to testify on the shut down's impact that will take place on january 24th we'll see what else question learn from that. so much more shares are down 4.5% after an earnings miss. morgan was hit by weak trading fixed income revenue down 30%. that's more than it rivals so did the overall bank rally get ahead of itself? tom, great to have you with us what's going on with morgan stanley? >> it because bad quarter. it was a bad trading

environment. there is always one that will stand out. it will stand out on the positive side. one that stands out on the negative side. >> does it tell you something about the vulnerability of the overall franchise or can they say morgan stanley is down more than rivals now. it is a buy because it is fine relatively speaking? which is it? >> i think it's b. so the trading is such a volatile number. but over the long run trading revenues rise. capital markets activity rises so in any particular quarter it is a crap shoot. the core franchise will do just fine they had other ie techtems i will argue if you already have a quarter that will not be impressive you might as well get ahead of the curve for 2019. >> why is it that the banks are

uninvestable right now it must be extremely frustrating. the stocks have been doing terribly now we have a little bit of a bounce but why has it been so toxic lately >> it is all emotion you know, there's beenin the last 30 years there have been nine times when the bank haves fallen 15% or more from their highs. two of those were related to credit problems of the early 1990s and one of them the great recession. of the other seven times the bank stocks have the correction only lasted five months and they bounced back 25% after that. i think we have just begun that on january 1 >> and you have three favorites here >> well, i think the best quarter that we saw so far was bank of america. citi group had another great

quarter. we'll talk to bb and t next hour are they a buy as well >> i think bb and t had a very solid quarter. for a reej that will bank that didn't invest as much as say a wells fargo they are doing a good job of catching up. i'm impressed at the ability to invest as well as the ability to control cost >> we'll talk about that good talking to you just now thanks for joining us. >> thank you >> here is what's coming up on the exchange still ahead, life and legacy of a man warren buffet said did more for the individual investor than anyone he has ever known. plus rising risk, the potential for climate forclosure

crisis we'll explain. and netflix reporting after the bell as the competition for content and eyeballs grows mom and dad got a new car. it's not theirs, it's mine. the rx350l with three rows for up to seven passengers. lease the 2019 rx350 for $449 a month for 36 months. experience amazing at your lexus dealer.

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life and of jack bogle we spoke to bill miller and he told us jack created more wealth for more average americans than anyone else in investment history and likely the future as well he was a great fill an throe miss welcome to you what i love is being reminded of the fact that it was because it was so unsuccessful. >> it was. he was indexing before indexing was cool obviously in his first race that was $11 million frm now it is something close to half a trillion for the first ten years as he but foundover pointing out nowhere else any where in the

industry imtaitated that index fund >> he was always looking for advice at that time. one tie tan was heard to say when he explained what he was trying to achieve here the titan said what this guy is trying to do is make all of the money on wall street at our expense. >> it may have been not true but certainly he was coming at the heart of the investment business there was a poster that said help stamp out index funds index funds are un-american. there was this idea that what he was doing was really coming at the whole concept. >> right >> we take it for granted today. it is part of the fabric of the stock market

let's face it, it is the next generation we take it for granted they have become so much a part of our lives that to question their vars aty >> it seems sellilly >> he did gore a lot on wall street and kill a lotover golden gooses or whatever you want to say. >> yes >> which was by design. >> that was my favorite line i told him on twitter this morning he was supposed to keynote the morning star conference in late 95. he had to cancel at the last minute because he was not well and had the heart transplant

>> he had waited something like 128 days and his heart was so badly damaged. he had his first heart attack at age 30 he had five or six more as i recall by the time he was on the list to get a new heart basically half his heart was not working and he was in the hospital >> i remember him coming on and talking. how would he say this is my 25th anniversary or something like that >> he was deemed to be really too old to reeceive a heart transplant he received the heart of a 30-year-old man which was to his advantage. it lasted in all that long >> i was thinking about it last night. how do you describe him as smsh that didn't know him two things, integrity and common

sense. even as wealthy as jack became and by some estimates he was only worth about 80 million. he never looked at a dollar differently than that way he did when he was not wealthy. >> no. >> he was still that frugal common sense yankee. >> he was very frugal, child of the depression his family lost it all he got a scholarship to princeton where he wrote the famous thesis. common sense, it was really the right word one of his first books, it may have been the first was called common sense on mutual funds it was the heart and soul of his approach to investing. i heard him described as a great investor i'm not sure that wears well on him. i don't thinkov of him as an investor per se. >> he wasn't a guy that would

put money into uber or whatever. >> right >> but he was a great investment c conceptualizer who figured out a great way to put money back into shareholders pockets >> with all of the volatility there was this thought ma maybe it was dead. i asked him about that i said what do you say to those people he said it depends on what you're buying. >> it is very simple to him. >> thank you both very very much i'll see you in a minute we'll see you there rapid fire >> i'll be back. that's what's coming up along with microsoft will $500 million help close the inequality gap >> the doj reportedly filing a criminal case. twn it complicate trade talks beeethe u.s. and china the exchange is back in two.

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pushing shares up about 5% today. now over to sue for a cnbc news update >> hello everyone. sheer blast happening at this hour at the pentagon president trump called for an expended missile defense program to better protect the united states from enemies. >> it calls for 20 new graund based int based intercepters to detect foreign missiles launched guest our great nation we are committed to establishing a missile defense program that can shield every city in the united states. >> president trump's lawyer has issue a new statement aimed at clarifying earlier excellents that appeared to have left open the possibility of collusion between president trump's 2016 campaign and slaurussia

he says no collusion by trump. he says he has no knowledge of any collusion by campaign members. sears chairman winning a bankruptcy option by presenting an improved offer. it allows sears to keep more than 400 stores operating and preserve 45,000 jobs you're up to date. that's the news update over to you. >> thank you i'm joined by melissa now. 400,000 is the number going around today apparently the number of homes that has got people talking about the lasting ramifications. >> students graduate they may not handle the debt payments well or they can't saver up for that down payment the data doesn't necessarily support that i get that 400,000 number. the latest data indicates that home buying is up when it comes

to me lillennials >> us millennials are older now. >> you have to look at the number of households headed up by somebody 35 and under it was up by 1.2% in the third quarter. it was up a fraction of a percent. we are seeing that millennials are buying homes >> right was it a permanent loss or shifted later? if it was shifted later it goes back to the birthrate stuff. >> you know, we have to wait and see. does it go back to normal? >> or is it a secular change in the way people buy homes we will talk about that but also we have two regional banks that is up 11% this year we'll talk to both of them >> all right we'll see you then thank you. here is what's ahead on the

exchange he won't back down in his fight for $120 million anything but typical. that's why we designed capital one cafes. you can get savings and checking accounts with no fees or minimums. and one of america's best savings rates. to top it off, you can open one from anywhere in 5 minutes. this isn't a typical bank. this is banking reimagined. what's in your wallet?

>> welcome back. here now for rapid fire is phil and leslie picker. i will keep saying that through the super bowl >> a good ring to it >> it does have ruby slippers. >> i do you just can't see them. >> telling time magazine consumers should be able to see what companies know about them and be able to delete that it is requiring all data brokers. >> one, it is a little little. two, why is it tim cook that has to say this? he says apple is is not in the business of collecting data. >> i think that's why he says this >> it should be mark zuckerberg or somebody like that saying that >> remember when they went out to vegas and there was a big apple

apple ad references amazon and facebook and google. >> when you look at the supply chain of where it goes you have the data it is selling to a middleman someone that can package it together they are selling them to professional investors it is a high price for data. these are money managers they are people that want to deliver by getting an edge on information. >> which everybody should know about. >> let's say this clearinghouse goes up. can what i see the end client, would i know that hedge fund it

is in an age where everybody can read a 10k >> and there's less data during the shutdown another way to get an inside edge, they will say i'm sure right now with the retail sales are making that available. >> yes >> next, a new report says the housing market is getting soft in the new york and nortd east but is surging in sunny south florida bill knows what it is. the new tax law and means homeowners bare the brunt of high taxes >> those of us that live in new jersey or new york know we are about to write a bigger check this year than last year because you can no longer deduct as many state and local taxes

it was the hedge fund billionaire capital. prices are down 20% there is 2.5% supply. >> are you going to buy a 6,000 square foot house? the property tax bills are enormous >> wehave talked about this. people are trying to guesstimate the impact the new tax law will have on their tax bill >> we'll see more. >> my parents turned 60. they move today florida. it's the law a lot of people that were already thinking of it, about to move and this kind of pushed them over.

there is a question of how long it persists after a year or two. >> they were telling us they were going do what they could about bringing back the salt deductions >> yes >> microsoft pledging $500 million trying to help residents as property values have surged there. should microsoft be blamed for this and will this effort work >> what is really interesting it is being done by microsoft this is done by a publicly traded company they must see an upside here for the base case as a fiduciary to shareholders >> or should they say wait a minute >> exactly >> a lot of it is loans. it's not giving the money away

sae second a lotov of them are janitors or people that aren't this sort of high paid tech engineers. there is self-interest here. amazon helped kill that tax in seattle. >> yeah. i think there's push and pull in terms of that it could have helped a lot >> it helped a lot i'm skeptical of everybody writing these big checks which is a regulatory crack downs on their businesses >> yes but there is sort of a precedent for something like this. the company provided the housing, the education and, you know, you bought from the

company store. >> you know, how do we get an out look at where it is seen as a positive -- >> internalistic >> not only that but it made kplik sense because you brought people in. they had to migrate there. >> they were in smaller towns. >> yes >> how about this, our friends reporting that interviewed several interest the company is preparing to go public pretty soon i wonder if it is too late to get big gains here >> how do they make money? >> advertising >> i finds something and i say

maybe i could buy that it is somebody -- i don't know where it came from or what i can do with it >> are you on pinterest? sit a little at this stage you to work your way through the system >> you would like it for recipes. >> there's a wonderful thing called the internet. >> no one wants to use google. it is a cleeaner way >> there is an acronym floating around i think you'll like this one it is uber >> and that's what we are looking out for. >> good luck to them >> yes >> thank you really appreciate it

that does it for rapid fire today. rising risk series looks at how climate clang is impacting the housing market how it could indicate a huger cl pielat forclosure crisis. we are back in duo -- two.

welcome back shedding new light on the impact of the u.s. economy and much of that ton real estate market. what about the mortgage market that plans to lose big what happened in houston after hurricane harry should be a warning. we have the latest in our rising risk series. you're calling this a climate forclosure crisis. let's take a look. hurricane harvey flooded close to 100,000 house tocton area hos

the vast majority had no flood insurance. >> ended up about 4 feet >> did have insurance and at the time vowed to rebuilt. >> the fabric of the kplunty has been amazing >> as they watched several homes on their street go into forclosure and the fabric of their kplunty seem to unravel they joined other struggling neighbors and others that descended on the city. houston strong economy made it a hot market before the storm. rekindling images from the forclosure crisis a decade ago >> i have heard plenty of stories of homeowners that have had no choice but to walk away >> in the disaster areas 80% of the homes had no flood insurance because they weren't normally prone to flooding. serious delen quincies jumped more than 4% houston could have seen a

massive forclosure crisis were it not for the strong investor demand in houston investor purchases of 10 or more properties jumped nearly 50% in the year following harvey some were large buyers like home vesters. >> as an investor it was kind of a perfect opportunity. >> he and his team have bought more than 80 flooded properties so far >> we literally can avoid the whole problematic nature of the forclosure process neighborhoods like this one are still rebuilding littered with empty houses and empty lots. some say it should be a quake up call we asked ed, the ceo if the mortgage market is prepared for increasingly severe weather. >> i don't think they are.

i think if we look at the foundation of what drives the mortgage market is the application of credit risk what is missing is the understanding of weather risks >> emphasized that most of the damaged homes were not in fema floodplains. >> we have this tremendous urbanization and roads that are being built in the last ten years, where does the water go is there an underlying risk for us to examine with respect to the portfolio? should we belending in those markets? >> lenders and the federal government that backs most loans base it on fema's flood maps they say they maps don't account for extremely increasingly weather. >> we can't try to determine what's going to happen in 12 months beyond because insurance is set up for what your risk is today. it wouldn't meet science to charge you far future potential.

>> fema required to update maps every five years and relies herely on communities reporting problems some don't because they don't want insurance premiums to go up >> we flow one-third have high flood insurance. we have a lot of work to do. >> as does the mortgage industry which could see a climate forclosure crisis. >> i think it could come close in terms of exposing lenders to uncontrollable risks >> when you a trillion dollars it is about time you start paying attention to that >> i like the investor who said these props weren't in a floodplain we have to think about whether we have to be lending in these kind of market how many others match the profile of houston with all of this new and nowhere for the water to go? >> so many of them we don't flknow when they will e coming more extreme.

so many more towns have done what they call hard skaping. they covered up the ground that normally will soak up a lot of this water and it will allow river flooding, ocean flooding and whatever it needs to go where it needs to go as he said in that piece it has nowhere to gochlt. >> -- go >> it is not just fema designated floodplains >> that's what they are saying is we should be looking at the weather risk going forward we called j.p. morgan. they said what we do is follow the guidelines they look at the current floodplains. they are outdated. they don't look at future potential. if you're gauging risks for what you see now you're not looking at what it is in the future. >> but some in the long run will say if lending in those areas drives up, good. if the floodplains look bigger isn't it bigger for the broader

help of the housing market >> you don't flow what investors are going to do with those homes. are they going to buy them and flip them over a lot of that happened all of those investors were buying to flip >> all right so they are still buyers who will be stuck in those markets >> all right thanks >> more for huawei we have details next makes it beautiful. state of the art technology makes it brilliant. the visionary lexus nx. lease the 2019 nx 300 for $339/mo. for 36 months. experience amazing at your lexus dealer.

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i am a techie dad.n. i believe the best technology should feel effortless. like magic. at comcast, it's my job to develop, apps and tools

that simplify your experience. my name is mike, i'm in product development at comcast. we're working to make things simple, easy and awesome. welcome back to "the exchange." new developments surrounding huawei the tech giant stealing trade secrets. >> whether they stole and could lead to an indictment soon huawei has been on the radar for years, but the recent arrests are different and global last week alone, the probe in the u.s. and taiwan's ban of its products and its government systems and the arrest of an employee in poland on espionage

charges. again, that's just in the last week but it adds to a growing list of countries from australia to britain, reconsidering their relationships and in canada, of course, the cfo facing extradition to the u.s the big question, kelly, as scrutiny intensifies with this latest probe, are these temporary setbacks for the company or do they signal a larger retreat that could knock them from the purchase, number one supply of equipment and second most of smartphones >> deidra, with that and other ways they're kind of coming after the company, what happens if all of the sudden, basically loses access to the u.s. market? >> if it loses access to the u.s. market and as an example, what we saw with zte and unable to say buy u.s. chips from u.s. chip makers, that would be a serious, serious blow to their business and certainly would hinder its ability to make

equipment that's gained traction around the world but showed that's unlikely. president trump, he enforced a very, very hard line against zte, only to go back on that but as i mentioned, you look at the map and the number of problems it's facing around the world. you really have to wonder if all of this is building and even if it's able to get chips in the u.s., where is it even going to be able to operate still has developing economies with the biggest business. >> we saw zte, kind of turn around on them after they paid a big fine and nearly went out of business all together. deirdre, thank you more than two hours away from netflix earnings. what the company needs to do to stay competitive as more streaming services hit the d t inth y whether the stock's rehogas isear will continue 's a question. was it necessary to create a luxury car more teched out than silicon valley? with a cockpit fit for aspaceship.

hang on. radar that senses things the human eye can't. busted. and the ability to make a thousand decisions before you even make one. was all this, really necessary? what do you think? ♪

we buy everything. here's a look at one of our actual pitch meetings. >> so this show is about a girl named jinny. >> here's money. go make it. okay >> okay, that was "saturday night live."

might not be how netflix spends the money but after investing $8 billion on content this year and with the streaming space getting more crowded just this week, how sustainable is the company's massive spending spree ben silver man, co-chair and current chair and ceo of propagate content. >> thank you >> i love the snl moments. it tells you, it's the zeitgeist now and throws money around willy-nilly. >> i wish it was they still have, you know, and are attracting the greatest story tellers in the world right now and we make a lot of programming for netflix, but it's unfortunately not quite like the snl sketch. i wish it was. >> i bet you do. so they're not the only ones out there. the field is getting more crowded just this week comcast and company said it's going to have a free streaming service. we know disney's is coming interestingly enough, cnbc.com said walmart is not launching a streaming service which may be a surprise they were even thinking about developing one

can all of these streaming sites be supported, ben? >> what's really interesting obviously is it was the tech players who led the charge, whether it was amazon, netflix, or we'll wait and see apple to launch but apple announcing their intentions in the streaming marketplace really because they didn't have to protect their relationship with the cable platforms and the msos and how their channels were distributed previously and what's fascinating about right now and i think what has hollywood excited and traditional story tellers and creators like myself is that the old players are now entering this space, whether it's comcast and their announcement of a free to air on a certain level, although delivered by a streaming and using sky technology through the recent acquisition but that's an advertising supply, streaming service. it's new and different kind of entry and you've got to assume they'll use some of their

amazing sports and news infrastructure, not just the traditional content that netflix and amazon has gone after and then obviously, disney's acquisition of fox and all of the executive fire power that's now arrived inside the disney organization once the merger is final, as well as the different brands they're launching it feels to me disney is launching six streaming services, not just one >> that's true espn plus was kind of burst out of the gate there. variety recently called attention to how much debt there is in a lot of these media companies, especially at&t and disney, like you just mentioned. what happens if the consumer doesn't pay up for all of this or doesn't have the time in their day to watch more than netflix? does netflix just win because they were the first mover? >> i think they don't just win i mean, if you look at the debundling, if that's how this is going to end up, you'll see that the net cost to you if you subscribe to each one of these

new services would still be less than what you pay currently. >> it will add up, ben netflix will continue the price and upwards of $20 or $30 a bunch at some point and spending $20 billion a year, by 2022. so the rest of it is not going to come free and the cable bundle, if anything, will come down a little bit. you know, that's going to add up >> but if you look at actual cost i don't know what you have delivering content into your home. >> the ultimate package. after maternity leave, month four, i was like, i want the ultimate package i want every channel >> i understand. is daniel the tiger piping into your screen all day long not yet, too little? so it's just your shows, but the way that you look at those packages in my house, we have directi directv and it's a fantastic product. i love my tivo, it's gotten better and better but i pay for every room in my house

i have nine receivers across my house. >> we've got to go, ben. monthly cost, real quickly >> it's upwards of 250 there $2h so it will be less, but all i want to say, we're happy and i believe everyone is going to continue just growing their consumption because there's better stuff on. >> ben silverman, appreciate your time. that does it for "the exchange." "power lunch" starts right now kelly, thank you very much we'll see you in just a minute welcome, everybody i'm tyler mathisen with melissa lee. new at 2:00, the markets have a new fear it's the fear of missing out fomo we'll explain. plus the passing of american icon, the future of indexing jack vogl pioneered. count down to the netflix earnings "power lunch" starts now >> welcome to "power lunch." i'