>> i mean, he was good with the segue. good with the timing, too? >> parker hanifen. and a multi-year for profit margins. >> shock. >> cisco systems. >> good stuff. "the exchange" begins now. ♪ thank you, scott hi, everybody. here's what's ahead this hour. the dow back above 26,000. a market watcher said the rally is looking extreme and valuations aren't compelling anymore. he'll tell us why. president trump set to meet with the chinese vice premier in the next hour. we we'll tell you where prices could be set to rise quickly. the next amazon is -- planet fitness. one analyst says about the 10 buck a month subscription model. we begin with dom and the rally and the numbers today. >> the rally in the market, green across the board for all the major indices. let's get you a look

this is pretty impressive. up 165 points at this stage. we were up as high as 202 points to the upside. good for about a .75% gain s&p up and nasdaq composite to the upside there one of the places we're watching close sli t closely is the semiconductor side of things you're seeing the vaneck vectors semi etf up 1.5% this particular etf up 28% so technology's a leader. our stocks of the day involve the gold mining sector newmont mining up 4% gold corp. down. barrick gold wants to contemplate an all stock merger to take over newmont mining. what's the reason, the drama

here, kelly? newmont wants to buy goldcorp. barrick wants newmont. we'll see how it plays out back over to you. >> you are giving romo a run for his money with the play by play. >> i'm going to try. welcome to "the exchange," everyone i'm kelly evans. take a look at copper hitting the highest level since july the shanghai composite closed at the best week since march of 20 16 so let's drill down more on the rally with bob pisani at the new york stock exchange. what's driving our stocks higher >> powell and china. you were absolutely right about the china rally this week here we had the fed monetary policy this happens twice a year. jay powell testifying next week in congress and used the magic word again, patient. that means the fed's essentially out of the rate hike business. the market likes that.

take a look at the full screen that you have got here important thing is, we have a global rally going on and that's something we haven't seen for quite sometime right now so china, the nikkei, europe, all up nicely this week. you hit it on the head, kelly. the positives we have? the market's moving on central banks being flexible and trade deal hopes and things that worry me, the trade worries and what's going on with the u.s. economic data it's been lousy last two weeks and clearing up the trade talk will the economic data get better back to you. >> bob, the china in particular is an outlier, right i wonder if it's anything to do with trade talks or not. >> yes i think it does. by the way, the fed in its commentary today, excuse me, absolutely tried to link concerns about the trade situation and the somewhat weaker economic data we have seen and looks to me like the fed itself also believes that the trade battles have been

having an impact on our economy, as well. >> yet the chinese market roaring to start off the year. bob, thank you >> okay. the dow crossing above 26,000 for the first time since november and out of correction now so that huge market decline to end 2018 seems like a distant memory is it supported by the fundamentals let's ask our guest. welcome. >> thank you, kelly. >> explain a little bit. do you guys have a rationale of the chinese market rebound or sometimes, again, just so beaten down and kind of left behind that these things have a way of surprising us? >> i think that's part of it the chinese market is cheap last year one of the worst performers. also helped is a coordinated not necessarily intentionally but action by most of the world's central banks including the pboc to stimulate the economies and seeing risky asets respond as you expect chinese stocks up. u.s. stocks are up commodities are up the dollar is contained.

this is a little bit early '17 where everything is going up in tandem. >> about that, we talk about some of these gauges like copper as being good economic barometers and a time everyone's saying the usda that is terrible, the flash pmi was okay yesterday and then more sensitive forward looking stuff like copper suggests things are better than fine. >> right now copper's responding much more to monetary conditions than economic data it's at best okay. it's been pretty abysmal in europe at best mixed in the u.s copper to me is doing what a lot of commodities are doing, looking at the dollar, lower real rates and supporting. >> you're a dollar guy for 2018? >> i think the interesting thing about the dollar is depends against what talking about the dollar against the euro, yes, we're long. at the same time we see opportunities in emerging market currencies so in contrast to 2018 when you generally had a

stronger dollar, we are seeing this year a range bound dollar, good for the risky asset category including em and commodities. >> bring it full circle. you said that you think the rally is ahead of itself the valuations aren't cheap anymore and i'm thinking about this with warren buffett's letter tomorrow and for two years saying valuations aren't that compelling meaning things look too expensive. >> i think it depends on where you look if we go outside of the u.s. valuations look reasonable, particularly in asia japan, parts of southeast asia you see a lot of stocks trading at barely 10, 11 times earnings. in the u.s. it's a different story. stocks were cheapish for about a moment on christmas eve and now back to some place ahead of average. doesn't mean that they're aggressively priced but you can no longer say this is a cheap market. >> there are unloved parts of

the market what are they today? >> a couple. cyclical names are beaten up what happened in q4 the is you had a very abrupt shift in economic expectations. one of the parts of the market became particularly cheap energy stocks at one point the discount of energy to the 13500 largest we have seen since at least 1995. >> really? >> one part of the market very interesting to us right now. >> that might be a place that you would pick up a few names here despite the overall concerns of valuations >> yes. >> does that mean that oil prices have to keep going higher or simply they got too cheap >> they got too cheap. the thesis is not the notion of oil on 80 or 90. many of the names look inexpensive. >> thank you so much. >> thank you. >> appreciate you coming out here let's turn to the big stock story of the day it is kraft heinz. shares down 27% after a net loss

of more than $12 billion in the fourth quarter revenues and earnings were well shy of wall street's estimates and cut the dividend, wrote down the value of its iconic kraft and oscar mayer brands and disclosed an s.e.c. subpoena on the accounting problems. let's bring in aaron and leslie picker is here, as well, to talk especially about the 3g ownership angle. what went wrong with kraft heinz? >> well, i think -- well, what happens yesterday makes it official that kraft heinz strategy of the radical cost cutting doing for years has failed this is really the 3g playbook to take over famous brands, wring efficiencies out of them and sales fell for six quarters in a row after the cost cutting because they were underinvesting in the brands and in marketing and innovation and now, you know, they're paying the price. >> i always, aaron, thought it was interesting that berkshire

hathaway was involved. it is important to have discipline but not the kind of warren buffett story right? he likes great brands because they're great brands and should be able to grow and thrive and not necessarily because you cut expenses down to the bone, right? i don't want to -- i hate to ask you this but what do you think he's thinking? >> i will you will ask him on monday. >> we will, yes. >> it would serve well to give an explanation of what he thinks went wrong, why can he was wrong, frankly i think one underappreciated aspect of the story is buffett lent the credibility and the all-american down home image. >> yes. >> because otherwise i think there's more resistance to this foreign brazilian private equity firm coming in taking over the iconic brands, laying people over. >> absolutely right. >> it went over before buffett was involved. >> leslie, that's the story of

the 3g you know iconic now brazilian firm doing this with a number of different companies and industries did kraft heinz specifically go wrong with them? >> so the 3g mantra, founded in 2004 bravillian businessman known for the work in the railroad industry kind of built the firm from the ground up with an ethos of acquisitions. a couple other areas where they're invested, restaurant brands international doing quite well. >> parent of burger king. >> kind of a mirror image of kraft heinz right now and also were responsible for the roll-up of anheuser busch which is struggling a little bit more so i wouldn't say either of those are akin to kraft heinz but does call into question this whole cost cutting model because if you can't get that acquisition machine going and

you're doing what they call zero based budgeting every single year does it ultimately serve every company in a way that would be most beneficial for the shareholders. >> aaron, you said people have been saying what's the next -- i don't mean this to sound the way it is but there's an analogy to valaent and thrived on repeated acquisitions to grow and increase earnings. totally different story but people have been saying to 3g and the issue of kraft heinz, what's the next big acquisition going to be and before that they have some explaining to do about, you know, why that would make sense and not getting back to earnings growth until i think you said 2020? >> they themselves said earnings fall next year and get back to growth in 2020 which is really disappointing to people. i think they maybe haven't gotten the memo. last night they were talking about, you know, they're cutting the dividend and doing that to

rebuild the balance sheet to go and do more acquisitions potentially in the future and i just am not sure that happens. people -- brands already are afraid if they're bought by kraft heinz it means they're gutted and this only reinforces that argument that's what unilever said when kraft heinz was interested in taking over them. >> that's right. >> i don't think that's in the cards. i think they need to clean up in-house show that they can grow these iconic brands, that they own there's been organic sales growth for two quarters. but that was before they were mostly cutting prices in the u.s. and that's hurt their margins, famously high margins. they need to figure it out before they go and buy anyone else. >> aaron, thank you. leslie, appreciate it, as well. be sure to tune in on monday becky quick will sit down with the oracle of omaha for thre years. that will be monday on "squawk box" beginning 6:00 a.m. eastern time hire's what's ahead on "the

exchange." >> coming up, home improvement headache a look at why the battle over tariffs could hit owners and buyers this spring housing season. and a healthy investment could planet fitness be the next amazon we'll explain. at&t provides edge-to-edge intelligence, covering virtually every part of your retail business. so that if your customer needs shoes, & he's got wide feet. & with edge-to-edge intelligence you've got near real time inventory updates. & he'll find the same shoes in your store that he found online he'll be one happy, very forgetful wide footed customer. at&t provides edge to edge intelligence. it can do so much for your business, the list goes on and on. that's the power of &. & if your customer also forgets socks! & you could send him a coupon for that item.

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welcome back breaking news on trade let's head straight to kayla. >> i just spoke to two sources who have been briefed on the progress of the trade talks and here is some additional detail as to what has transpired behind closed doors first, we know that china has committed to buy up to $1.2 trillion in u.s. goods remember that this was a major part of the discussion between the two presidents at the g20. china's earlier offer had been floated at $1 trillion so this is a significant increase to that pledge. an i'm told that it could be up to $1.2 trillion i've also learned that as far as some of these more longer term structural issues that there's significant gaps on the topic of force technology transfer. that is, of course, the practice of china requiring companies to operate in the country under jvs and then stealing that

technology i have learned there's little progress made on too front and that china has so far been unwilling to be subject in enforcement on that issue. so that is one area that remains a roadblock in these discussions and negotiators feel like enough progress is made on all of the other areas to move forward and in moving forward part of the discussion on a possible trump/xi summit is late march at the president's resort in southern florida and currently talking looking at a late march summit of the two leaders. i imagine we'll hear more from president trump in 90 minute's time that's the latest. >> thank you the dow slipped a little but just below 26,000. of course, we'll keep an eye on it. to the bombshell story of robert kraft the new england patriots owner charged in a prostitution sting. let's go to nbc's kerry sanders with the latest. thank you for joining us what do we know at this point?

okay i can hear kerry but i understand everybody can't we'll bring him back apologies for that. film studios marketing to kids, we have a closer look what the they're doing now. and whether it's working plus shares of stamps.com dropping like a rock today, down more than 50% after the company ditches the u.s. post office in favor of amazon. that story is ahead. "the exchange" is back in two.

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welcome back let's get back to that bombshell story of robert kraft. the patriots owner being charged in a prostitution sting. kerry sanders of nbc does have the very latest for us now kerry, hi again. >> reporter: hi. can you hear me okay because what we're talking about is really as you say a bombshell. the police department here in jupiter, florida, was part of a multi-agency investigation that began when somebody at the health department got a complaint about a massage parlor once the police got involved, it turned out that these massage parlors were allegedly fronts for prostitution they were up and down portions of the east coast of florida

well, as the police began investing they decided to set up surveillance and that surveillance starting here in jupiter area goes back to october and the authorities here allege that among the people who went in to the massage parlor for purposes of prostitution allegedly was, indeed, the owner of the new england patriots robert kraft, somebody who is originally from brookline, somebody who has gone from the son of a dressmaker to a multibillionaire who has really reached levels of success in sports that are unheard of with six super bowls for his team anyway, the authorities here say that they have not only video evidence but according to the reports here there will be some dna evidence with seminal fluid from the johns coming in and out as they're referred. the authorities did arrest the people at the top of this front

and they say it's really important to understand that the women who were inside these massage parlors came from china to new york and wound up in florida but they thought in china that they were applying for legitimate jobs. it was only that they got here that they found themselves locked inside these massage p parlors living in them, cooking the food on the back steps, sometimes sleeping on the tables where they were to perform their massages and whatever else was going on inside there. so, at this point, robert kraft's attorneys have released a statement. it's very brief. it says we categorically deny that mr. kraft engaged in any illegal activity because it's a judicial matter we will not be commenting further. a lot of activity there. understand that robert kraft in no way is charged with the sex

trade. it is the misdemeanor of soliciting prostitution but the authorities say that it takes the client to have the actual business there and in this case allegedly a sex slave operation where the people again unwittingly, kelly, found themselves trapped in florida, unable to speak english and didn't know who to reach out to for help. >> thank you. here's some of the movers this hour. roku shares following an earnings beat and strong streaming growth that stock up 100% that's a doubling for roku this year in the past six weeks wayfair soaring today, reporting a smaller than expected loss revenue also beating estimates and the active customer count up 15% from a year earlier. dropbox is falling the shares are moving lower.

now tobill griffeth. >> thank you iran is continuing to comply with the landmark 2015 deal. its aim to prevent teheran from building weapons the u.s. as you know has pulled out of that deal and is pressuring remaining countries to abandon it, as well. opioid related deaths quadruples in 20 years and shifted to the eastern part of the u.s. washington, d.c. has seen the fastest increase where deaths have tripled every year since 2013 and a winter storm dumped nearly three feet of snow in northern arizona breaking records in the area around flagstaff. schools and roads have been closed across that area. thousands of people are without power. and japan's space agency has announced that the space probe successfully landed on an asteroid the craft left earth in december of 2014.

it arrived at the asteroid last june it's expected to carry out two more landings to collect samples before returning to earth. that's the update at this hour >> bill, thank you so much. 30 minutes to go until "power lunch" and joined by melissa. what's coming up >> very, very, very important meeting in washington. 2:30 president trump is meeting with the chinese vice premier and expecting a tape playback and listening to whether or not they confirm a late summer summit and could be market moving at the same time, as you know this, kelly, the chinese stock market on fire this year one of the best performing this year and if you look at the riskier parts, that's up 16% year to date discussing within the context of this trade war what is the better play right now, the u.s. versus china what in china could you buy?

we have two guests to discuss all of that. so very, very big. >> not the bachelor. tim seymour. not the bachelor. >> you thought. >> i was very confused. >> you're very wrong. >> yes, yes. >> rarely but -- >> very rarely but we'll talk to tim. he has a couple of picks for us. see you then thank you. here's what's coming up on "the exchange." another unicorn prepares to hit the market a dashing valuation. should a gym company have the same valuation as amazon and the $100,000 swag bag. it's all ahead in rapid fire

welcome back let's catch you up on a few stories that should be on your radar. it's time for rapid fire here with the takes are bill, kate, robert welcome, everybody "the wall street journal report"ing that pinterest has filed to go public it's seeking a valuation of $12 billion or more. pinterest joins a growing list of tech companies to ipo including uber, lyft, postmates. finally, finally, finally. it seems like this one is for real the pipeline is actually coming. >> i think this is -- this story

more about what's still to come than the pinterest ipo this is what's considered to be a modest valuation for this company at $12 billion and rightfully so. we have talked about that. i don't get pinterest. >> you're a cook guy i thought you would like did recipes. >> i go to food.come, elsewhere for the recipes. not pinterest to look for a picture of an enchilada to make. you know >> i once made some great -- i think it was chinese broccoli and beef dish or something from pinterest. a problem they have had with the content is the anti-vax stuff. did you see the crackdown on that this week >> this could be the biggest year for ipos. when since 1999. >> 1999! >> we know what happened after that good times coming ahead. i love ipos to finally get under the hood of all these companies and see what they're really losing which is a lot of money. >> yes but that usually doesn't stop. the irony is investors want to get in they have a sense of cleaning

things up by the time we go public have a path to profitability robert, is that true or should they try to get public as soon as possible and worry about that over a five or ten-year period >> we thought after 1999 that wouldn't happen again. they're real businesses and not doing that again here we are where uber lost $800 million in the last quarter and that -- i could do that, too. >> that's a mature company that's a mature -- a big difference. >> one thing if you're nascent do you use pinterest >> i was saying my mom is a big pinterest inspiration board for parties, things like that. i have heard people complain when you click through you can't necessarily buy some of the products you are looking for and another issue that they might have. >> i'm sure they're happy to fix that how about this jeffries upgrading planet fitness from buy to hold today sounds straightforward and not they say planet fitness is going to be a platform like amazon not a gym. and arguing it should be valued that way like amazon or like netflix citing the $10 a month

subscription plan. the upsell for the premium members and the expansion of physical locations. >> i mean -- you go ahead. >> i'm a serial gym member i belong to four. >> really? >> captain america belongs to gyms >> one of them is planet fitness. planet fit sns when i first went in there, this will never survive. it is a gym for people that hate gyms and why they are. >> why do you have a membership there? >> when i'm upstate visiting my dad, that's the closest. it is so depressing, the machines are terrible. they don't give you towels $10 a month which -- >> no frills, robert no frills. >> it is a guilt subscription to pay $10 to feel like you belong to a gym and go for pizza night monday night. >> non workout types of people. >> they have a suite of products i don't know that i compare it to amazon just yet we'll see the next few years but they have a black card program

like $22 a month, but you get to bring a workout buddy with you every time and bring somebody that doesn't belong to the gym, massage chairs, tanning beds a discount on reebok gear. >> you can't argue with success. this is a company that's gone from $20 to $60 in the last few years and doing something right. my daughter, i was just checking with her because i'm not the type -- i'm the guy that would join a gym on january 1st after i do all the resolutions and then i never go back again right? my daughter belongs to a planet fitness gym in washington, d.c she loves it for the low price, for the clean facilities that she perceives and never wait for a machine. now, you know -- >> nobody works out. it is great. >> exactly. >> robert, you are such a hater of planet fitness. up next, door dash announcing to raise $400 million in the latest funding round bringing it to a $7 billion valuation. the ceo says used to diversify

the delivery offerings and my question goes back to the business model longer term for this one. >> this is a very, very, very competitive business and a lot of very ambitious entrepreneurs in there insta-cart and uber eats you can go on and on something has to shake out at some point and these are the kinds of companies, again, i think are going to have to be acquired you know right now they're attaching themselves to walmart and other food delivery businesses to try and gain market share but at some point they have to see a shakeout. >> i think the problem is with the companies funds thrown at them to be cheaper but to the customer they only like it cheap. they have a longer term model. door dash needs to raise prices to show profit and then i order less that's the issue. >> that is an issue to keep an eye on but a smart thing they

have done is diversified who they partner with. i was telling robert earlier, chipotle with them for the nationwide rollout and walmart in 800 locations in the u.s. and they have something going for them that some of the other platforms don't necessarily have which is an edge. >> i think it's brilliant that domino's has a delivery built in stamps.com shares plummeting making a big bet on amazon and it disrupting the shipping space and saying it's a threat to be taken seriously. >> this is more to this story than just that headline. i admit. you know, looking at the stock chart last summer this was a $285 stock now it's a $85 stock. >> wow. >> however, what they're trying to do is diversify their distribution stream, as well they don't feel that the post office itself is sophisticated enough or nimble enough to be able to work logistically in the

e-commerce area and trying to go with u.p.s. fed-ex and with amazon which is doing its own logistics at the same time however, they do admit they make half what wall street thought they were going to make this year as a result of ending the partnership with usps. >> we only get the stamps at the post office. >> where else? >> only place i remember to buy them honestly. >> i think i picked the story because -- i collected, i liked the ones that were pretty. i do -- i like getting the -- i still walk in the post office and pick out the pretty ones >> how nice. >> how nice. finally, a $15,000 trip to iceland, a gold infused anti-aging mask and a poop emoji plunger, in the swag bag given out to nominees at the academy awards they're valued more than $100,000 and by the way, cannabis products are featured for the first time ever. >> let's also not forget these

are some of my favorite parts of the $100,000 swag bag, a spy pen from peta for discretely reporting on set animal use. a phobia relief expert 18 minutes. >> that's the magic number. >> you get the cannabis-related edibles here. >> yes am i asking a super rich question of robert i have questions about the free vacations? taboo? does meryl streep go on to the vacation run into lady gaga >> one word, ebay. >> get rid of them >> i don't know. >> i think they have plenty of vacation opportunities on their own. i don't think they need these. what's interesting about this, this company is not affiliated with the oscars at all they were sued by the oscars the bags valued at $250,000. they brought it down and they can't deliberate ll show the price of each item and can't say they're in any way

affiliated with the oscars and the oscars were upset. and each of these businesses is paid, pays this company about $4,000 per item to just put it in the bag because we're talking about it. >> exactly. >> exactly. >> so this middleman is making all the money and the companies donate the stuff and pay to get it in the bag and a bit of a racket. >> iceland, amazon, costa rica and panama. >> only thing used is $30,000 plastic surgery facial peel. >> that is true. >> that's useful. >> a poolside meal fixed for you by a professional chef. >> maybe someone will give theirs to you. >> we have to nominate you i hereby nominate bill. >> putting up with me. >> everybody's a winner. >> thank you all have a great weekend coming up, film studios are putting big bucks of marketing animated movs nciesie kids are the targeted audience they're getting creative

how to train your dragon opens in theaters this weekend from universal pictures and dreamworks which with cnbc is a subsidiary of comcast and when kids watch less tv an tv commercials, how's the studio promoting the film and others? we asked julia boorstin on the oscar red carpet with a look julia? >> reporter: kelly, dreamworks animation is not relying on commercials but rather going to where kids and teenagers spend their time to drive word of mouth and social chatter for how to train your dragon 3 the studio brought dragons to facebook offering a dragons everywhere effect and on snapchat a lens to add a dragon to your shot nbc universal, dream parent of dreamworks offered this free mobile dragon game now, to hook families visiting

walmart, dreamworks brought in a vr experience to 16 walmart stores bringing kids into the hidden world with headsets and leap motion sensors. even the tv ads for the hidden world are outside the box, take a look at this one in which the dragon seems to interrupt a press conference now, warner brothers has also gone far beyond commercials the promote lego movie 2 with this immersive experience in hollywood. i took my kids to visit it and promoted the film. disney is also embraced different things like augmented reality features on social and been able to leverage the parks to drive interest in kids' films. how to train your dragon 3 does have the advantage of having had animated series as well as short films out on cartoon network as well as on netflix those have also helped to keep the characters relevant since the last installment in this franchise. back over to you.

>> julia, what is it 48 hours, 50 hours before the oscars there's like so much activity going on behind you already. it's incredible. >> reporter: there is, there is. it's covered with white plastic getting it ready it's noisy putting up lights and getting everything ready do go so yeah. just about 48 hours from now. >> wow let's bring in cynthia littleton from variety i liked it bet we are the min i don't knows -- minions why is animated films in particular seeing the gimmicks >> it is a by-product of the massive changes that we have seen in the way people watch television, especially kids. they are, you know, kids these days have -- seem to have phones and tablets, attached to their hands. anyone that has a kid at home knows that they don't sit in front of the tv watching the channels that they used to so it makes -- forces marketing to be much more creative and

much more out of the box as julia said. >> what's interesting to me, we talked yesterday about this new report about kids spending more time in front of the screen than ever shouldn't it be easier than ever to reach children? they're literally on screens all the time now >> the problem is fragmentation. it used to be, you know, ten years ago, 20 years ago you could reliably put commercials on a cartoon network and get masses of children now, they're -- they are watching screens but they may be watching a youtube video, might be on a social media platform. they're all over the place it is much harder to get that mass audience that marketers want, especially for something like driving people to the opening weekend of a movie. >> julia >> reporter: kelly, i think that's exactly why we are seeing the reliance on the franchises the fact that in the many years as we last had how to train your

dragons movie, the characters, the franchise on netflix, cartoon network, keeping these characters fresh in consumers' minds and less hard to break through the clutter and to deal with that fragmentation. so i think that's one major reason to see hollywood rely so heavily on these families of characters like we have seen with marvel, all the characters that disney is making movies about and ditto the d.c. comics because once you have an awareness of a character it is a little bit less challenging to get someone to go see a movie but it is really -- that's why we see so few truly original movies to be tent poles. >> we are also talking about the oscars coming up and amazing to me how much money is spent on campaigning for them is netflix making everybody have to spend more in order to garner the big awards >> it is they have -- netflix and amazon in particular have just been an

influx in a system very rich, you know, traditional hollywood movie studios will spend what it takes with a movie that's really in the unt they will spend what it takes because the oscar is prestige, helps with downstream sales and netflix has impressed everybody with their incredible level of spending and the oscars is no different. >> crazy thank you both we have that big event sunday night. coming up, a look at why the battle over tariffs could hit home enters and buyers this home buying season. "the exchange" is back after this i mean you're still blatantly sucking up to me gary. brilliantly observed, sir. always three steps ahead. six steps ahead. sixteen. so many steps. you done? a million steps ahead.

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that protects what's important. it handles everything, and reaches everywhere. this is beyond wifi, this is xfi. simple. easy. awesome. xfinity, the future of awesome. s. welcome back as we wait to see if a new round of tariffs go into effect on march 2, the home improvement sector has to prepare for the busy spring season courtney reagan with a look at how companies are doing that as higher tariffs loom. >> reporter: as tradetalks continue between the u.s. and china, the trade show must go on true value holding the home and garden venue trade show in dallas as more than 460 home improvement, hardware and garden products could see tariffs increase from 10% to 20% on or

around march 1st and on top of steel, aluminum and other tariffs instituted last year >> they were a nominal impact to our business in one and two but three was different. >> reporter: americans spend $10 billion a year on the home improvement products subject to tariffs. a tariff of 25% could add $2.5 billion to the cost. the company is already facing rising freight and labor costs. >> we do a lot internally as a company first to make sure we don't give a price increase and when we just are pushed to the wall and done everything we can, we go out with a price the increase. >> reporter: only the fifth in two decades and the first as a result of tariffs. voorhies said there was a

campaign but helped profitability recover. in a letter to the u.s. trade treasury, the sun joe snow joe ceo said tariffs could make its products including pressure washers, leaf blowers and hoses, quote, substantially more expensive for consumers. >> courtney live in dallas now not the first sector i'd think of anyone less impacted if these shares do go up? >> reporter: great question. scott's miracle grow do a lot of manufacturing of their products right here in the u.s. so they're a little bit less affected they did get a little lucky because there's this one insect killer they make this container they make and pesticide itself made in the u.s. but battery operated sprayer wand that's attached to it that was subject to tariffs but got an exception because counted as agricultural product. back to you. >> battery operated sprayer

wand i have to say, i'm learning more and more i'm paying more and more attention right, to all the things around me how they got here, how they're made to the companies, may be irritating but educational campaign thank you very much courtney reagan china may be experiencing a slowdown but one sector still thriving we sent a came tbeinto ke the pulse of the chinese consumer and that's next

♪ ♪ let's go from plans... to full blown production. with financing solutions from american express. chat with us today and let's make it happen. american express. don't do business without it. when yowhat do you see?itical issues facing our world, we see a billion more people breathing free. we see access to fresh food being the global norm, not the exception. we see homes staying cooler, without the planet getting warmer. at emerson, when issues become inspiration, focusing core strengths to create a better world isn't just a result, it's a responsibility. emerson. consider it solved.

welcome back the economic slowdown in china has been highlighted in a number of earnings reports. the one sector thriving. seema mody has that story for "the exchange." >> reporter: chinese may be buying fewer cars and smartphones, however, the latest reports from a number of luxury retailers show us the chinese are buying luxury items despite the broader slowdown in the economy. >> i have bought an hermes scarf. >> reporter: a growing middle class and a desire to stand out all playing a role. >> if you purchase a luxury product, it's a sign of success. >> reporter: stricter controls on luxury goods from overseas is

also pushing chinese to shop more on the mainland >> it's more convenient and they don't need to worry. >> quite a tough crackdown on household purchases of luxury goods abroad >> as the economic story worsens, the chinese consumer may think twice about splurging on finer things. >> i will restrain myself a bit. maybe two purses, i might switch to one per year or per two years to slow it down. >> seema joins me now. a lot of great tidbits in there. interesting to me is, are these the same people who would have previously bought the luxury items in europe or china or more than that? >> i think it's exactly that because of beijing cracking down on the purchase of luxury goods overseas, finding more chinese buying those similar products at home so on top of that, a lot of these european retailers cutting prices at home to incentivize that consumer to make those

purchases. >> in china? >> in china. >> interesting right? >> chinese didn't want capital leaving the country. they're still going to travel abroad how much of a crackdown are we talking? >> a big crackdown you saw a lot of the beijing government officials increasing their presence on airports to really try to monitor their packaging aes and luggages. that's the main reason you see more spending inside china because they don't want to deal with that trouble. >> if you're luxury goods purveyor, i assume that's more locations or increasing their direct to consumer, however that works. >> you've seen because of the stricter controls and retailers trying to redefine their retail strategy on the ground, some more retail presence, also more partnerships with the e-commerce players like alibaba and jd.com, to get in front of a larger growing middle class. >> it's an interesting time because the idea is china

slowing, a lot of companies with exposure there have excited it as head wind, but yet the luxury market is thriving what do you think is going on? >> it shows the chinese consumer is still spending money. just depends on what you sell and for now, that chinese affluent class is less price sensitive. a bit more insulated from the chinese economic slowdown. for now, the big question is will that continue if this economic slowdown persists as we heard overseas. >> the slowdown too they're talking about, it's in the industrial sector and more of a consumer driven economy. this plank could do okay anyhow, is there any sign they're pushing back on u.s. luxury goods because of any anti-earnisanti-ear anti-americani anti-americanism >> that was the concern when this took place back in 2018, the big foreign companies, the chinese consumers pulled back on foreign goods but in china, i mean, they really love their luxury items, their handbags, bells, high heels. it's seen as a social status, as

a way to distinguish themselves. $1.4 billion, the most populated country. so if you are a millennial now climbing the corporate ladder, you want to find ways to use discretionary income and help yourself out. >> only one bag a year thank you, seema, great stuff. that does it for "the exchange." "power lunch" begins right now >> thanks, kelly new at 2, top trade negotiator meeting minutes from now. could a deal around the corner inflation, wages, rates and avalanche of fed headlines today. what they mean for this market and $4 billion that's how much warren buffett lost today alone on his kraft heinz stake. almost losing a third of the value in today's session is it a screaming buy or maybe it's buyer beware. "power lunch" starts right now