it's 13% cheaper than a week ago. i think this is a good place ton. >> i'm still emotionally involved and dating boeing. >> pilots negotiation with american airlines, i look the stock. "the exchange" with kelly evans begins now thank you scott. hi, everybody. abandon the target, why the fed may be moving toward a new way to measure inflation what it is and should investors be worried lee cooperman will join us today. we'll ask about his top investments, plus his thoughts the ted la ceo back in the hot seat how much damage is he doing to the stock? >> not a lot of damage in the marketplace. if you look at where we stand we are in the red, but not by much.

the dow is only off by about three basis points here. same for the s&p 500, and the nasdaq composite chasing the declines so stability in the wake of fed chair jay powell's testimony before the senate banking committee. what to match today home construction is off a bit. you can see here we are, though, up about 24% since the lows that we saw back in december, so a bit of air coming out of that home construction trade. our stock of the day, it's not all bad for brands and consumer products and good. smucker's up by 5%, up on its earnings record and better outlook. coffee and premium pet foods the drivers. the shares are still down 20%,

but consumer brands are on focus. >> we'll have more on somebomucs fire the president landed in vietnam, it will be the second meeting between the two companies. back home housing starts were awful in december they tumbled, and the quiter stayed strong in february. was it just a one-off? confident coming in stronger than expected this months what's holding us back? there have been -- so powell reiterated his -- there has been talks in delay in the brexit so why no real loy i think the passive fed are already priced into the market hey, by the way, one more thing,

powell was asked about how he felt about attempts to restrict corporate buybacks he said allocation of capital is always left to the private sector, and quote, i would want to understand the consequences of changing that and this comes on the heels of a hue buyback today announced by home depot the bottom line is after a record 2018, buybacks show no signs of abating. >> we talked about how investors were not rewarding companies you look at home depot, what do you take away from that? >> you're note getting help, and remember, they're all rolling out 2019 guidance now. it wasvery, very disappointing numbers. so that will dominate the discussion

so remember something. there's such a big buyback that in to 10 they had 1.7 billion shares outstanding they'll go below a billion the bottom line is they have reduced their earnings about 30% -- reduced the appearance of the earnings about 30% that's an amassing drop. look at those that reduced their share count reduction. this is a very big business, and it means all things being equal, your earnings are 25 in the case of apple, 27% better than they were seven, eight, nine years ago without anything else changing this is why buybacks are a controversy cal topic. jay powell is wrapping up his testimony, saying economic growth will be somewhat slower this year and the fed will be

patient. let's bring in senior economics reporter steve liesman, look with greg, a economics commenter at "the washington post. we'll get more into this, but the data this morning, especially on the consumer side has some economists say rate hikes broadband back in the picture. what's more important, do you think? >> i think that the fed is in a holding pattern. i think they're holding short of where they want to be. i think they would prefer to be at more of a 3% funds rate but i don't think there will be any change given the best way to put it is the totality i don't think they're going to be changing back in march, for example. we got a few clues from powell about the balance sheet. for the first time i believe he said about the $1 trillion

estimate for banking reserves is reasonable it meejs they could stop the end of this year, maybe even short of the end of the year i throat he was more do muchish on this issue, people are coming back into the labor es, and that's a more dovish outcome. >> and, greg, you're picking up indications that they're trying to overshoot the inflation target >> i thought that was the hidden takeaway he was asked by pat toomey, hearing all this talk, i don't like that, and his response was we have to worry about, and he went on to say that expectations are the most important determination.

if you really believe that, that means you do have to compensate for the% below with above-target inflation to make sure they don't get stuck. >> hey, greg, without disagreeing with you, i disagree i think everything you said is right. i just can't see powell, who is so politically adept, navigating the fed towards a higher inflation target. >> and let me pile on to that. >> you want my cost of living to rise by 2.% -- >> here's what i don't understand, greg how can they tailor the public's expectation to 2.3%. i don't understand that at all obviously they're at the start of a multi-month evaluation. there will be a reference

conference in june the points you raise are good ones, but rich clair, john williams, the new york fed, and now jay powell, there's clearly a desire to do something about this and move in that direction. i don't know if it would be average inflation, and the points you raise are very good the fact that senator toomey was raising concerns about it points to the political difficulty. that i think will be the single biggest challenge. how do you communicate it without sounding like you're raising inflation targets. >> let's -- what's the takeaway for investors, then? is it that this kind of talk means a more dovish fed for a longer period of time than we previously thought chris ruppke is says rate hikes are coming, the economy is stronger than you think. >> categorically, perhaps yes, this is a profoundly dovish shift by the fed

it basically means that not only did he allow the economy to overheat, they practically want it that's the only way they know to get inflation above 2% that means lower for longer. that does not exclude the possibility that even given that do muchish forecast, they may see another reason for a rate increase >> i wonder, though, if they do what greg is talking about without saying they're doing it. >> how do you get the public to believe it >> they can't -- >> because of acts of the federal reserve. if inflation does -- if they are successful in overheating the economy, you get it at 2.2, 2 po the 3, 2.4, that would be a tacit higher inflation target. >> i think it depends on how, right, greg? if they could engineer the oil price to go higher, third just have trump tweet about it.

>> though i would point out the tweets are not having much effect so i think you have to turn to something else, but the fact the next question is how dough get it back down the fed has no history of being able to engineer a rise in the unemployment rate. >> no, it creates bubbles -- when you guys come back, we'll talk about mmt especially after the chair was asked about it today thank you both greg ip and our own steve liesman. here's what's ahead. >> announcer: coming up, the rally and trade tip. lee cooperman joins us to talk about that and more. plus a miss at home depot, and a weak outlook at macy's the number one analyst on the street is here with his take and where to shop for your portfolio, and

where to stay away and elon in the hot seat, again. who can his new battle with the s.e.c. cost investors and the company's reputation this is "the exchange" on cnbc

welcome back to "the exchange." let's go to las vegas, where we are joined by lee cooperman. leslie >> reporter: hey, kelly. lee, thank you so much for joining us. >> thank you. >> just coming off the jay powell's testimony in front of the congress today, speaking fairly positively, but how should stock market investors be reading his comments first of all, in terms of the fed, they'll be data dependent if it supports a rise, they'll increase rates if data doesn't, they won't. my question is they're on hold, with maybe something happening on december. but i real them as being very pragmatic i think in the bigger picture we're in an normal

reason i reasoni say that is there's somewhere, depend somewhere between 9 and $11 trillion dollars of conch debt. you lend money for germany for two years, you get negative return to germany, maybe ten basis points japan ten year, you get zero it's not a real world. i as an investor try to figure out what's norm at the product activity of the labor force grows 1.5% labor force and product activity growth determine real growth, and we're probably slowing to that level right now 4% nominal world, ten-year government bond ought to be 4%, may take several years to get there, and the fed funds rate should be something like 3%,

currently 2.25. >> so you think it's fair value? >> i can find a lot of strokes attractive at their fair value the conditions that seemed are would be a big market decline don't seem to be -- the recession isn't in the cards a slow down, yes, a recession is not in the cards the -- interest rates adjusted for inflation are zero thirdly is expected value -- we don't with tech latif valuation,

we don't have the public operating. the fourth thing is some kind of geopolitical event that just happens out of blue. lots to worry about, north korea, ukraine, you name it, the white house, we have an unconventional white house, which is destabilizing people a bit, but i think the big conditions of decline are not present and we're okay i have significant long-term concerns go ahead, kelly, how are you >> very well, and i'm glad you are here today i wanted to ask you what your opinion is having tanged with the s.e.c. over the years, what do you think of the way they're treating elon musk he says, look, they have a vendetta against him and singling him out for unfair treatment. what do you think? >> i don't know. he's brilliant -- his situation

and mine were totally different. as far as i'm concerned, he's brilliant, but conducts himself like he needs adult supervise. i'm not invested in tesla. if i was, i would be very worried about his deportment he runs a public company, he has a responsibility to the public my situation was totally different. there was -- i have to be careful with what i say, but the boyne line is the s.e.c. is abusive in their conduct i've said that publicly, you know, and i will only tell you a little story it's all true, and i have a witness to the story about a year ago, price waterhouse sponsored a seminar in palm beach. the guest enter was mary jo white, head of the s.e.c. when my case was brought. i went over to her, introduced myself and i said you're lucky i'm a gentleman, i'm not going to attack you in public, here's

a sealed envelope with the question if you answer the question, i have give $100,000 to your favorite charity she said she was game. what's the question? your staff responded if mr. cooperman would like to settle a five-year bar from the industry, admission of guilt, and i told my lawyers i didn't go to hard varied or yale, that's where you guys probably went, you can tell them they can have the rockefeller salute as my response you came back five months later with no new information and said, okay, no admission, no admit, no deny, no time-out, 4.9 million. what did you learn between the first that helped destroy the business and your second does which i would and the response was -- innocent people -- they didn't say i was innocent, but

innocent people settle because of costs that's what they bank on and that's disgraceful. >> that's why i wanted to ask you about the tesla situation. if you were an investor, you would be bent did his deportment. >> he's got to behave like an adult. you know, stop tweeting and saying things and contradicting yourself i'm not involved in tes tesla, so know what they're going to produce, you know, you're better off just keeping to yourself. i think most intelligence and sane people would recognize his brilliance, you know, but he's undermining himself. a bit like the president himself. who could argue with the successful ideas that the president has had? who can argue with the strength in the economy what we can argue with is if he could be more balanced and recognize the need to subject

himself as the president of the country and not of his base. like i said, he vanquished 16 opponents, he won, so who am i to tell how to conduct himself time will tell. in 2011 you wrote an open her to then president obama looking at issues related to class warfare, and i'm curious what you thought. >> if you asked me about high long-term concerns, concern number one is there's too much debt in the system i was very surprised how abruptly the economy slowed in response to a very small rise in rates. that tells me there's too much debt. >> public and private debt >> yes the second thing that bothered me, to be honest with you, i think the tax package, while correct for corporate america, probably gave too much to wealthy people at a time when the economy didn't need a stimulation. i think that will bite you in

the can, i can't tell you when the third thing is the apparent move to the left that's taking place in the country which results from income disparity, which i'm sympathetic to i'm a kid from the bronx, i was lucky new to make money on wall street what made america great is capitalism. it has some flaws, but socialism has no benefits, so i'm very worried. i think what happened in new york with the movement led by aoc? is disgraceful the number of jobs lost -- >> you mean with amazon? >> yes, absolutely, disgraceful and wrong. i'll give you a quote, only reason why i have a piece of paper -- the main vice of

capitalism is the uneven distribution of prosperity the main vice of socialism, the equality distribution of misery. and, you know, i'm committed to capitalism everybody has a hero figure in life mine is ken langone, i read his book, he's a great human being, he's on point and we have to make sure the country does not move to the left we have a bunch of candidates running on the democrat that is leftward-leaning to me that's very counter-productive and destructive. so you believe that would decrease the wealth gap would be worse for the economy -- >> long term, sure i mean, basically -- there's so much evidence -- two, three years ago i went to cuba on a mission, but it was legal to go. the cuban people are

hard-working industrial people they're prospering in miami. the cuban people get one quarter of a chicken once a month. they spend two hours to commute from the countryside to downtown havana, because they have no organized transportation system. it costs by 3.57 a minute for cell phone service people can't afford it they live in dilapidated condition. that's socialism verb capitalism why do we want to up for that? it's all understandable what's going on mr. bernanke yond stood in 2008, he had to reverse debt the best ways to do that was get wealth up. so he figure figured the best way was stotts the stock market up, but there's a disproportionate level of -- and the government tried

suppression. you guys got a windfall from the stock market, but we'll give you no return on your savings. so you adjust the coupons on bonds and on treasuries, and short-term paper for inflation and interest rates, you're losing ground. >> right. >> now they're trying to say the wealthy have done so well because of the what the fed has done, we want to take it back. on elizabeth warren wasn't well tags and ooc was a 70% marginal tax. we have to do it in a different way. i believe in the progressive income tax structure i believe wealthy people should pay more i happen to believe that's my brother's keeper, but we have to agree as a nation mashed the maximum tax be, because that defines the yield to the u.s. government a lot of the politicians, they don't deal with it flat on i hope mr. buffett isn't happened with me on my use --

but i said i agree, what do you have in mind >> he is a million, 35% tax, 5 million or more, 40% i signed on the dotted line instantaneously. everyone in new york, new jersey, connecticut, kentucky, high tax states are already in the 50s. it's a moral question. what should the people give up of their hard work i'm lucky, okay? i work very hard, but i've worked hard doing what i love. i don't mind giving back, but i think there's a question, what the working person should do if you ask a man in the street what the typical tax rate of the wealthy people, they would have no clue. >> lee cooper madge, thank you so much. a lot to unpack. i'm going to send it back to you, kelly >> great stuff thank you so much. coming up, round 2 for

eloans verse the s.e.c why shoulders are paying attention. and another company known for food and beverages is betting big a pets 'lhafocus mere isn't pet food. wel ve those details ahead

. today michael cohen is toichg in a closed-door hearing. tomorrow he will testify before the oversight committee in a public hearing thursday's closed-door hearing will be before the house intelligence committee >> jared kushner in abu dhabi saying the u.s. is ready to put forth a new plan he plans on announcing after the israelis elections in april. >> the objectives of this visit, we've been working on the peace niche tiff for two years now, and we're getting ready to put the plan forward we spent a lot of time consulting with the different stakeholders in the region, getting a lot of good advice and. in oregon, an am track train with 183 passengers aboard that has been stuck since sunday after hitting a tree is now on

the move am track workers say the train is now headed to eugene, oregon. that's the news update this hour "the exchange" is back in two minutes' time.

welcome back let's catch you up it is time for rapid fire. here with their takes are kate, william, welcome, everybody. shares of jm somebomuker. this an j.a.b., which owns brands like dr. pepper said it's also breaking to a they're going to spend about 72 billion in 2018 they have reich are ray's

nutrish brand, and i like high-end, organic -- >> what is ollie wearing that's -- hi, bud. i didspend about $7 on that birthday hat. >> it has to be a good economic indicator. and you know, your pet will never say -- or i like the cheaper food. >> can we talk about -- we have leah, right 1234 come coo cake also has an instagram feed.

ounchts those are mine you guys were talking about ped foots. i would just say i pay a lot for ped food >> you know there's stories about how much it costs to raise both in manhattan. i have kids, i have one child, two dogs, and they all command equal amounts of time. they have one of those golden doodles. this dog is insane i'm sorry we left you out of this

shares of hertz and davis are both up big this year. one they're eliminates a lot of older cars so that's hem them command better pricing the other thing is they've been improves their customer experience s there steam to be the longer challenge of lyft and uber >> uber is so easy >> i do rent a lot of cars

there are places where you could find it. >> and they are making it up on price. s. >> so they've got the pricing issue, gets they pared down the inventory. got a little ahead of itself >> yes, i do prefer the lyft or uber, but my parents love hertz. >> so it's a nice market >> my dad liked to wing it i know he's listens, so herds, your parents rental car company. selling high-end cannabis -- and

rolling papers, a sign the largest maul operator at it's locations this year. the farm bill set it was okay. so that bill is why we're seeing this >> more and more they're in beauty and skin care. >> what are the benefits is it just cool and interesting? >> i think it does have some health benefits. >> so the thc is the high? >> yes exactly. >> do you think they should auction their ticker symbol?

>> there's a risk that it becomes a commodity so all these companies creating what they hope is a luxury product, but at some point someone will say this is the luxury sector, make it safe and healthy even powell was asked about it i guess you don't have that problem if you buy a cannabis -- >> when the fed chair asks about crypto, something like that. >> someone -- moving right along. apparently a smartphone can read your palm. lg introduces the g-8 think or thinq, depending on how it's pronounced

>> i thought biometrics, that's the whole thing. >> facial recognition on the iphone x is not that good. have you tried it? >> i don't want pictures of my veins now. >> just because we talk about when you submit your dna brand, when you take that you are thumbprints.

it's just who owns it, how is it being -- with the finger >> thank you guys. >> pets is all anybody wants to talk about n.on musk is in trouble agai what it means for the future of tesla, that's next we see engineers simulating the future to improve today. at emerson, when issues become inspiration,

creating a better world isn't just a result, it's a responsibility. emerson. consider it solved. i've done all sorts of research, read earnings reports, looked at chart patterns.

i've even built my own historic trading model. and you're still not sure if you want to make the trade? exactly. sounds like a case of analysis paralysis. is there a cure? td ameritrade's trade desk. they can help gut check your strategies and answer all your toughest questions. sounds perfect. see, your stress level was here and i got you down to here, i've done my job. call for a strategy gut check with td ameritrade. ♪ welcome back elon musk is in hot water again. he tweeted they'll make around 500,000. the s.e.c. is asks him to hole musk in contempt, claiming that he violated the --, and fired back, writing, the s.e.c. forgot to read the transcript, how

embarrassing tesla's chairs are flat today. tim higgins is here, alongside our own phil lebeau. tim, let me ask you about the impact on tesla here the response from tesla's lawyers at the s.e.c. clearly say he didn't do that. in fact they say they huddled after the fact to craft a clarification to those tweets. that's at the heart here he's been pushing it for the last few months. most notably during "60 minutes" interview when he didn't respect the s.e.c. he he said there's free speech in this country, and he was

praised by jack dorsey that said he now has two weeks to explain himself. >> he hayes under march 11th for him and/or tesla to basically say to a judge why he should not be held in contempt of court the issue is he agreed to the s.e.c. requirements that all of his communications be preapproved. they weren't that is the issue. so he said there's an element of people saying, let's not get carried away here. at the end of the day, this is strictly about the agreement that he signed with the s.e.c. back in december.

there's a couple issues here, and the other is whether that information was misleading is that right? what really wasn't clear, there was a bunch of numbers, and then you add some more on twitter the core issue is he didn't get it review. what's the risk to tesla that may come from that

the two are not related. the issue here, you know, is the s.e.c. looks at it tesla's valuable is he's become wrapped up in the country. so they want to rein him in, bush they also don't want to pump it out. >> tim, thank you very much. before we let you go, i wanted to ask you about the fiat news it sounds like it would be the good pumping about 4 if the 5

billion into one new plan and it's going to be that's the plant where they built the cherokee, so overall, good news if you're in the detroit area. it's different vehicles. you don't want to continue building at three shifts so they're doing the prudent thing in terms of curbing production. >> phil lebeau, thank you so much well off their earlier highs tt.lloiusa -- they' jn onha at do advisors look for in an etf? i tell clients, etfs can follow an index, but which ones target your goals?

it's not about quantity. it's about quality. no trendy stuff. i want etfs backed by research. is it built for the long-term? my reputation depends on it. flexshares etfs are designed and managed around investor objectives. so you can advise with confidence. before investing, consider the fund's investment objectives, risks, charges and expenses. go to flexshares.com for a prospectus containing this information. read it carefully. people know aflac... aflac! ...but not what they do. so we're answering their questions.

aflac is auto insurance, right? no. uh uh. is it homeowner's insurance? no... uhuhuhuh! is it duck insurance? nope. ahhh! do they pay me money directly when i get sick or injured? yeah. aflac! you got it. you know aflac! boom! get help with expenses health insurance doesn't cover. get to know us at... aflac dot com.

>> shipsticks.c om! no more lugging your clubs through the airport or risk having your clubs lost or damaged by the airlines.

sending your own clubs ahead with shipsticks.com makes it fast & easy to get to your golf destination. with just a few clicks or a phone call, we'll pick up and deliver your clubs on-time, guaranteed, for as low as $39.99. shipsticks.com saves you time and money. make it simple. make it ship sticks.

is it because so many go after it the same way, chasing after short-term returns?

instead if getting caught up with the crowd, the investment managers at pgim take a long term view. uncovering opportunities for alpha across public and private markets, while anticipating unforeseen risk, has powered our rise to a top ten global asset manager. partner with pgim. the global investment management businesses of prudential financial, inc. . welcome back macy's and home depot out with q4 results and the indication is a pretty mixed bag macy's beat but sales weaker than expected but home depot missed on both the top and bottom lines and issued weak guidance tomorrow, we hear from tjx and

lowe's as retail sales in december plunged and tax refunds have been disappointing too. matt boss, retail analyst. our own courtney reagan, great to have you both here. courtney, real quick i mean, the home depot one in particular, this is a company that has done so well for so many years what is it telling us? >> this was interesting. so i will point out, there was a sort of technicality with the earnings there was this impairment charge that was a pretty decent chunk, a one time thing so i think in a way, you can almost put that aside as opposed to calling that a miss because of the way we have to classify that from an accounting standpoint the sales were weaker than expected and what home depot ultimately said is it was weather. if it's cold, if it's wet, you're not doing a lot of home improvement projects outside your house wet is actually a bigger prob m problem. also, the hurricane so $400 million in sales from the hurricane the year before they

knew they weren't going to make up but fell further short than anticipated. >> and macy's among the others what do you think is sort of the main hurdle for them this year >> i mean, the main hurdle remains sales. this is another mixed bag for macy's and i think really the theme across the department stores legacy brick and mortar models are continued to be under pressure so store sales up and gross margins down over 100 basis points gross profit dollars continue to be down mid single digits. what's holding the stock up today is the $300 million of sg&e savings outlined for 2019 and that allowed them to guide the earnings in line with the street >> is that the right strategy, matt obviously, you're always looking to run more efficiently but when i think about the success walmart had by investing heavily and the little sheet he carries around to make sure he doesn't become the next big retailer to go by the wayside, what do you think is the long-term plan for

macy's here? >> the reality is it's their only choice. i think all of these models need to continue to invest because retail is changing faster than it ever has. the reality is you need to win on value and you need to win on convenience and the question is, how do you do that if you were built as a brick and mortar retailer and now you have brick and mortar moving to e-commerce at the fastest pace we've ever seen the battleground is fierce amazon continues to gain share you talked about tjx coming up tomorrow the off pricers gain a tremendous amount of share so the brick and mortar models are under siege and it will continue for a number of years. >> one point is that macy's has tried to do its own off price model within the store but what they found is that it is increasing spending but with the shoppers already there it hasn't brought in a new shopper. and that is another one of macy's hurdle.

they have platinum level shoppers responsible for 30% of the sale it's that occasional shopper they need to work on grabbing? >> are you getting read through with what happened with the consumer last months great confidence data this morning and yet that december retail sales report looks like less of an anomaly is it go back to weather court or >> the ceo says he thinks the consumer is healthy but watching it he feels like there is some noise in the data and when taked to cfo at home depot, carol, she said she believes the housing market is what she would call stabilizing. we went through this period where it was really accelerating and now it's stable. >> matt lowe, last word to you as well. >> the consumer's narrative appears to be softening a touch. i think the reality is that and what courtney cited with the occasional customer is exactly what's happening the last 12 months, you had an underlying macro dynamic that benefitted retailers versus 2017 and now fully lapped that and i

think back to when macro playing field. the question is do we take a step down but even if we're stable, i think the benefit underlying is less so than it was a year ago. >> neutral on macy's overweight on tjx. thank you so much for having me. courtney reagan, thank you for joining me i join tyler and melissa in a minute on "power lunch" which begins right now. >> yes, it does, kelly, we'll see you over here on "power lunch. i'm tyler mathisen along with melissa lee, new at 2:00 today, the fed chair powell on capitol hill warning about head winds for the economy and the mounting deficit the s.e.c. wants elon musk held in contempt of court musk is fighting back. it all boils down to a tweet and is this going badly for tesla and investors? we'll explore that one is housing about to hit a slump ahead of the crucial spring selling season? you heard courtney talk about that we'll explore it mor