>> thank you arts. i think you can't ignore the up tick on legends. the worst week for stocks this year. the dow is on the verge of a four-day slide. we'll take a closer look at what's happening. kroger sinks as earnings and sales miss. will their investment pay off in the long run or is the stock dead money >> and transport skid. a hot retailer gets the cold shoulder and one city wants to save cash. that's all ahead in rapid fire today. we begin with the sell off. bob pisani running through the numbers for us. >> well off to the lows. the market leadership stocks are the ones that are weak. take a look.

you can see semi conductor stocks, industrial stocks and the transports on the weak side. there has been concerns that the market is stalling out and these leadership groups have been weaker in the last couple of weeks. you see with the s&p down about one percent. all the market leadership down worse. some of this may be rotation. the defensive sectors, utilities, consumer staples in the last couple of weeks not as bad at all as you can see the rest of the market. so some concerns here. rotation the key issue. maybe we should be a little more understanding. remember, the bull market is turning ten years old on friday. the annualized return is 17.5% a year. that is way above the historical average of about seven percent. people have been saying that they ought to temper their returns going forward.

>> before we get into that, i wanted to ask you about whether that earnings recession may not be coming after all. >> what we are looking for here is we made a big thing about this in february, earnings tumpabled expectations in the first quarter and are now negative. we were up five percent for the first quarter. it lumtplummeted to a negative territory. i think that if we stay at this territory we will end up in a positive quarter for the first quarter. that's because the companies are very conservative in their guidance. they tend to beat by about three percentage points. i think there is at least a good chance we can avoid an earnings recession in the first quarter. >> the number still aren't great, but we'll take it. welcome to the exchange.

the euro dropping to a two-year low against the dollar after the european central bank introduced more easing measures. u.s. household networth fell in the fourth quarter. households did experience gains from real estate. that helped to moderate it. all of this as we approach the ten year anniversary of the bottom. while stocks have posted huge gains more has been left behind. >> that group being the banks. they have actually participated in that revival since the bear market low. if you look back, this is the one big section of the market that has not retained the peak levels from before the crisis. if you go back to the end of 2006 before the crisis was starting, the big banks like citi group and also bank of america, morgan stanley and goldman sachs is trading below

the peak levels. itis a vast gulf. if you look at financials as a percentage of the overall s&p 500 it is pretty stark. it went above 20% at the peak in 2005-2006. it's interesting, it reminds me a bit of after the 2000 tech bubble burst. the same amount of time since that peak and nasdaq was down 40%. most of that has kind of worked its way back. that is how long it takes for the center point of the excess before a crash to come back. >> we should be glad it wasn't the index as a whole. it has been challenged. the rally around that has been amazing. let's talk more about the role that the banks have played and the recent down turn in markets. let's bring in chief market

strategist. welcome to you both. let me quickly call out the performance by jp morgan which is the outliar. it is more than doubled since '06. is it just because jp morgan never got crushed at the very lows >> jp morgan held up better than almost all banking. certainly the big ones, they never really had the down turn or got pounded as hard as the other big banks. not only did it help but it put them in a great competitive position to gain a lot of market share and get stronger when other banks were kind of licking their wounds. jp morgan was active while others were trying to heal. >> bank of america and citi group and wells fargo. for citi group in particular we are way below the levels we saw 13 years ago. why has this persistently not gotten back to the levels but in

recent years been such a bad performer? >> it has had fits in starts from expected revenue growth that didn't quite materialize. international is a big part of the story and has grown faster in the u.s. while that fell apart. when i look forward on citi group i see it is trading in a dramatic discount. i think the international operations are going the right way now. and we are seeing growth in north america. i look at citi group and i can envision more potential earnings upside versus current expectations than i can for most other banks. >> what is interesting to me is that other than the rally right after trump was elected, this is some of the fits and starts that jeff is talking about, we saw a great run by the banks. warren buffett owns these five or six of these big banks.

he knows it. he still says he would be happy to add to them at these levels. you look at a place like value act, morgan stanley's last big investment thinking it would make 15% returns. the big value players think this is the place to be in the long run. >> cheap relative to the market. i think they still provide you with some play on the exposure to the u.s. economy. they are going to grow with the economy. they are safer now. does it mean they have less leverage to good timesal i think that is what the market tried to sort out. >> let's talk about the overall markets. we have hit a skid this week. what are your clients saying >> i think our clients very much are attuned to the fact that we went down too far too fast in the fourth quarter last year so that recovery is probably too quick. i think we are at a point where investors understand when you move that quickly in one direction you have to take time

to digest that move. i think we are at that period now finding ourselves spending time between 2750 and 2,800 until we see the manifestation of things we started to price in. we need to see that turn into good news. >> i wonder as people think now about the realistic returns in the stock market all the way for the last ten years kind of circle back, no one thought 17% a year was feasible. when it comes to the banks it was a loss decade. can you be in the u.s. stock market and do well as long as the economy is expanding or are people going to talk themselves on the sidelines and say i missed the gains and will look elsewhere in. >> there are those people that exist that have been out of the market for this decade of returns whether the s&p has more than tripled. i think if we had 17.5% average annual returns the next ten years will not be close to that. we will get something much

closer to what is average. that is still good and will still outperform having just the fixed income focus. i think you want to stick to your plan. >> people would have said those returns can't persist. of course, they moderated over the next five years. nothing about this rally has made sense. you have to keep having this wall of worry to climb. to me it seems like it is still there. >> i completely agree. it is a long cycle. the 90s was the longest cycle to date. if you dial back, you have half the historical rate of return since then. this is kind of the payback for a pretty bad decade. >> thank you all. i'll see you in a little bit. we have a news alert on air bnb. >> air bnb is acquiring hotel

tonight. the two platforms will continue to operate as separate entities. this does bill itself as an end to end travel platform. ceo and co founder has said they would be ready for one this year, but a source tells me it is unlikely to happen in 2019. buying hotel tonight is air bnb's biggest push into the travel industry. so far these names haven't moved much on the news. >> are they doing this because they want the growth or they want a different kind of opportunity? >> i think it fits in with the narrative that they are trying to justify the latest valuation. they are trying to do ebe an eno end travel platform. they are infringing on the territory with this move. >> everyone wants to be the one

stop shop. now we have had the proliferation of so many services. >> thanks very much. here is what else is coming up on "the exchange." >> ahead, clean up in aisle nine. kroger sinks as sales fall and it's outlook misses. the transports could be sending a message to the markets and it's not a good one. and a tax code typo is costing some businesses millions. this isn't just any moving day.

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stay connected while you move with the best wifi experience and two-hour appointment windows. click, call or visit a store today. in just the last few minutes executives wrapped up testimony before a u.s. senate panel on data breaches they suffered. the ceo making bold statements about the dangers the u.s. is facing. listen. >> these attacks are no longer a hacker in the basement attempting to penetrate a company's security perimeter, but instead are carried out by increasing lly sophisticated criminal rings and nation states that are well funded or the military arms of nation states. >> let's bring in will herd of texas. he chaired the i.t. subcommittee during that 14-month investigation into the breach. it's great to have you here.

welcome. >> thank you. >> it is reported thatd data from 143 million americans has never been found. she said the consensus is that it was stolen by a foreign government. you have said equi fax could have done more but are companies doing enough here? >> i think in the equifax example they didn't do enough. there was a known vulnerability in their software that they didn't fix by issuing a patch. the software went unpatched so i think it was 145 days for an institution that large and that sophisticated, that is actually unacceptable. large companies, you are facing almost 54 million attacks a year. that is a crazy amount of attacks. but you need to be doing the basics. the basics is make sure that the software that you have is patched. make sure the people using your systems have strong passwords

and make sure the people using your systems also don't click on things they don't have. people shouldn't have access to things they shouldn't have access to. we can be improving the exchange of information between the public and private sector. when you have nation state attackers coming after our companies, the only way to defend against that is with another nation state. i think the way we exchange information can be improved and this is something that the department of homeland security is looking in, the intelligence community is working on and this is a way to improve the cooperation. >> let me ask you because this feeds into this story that iranian hackers have hit hundreds of companies in the past two years. as you said, there are some with vulnerabilities like equifax should be punished for having that in place. what kind of standards are we talking about? >> there has always been a debate about should there be a national breach standard that if

your digital infrastructure is used to expose somebody's private information, what should the punishment -- there hasn't been an agreement up here in washington, d.c. on that. right now we are dealing with about 47 different state laws that manage how a breach is handled. and we need to have a national breach standard. but everybody needs to recognize that you are not just a threat now because someone wants to steal your credit card information. when you look at how equifax. i never opted into that. it is used to get into bank statements and things like that. we have to rethink who should have access to an individual's information. who owns that? in my opinion, it's the individual. we have to work together between the public and private sector.

>> it's a great point. i wasn't aware that they were working on a breach standard. especially for disclosure that would be a minimum. you have to ask about what is going on on the border. you have a front row seat in texas. i was surprised you didn't support the president's emergency declaration. the numbers are staggering about the backup down there. why don't you support that effort and if he doesn't declare a national emergency what recourse is there >> i supported technology, manpow manpower, physical barriers. congress voted to add 88 miles to the physical barriers that are there. we have a major problem. last your $67 billion in illegal narcotics are coming into the country. border security is a problem. this saz problem that existed from previous administrations. the power of the purse should

reside with congress. >> i saw that you said there is a thousand farmers at risk to having land seized. it is a complicated issue and stakeholders have a lot to lose. how quickly can they get efforts up and running this situation is at sort of a flash point right now. >> this is using technology in order to understand what is coming back and forth across our border. this was deployed in one area. since it has been deployed for a couple of months, you are seeing no longer any illegal activity coming back and forth in that area. we need to have technology and manpower. people are coming in illegally, we need men and women in border patrol to grab those people. we have the money to pay for them. we don't have the bodies. the reason we don't have the bodies is because border patrol is losing a lot of people. i introduced a bill last week to

fix nuances within border patrol because the men and women have a tough job. they need to make sure that they are being supported. we need to be focussing on a strategy on how to solve this terrible problem and not just focus on one tool. and we also need to make sure that we are addressing root causes which is violence and lack of economic opportunity in the northern triangle. three weeks ago when we passed that appropriations bill, more additional funds for state department and usaid to address the root causes in other places. we have seen unprecedented level of cooperation with the mexican government, as well in certain parts of the border. >> i'm not sure how much money can change some of the awful situations down there. it's a great conversation. thank you for joining me. really good to get your point of view on these topics today. >> thank you. coming up, bio tech is falling after fda commissioner

who sped up the drug approval process has stepped down. we'll talk about what is next for the sector coming up. and shares of burlington plunging on disappointing fourth quarter results. is this another tale of the retail haves and have notes? duncan just protected his family

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hour. gaming stocks are in the red following a notesaying activit by high roleers was down nearly ten percent year on year in the fourth quarter. those names are down nearly four percent. shares of chinese internet stocks falling. alibaba moving lower. alibaba is down about three percent. also american eagle outfitters down after the company reported revenue shy of estimates. it gave weaker than expected current quarter guidance. over to sue herera for a cnbc news update. in washington, first lady melannia trump onerring women from around the world with international courage awards. >> as i have said before, i believe courage is one of the qualities we need most in

society. it is what propels us forward. courage is what divides those who only talk about change from those who actually act for change. french cardinal announcing he would hand his resignation to the pope, this after a court found him guilty of failing to report accusations against a pedophile priest. the court handed him a six-month suspended prison sentence. and queen elizabeth posted her first instagram image, this from the science museum to help promote the summer exhibition. she shared a letter from charles babbage to queen victoria and prince albert. i love that story. you're up to date. guys, back to you. >> thank you. about 30 minutes until power lunch. what is coming up? >> i'm still getting over the queen on the gram.

>> i want to see -- >> we have a full show coming up. we have congressman tom reed of new york. he just met this morning. we'll get the latest when it comes to negotiations with china. also, the other trade wars that might be brewing, canada and mexico. and also european auto tariffs. we'll get the latest from him. it was an amazing interview. this really captures the notion that the very, very wealthy should be taxed more. we'll get the low down. why should i pay a lower tax rate than my assistance. >> how many are there in the world? >> this is a great discussion. >> we'll see you then. here is what is ahead on the exchange. >> coming up, transports stall with airlines grounded.

our radical idea in car buying is paying off big. would you rent a pillow or blanket? it's all ahead on rad repifi. issues facing our world, el what do you see? 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.

let's catch you up on a few stories that should be on your radar today. it's time for rapid fire. here with their takes are michael santoli. if you are coming all the way here -- >> and first up today, the dow transports are riding a ten-day losing streak on pace for the worst week since december. we haven't had a nine-day since the financial crisis. here is the performance just in the past year. american down 41%. >> and it has mostly been airlines. the streak is definitely pronounced. the fact that you can go down ten days and it is only four percent off the high. it is not as if it has been plunging every day. airline is a drag. fed ex and ups have been weak for a long time. i wonder if it is the market --

>> i don't understand. what is the problem? because they have people peeling away, using u-haul vans? >> the returns of all of this high volume get it to me now, the burden is falling on them perhaps. >> we will talk more about this on a number of ways. we have american ceo coming up on power lunch. we will talk about the fed ex angle of this. let's talk burlington. shares are plunging on a mixed earnings report. they had weaker than expected comps. they missed on revenue. what do you guys make of burlington >> they have pushed more into the toys category which you thought or would think might help them during the holiday season. they are seeing sales up over one percent. no toys r us this year. if you look at their unity, burlington is over ten percent. they are both in the same category. i like a good deal but i'm not a

big burlington shopper. i'm more of a tj max rr type of girl. >> now all of a sudden investors are taking a second look. >> i think main issues are really on the bottom line. when you look at rising costs, labor and freight are both going up. a lot of the off price businesses are feeling effects of that. they don't charge enough. >> they are all complaining about freight prices going up and fed ex can't make enough money. shares of caravana are on a tear thmpt ceo was on squawk alley to talk about the tesla's move could impact their business. >> i think it's great for us. i think anytime you build a new business, you want to deliver something that is better for the customers. i think goal number two is they need to understand it is better.

tesla has an incredible mega phone. >> i think it is up like three x in a year. this is an incredible story. what is going on >> i think it's the typical silicon valley solution to a problem everybody has which is it is really annoying to buy a car. >> used car. >> 40 million cars. it's the ultimate huge total addressable market story. there are 40 million sales of used cars every year in the united states. what can you do but grow >> what's interesting here, uber coming down the pike, carvana investors are excited about the idea of buying cars and the fact that nothing that has to do with disrupters -- >> can that sustain for a while? >> soon as next day delivery, anything that doesn't mean you have to sit in the dealership. this is targeting i think younger people.

i would still want to test drive a car. >> 96% of millennials think they would want to test drive a car before they buy it. >> but you don't get the good coffee. >> what good coffee do you -- >> really good coffee at the car dealerships. next up, rent the run way is going beyond renting designer dresses. the company is partnering to rent blankets, pillows and home decor to customers. are people really going to want to pay for this kind of service? >> i think it makes sense to do it because you are freshening up your wardrobe and whatever is in the background of the pictures. >> i see it from the perspective. i'm not sure if it is mass market success. >> kate rogers needed this

service. i think the average customer is around 29 years old. this will bring in a younger demographic. they will be renting things like throw blankets, pillows. i don't know i would want to rent those but at a younger age i would have. people may want to freshen up their apartment for a party. >> there is such a funny thing happening which is the freshening up in a modern way of an old concept. it is a little different. sometimes you can rent appliances or furniture. it just seems like a way to get more comfortable with something that is necessary when you are not able to just splurge on redoing yourhome all the time. >> you mentioned the word splurge. west elm isn't one of the more expensive furniture options. >> they are pretty pricey. >> how much can you actually rent these for >> why would you pay a monthly subscription model to never own

anything >> especially if you are renting a pillow for $50 and it retails for $100. sometimes the math makes sense if it is a luxury item. >> you should have your own cut off date. by age 24. >> they are rental bundles. it's part of the subscription service. you can get a new dress and a hand bag and a throw blanket. they may test other items. >> the answer to the people saying i don't need that many different outfits a month. this can be one of your choices. >> you can buy it at a discounted rate. >> last thing, is there antic factor with the fact that you are reusing pillows? >> i think people are in. >> finally, the city of brotherly love is set to become the first major city to ban cashless stores. the new law requires most retail

stores to accept cash as payment. it will take effect in july. what is going on here? it has become a class issue, the idea that if you don't have a credit or debit card it seems to exclude you. it's interesting. it is kind of a class issue and a lib. -- >> the one way to have true privacy is with physical cash. you want to make sure you don't lose that. >> a lot of restaurants have been experimenting with this. i believe it is an environmental move. i know shake shack tried this. when you want to use cash it is for low ticket items like a burger, fries and a shake. high school kids maybe don't have a debit card. they got pushback from it from different groups of people and ended up doing away with the

stores that were testing this out. >> so barbados has been experimenting with the digital coin for a while. they find the more cash that circulates, the more likely people are to get robbed and that there is this kind of underground culture of crime. they believe that switching to a digital coin can solve for that. that is not what philadelphia is doing. >> situations where cashless can help and others where it can hurt. every time i see ban cashless. you have to think if we are not allowing you not to take cash. we have a surprise rapid fire. tim cook met with the president yesterday as part of the workforce advisory meeting. here was trump thanking the apple ceo. >> put a big investment in our

country. we appreciate it very much, tim apple. >> so tim cook just a few moments ago changed his twitter handle to tim apple emoji. if i were him i would be flattered to be so identified with the company. i wonder if that plays well with apple. i don't feel like apple is a place where the president is that popular. here is tim cook sitting next to him. we know they talk all the time. maybe they feel like this is not what they want their ceo to be doing. >> i do think you don't want to take it so seriously that you take -- >> it's refreshing. >> i'm shocked. >> i love the clip. it made me laugh. >> we have all been there. we misspeak on tv all the time. >> every 30 seconds. i wonder if they have as much a sense of humor about it within the company.

>> i saw ivanka laughing emoji about it today. i guess she is taking it -- >> as long as everyone is laughing i guess it is okay. thank you all very much. shares of kroger are plunging today. we'll see if the cinha can successfully compete against amazon. we're back in two.

shares of kroger are down more than ten percent today. the company reporting a miss. here to drill down is columnist at the wall street journal and wolf research managing director and senior analyst. you said kroger is down for a reason, not so much company specific but that the industry trends are just too much to deal with. >> it's a perfect storm for our supermarkets right now. you have amazon coming in most obviously. we have european discounters

coming in and putting pressure on prices. costs are high. transport and logistics costs are high. consumers are changing the kinds of foods that they want to eat. supermarkets have to respond to that. it's a million things at once. i think kroger has been innovative and bold in responding to this. the pressures on the industry are too much. that is why the stock is down today. >> do you agree with that? if kroger says maybe we can play the sound from the cfo when he talked about some of the reasons why they had this mixed news. take a quick listen. >> with our launch of krogership that we made investments in which was part of the margin erosion, we would expect to be able to serve 100% of the united states by this time next year. >> that was the cfo. he is basically arguing these are investments so that we can be competitive in the future. we have seen it payoff for wal-mart and target. why won't it payoff for kroger

>> i would argue it is not paying off for the other two. as you take a step back, there are so many changes going on in the food and home and consumerables industry. i call it destination unknown. we are embracing this idea of omnichannel but no one understands how to make money. i was just out at the conference in las vegas and it was a big topic of conversation, met with some grocery people out there. we are going this direction but no one makes any money. if you look at pea pod which is part of stop and shop, they have been running that for a couple of decades. they don't make money. i think the challenge is, it is great to make the investments and go omni channel. it seems that is where the customer is going. we are not making money. you saw that in kroger's report and the challenge you have and it is a huge challenge is amazon is redefining consumerables

industry. everybody is moving that direction. even wal-mart is struggling. they said it on their conference call that their omni channel business is losing more money than they thought it would. >> how would you talk about what is happening in the grocery category specifically because i say if i'm kroger and some of these others i wait this out. one will be profitable, we at least are an existing company that brings in cash from locations and real business. if that means prices are going up after everybody goes out of business, it might be uncomfortable for a while, but we will be left standing. is that snnot going to be the case >> people have reasons to go to their stores. the amount of stuff i buy online now versus five years ago, coffee beans, laundry detergent, you can get it all delivered to your house. if kroger doesn't respond they

can be in real trouble. they have no choice at all but to make the investments. they are investing in delivery, order online and pick up in store. they have a stake in the company built in robotic warehouses. they bought home chef which is a meal delivery company. they are saying however you want to get your groceries, we'll find a way to get them to you basically. that costs money. theworry that scott was saying is how do you make money on this and their margins are under pressure. the sales are decent but the margins took a big dip. they didn't want to give specific guidance. so that's a question. you make the investments because you have to. can you do that profitably. >> you is a $25 price target with an under perform. when would you feel comfortable saying you can see a price towards a higher price for kroger >> i think for the entire

industry as we said before it is hard to understand the path to profitability. the biggest new entrants is amazon. they have a huge advantage as we pay them # $19. the challenge you look at kroger is where analysts go to the numbers. for a decade the company has seen their margin fall about ten basis points a year. that was offset by very strong sales somewhere between three to five percent. as we move out, it's hard not to think sales are softer and that margin pressure remains. discounted cash flow shows us the stock is worth about $12. and so kroger's got a tough, tough road in front of it. >> guys, thank you both. we will continue the conversation. great information. thank you so much. four words were left out of the current tax code and are

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. welcome back a quick check on the markets

off session lows dow been down more than 123 points same for the nasdaq, about three quarters of one percent. here are the sectors that are the weakest. financials down almost that amount real estate is up by about 2/3 a percent. under the new tax law, businesses are to be able to write off the cost of construction in the first year but restaurants accidentally left off the list. the mistake called the tax code typo and cost hundreds of thousands of dollars our ylan mui explains. >> looks like we're ready for lunch. >> reporter: matt who runs this burger king franchise in west virginia spent $150 remodelling this back in 2017. >> we changed the roof structure and had to raise the wall, now this very same a glitch means renovations like this one no longer get a big tax

write-off and plans to build two new stores on hold. >> this is an error and that is the frustrating part about this. the actual depreciation rate changed back from 15 years to 39 years, which then means that we no longer can get that faster depreciation rate and we no longer get our 100% bonus depreciation. >> washington is working on a correction, but it needs support from both republicans and democrats. >> this is a 15 minute fix let's do it. let's get on and not play partisan games with something that affects jobs and every single member's district. >> ylan mui joins me now this was literally a typo. there was no intent whatsoever behind it. >> absolutely not. i talked to one of the staffers who actually wrote this law and said he said they realized it just as this bill was coming out for a vote and there was no way to fix it at the last minute so both sides do acknowledge that this is just a technical correction the problem, kelly, is that this

is not the kind of bill that democrats want to get behind because they feel that it's helping out republicans to solve a problem in a law that democrats don't agree with in the first place. >> 15 minute fix and sounds like it could be. >> it's been dragging on for months >> that's a great story. thank you so much. ylan mui in washington health care outperformed in 2018 and up 3.5% this year me 29.rst in01 so backing medicare for all. is there more pain ahead that's next. i can't believe it.

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welcome back one of the best performers last year now one of the worst. we're talking about health care. it was one of the bright spots in 2018 but now the medicare for all chatter may be scaring investors away somewhat. let's bring in anna gupta. how much do you think this talk, whether it's the bill they voted on in congress or the 2020 rhetoric, how much is that affecting these stocks because i'm surprised that would be holding them back they would take it that seriously but maybe they should. >> yeah, i think it's headline risk and it's definitely created a sell-off

it just continues. medicare for all, as you say, the very left wing liberal proposal out there, single payer and then the drug manufacturer rebates from secretary azar, health and human services. created a lot of noise with big pharma companies as well as the health insurance a senate hearing done by grassley and wyden at one point and then at some degree, the recent resignation of the fda commissioner i think probably hit the bio pharma stocks more but mixed on that one. >> let's go back to what you said about the drug rebates. why would insurers suffer if these go away? i read that actually, insurers can pocket the rebates and because of that, they drive patients to drugs with the highest rebates so they can take that if rebates go away, ironically, it's health insurance companies that could suffer and policies for everybody could go up.

>> yeah, so you have to put it in context it's over half a trillion dollars of spending with pharma right now and growing by a lot medicare, they definitely pass through everything back to the seniors. it does benefit healthy seniors. those filling scripts at the point of care get hit with high out of pocket costs but there's nothing more that the insurers can do to subsidize that you'd have to take money from taxpayers or from healthy people and move it to those that are filling scripts more commercial, there is a bit of it that's pocketed by the insurance. that's how they make the margin. >> i don't think many people realize you're saying that health insurers make their profits from rebates >> some of it. and a lot of it is passed through to employers and to subsidized premiums through you and i, however, the percentage, they pass through 95 plus percent but that's going to just

kind of make that profit so they have to find a different way to do it they're already trying various different things and having different net cost models, changing contracts >> fascinating >> 85% margin. it's not outrageous. they've got to make some money if they're doing anything useful which i think they are. >> finally, there was news saying joule is pitching itself as anti-smoking tool and under fire for getting team tooeens a vaping scott gottlieb is now out. could we see juul as a way to incentivize workers to choose a healthier form of smoking? >> smoking cessation are programs that health plans sponsor them juul's challenge is can they prove that it's not moving from one type of addiction to another type of addiction?

secondly, there's a brand issue as well associated with it, but it's a possibility if the safety concerns are not as bad as everybody feared. >> ana, great to see you ana gupte, thank you that does it for "the exchange." time to join tyler and melissa for "power lunch." >> see you in just a moment. i'm melissa lee with tyler mathisen new concerns about global economic weakness. the ceo of american airlines, his stock down 40 plus percent in the last year can he turn things around? the latest on trade. the china deal and new nafta from a congressman who met with robert lighthizer today. "power lunch" starts right now >> hey, everybody. how are you? welcome to "power lunch. down day for stocks. off the worst level of the day, we should point out. fears about a global emi