negative impact on stocks, although they've bounced off their worst levels of the day. the dow had dropped below 26,000, currently sits at 25,980 s&p 500 above 2,840 and still green across the board, though the russell has dipped negative again. kelly and "the exchange" now thank you, scott hi, everybody, and here's what's ahead this hour. a busy hour. president trump is set to take questions at a news conference with brazil's new president. trump already said he is, quote, strongly looking at nato membership or some other alliance with brazil we'll bring the whole thing to you live. oil prices are surging this year to nearly $60 a barrel, and that's pushing some energy names up by even 40% we're going to talk about which are flying too high and which you should own. and felt felix is turning down the apple's new streaming service and a peloton of its own. that's in "rapid fire. first, the markets. right, because there could

be a little bit of a headache because of bloomberg headlines coming out, saying that perhaps trade talks are not progressing nearly as positively as some would expect or maybe look forward to for that reason, the dow industrials at their highs today were up about 195 points we got as low as only being up eight points and dropped about 130 points or so when the headlines initially came out so an eye on the markets, but still on balance, we are still about a third of a percent to the up side for all of the major indices. if you look at the ceob volatility, we were at five-month lows, lowest levels in stock market volatility since the beginning part of october when markets were at record highs. we'll keep an eye on stock market volatility. and of course, when we talk about china trade headlines, we often focus on some of the stocks that have become proxies fairly or unfairly with regard to china trade caterpillar's one of them, still up about 0.5%, but you can see we did move a little bit lower

well, this is a one-year chart, but still, caterpillar and some china-centric stocks taking a little bit of that impact. we'll keep an eye on those in the afternoon trade. kelly, back to you. >> dom, thanks welcome to "the exchange." i'm kelly evans and the ten-year treasury yield is back above 2.6%, i know, not high, but still. the fed kicking off its two-day meeting on interest rates today and oil hits a four-month high after the opec meeting extending cuts ad fedex is looking for insight into the health of the global economy. let's drill into this with bob pisani at the new york stock exchange still climbing a wall of worry here. >> let's put up the s&p 500 and reiterate what's going on here the bloomberg story essentially says the chinese want assurances that the tariffs are going to be lifted if they make the trade deal, and obviously that's a sticky point in the negotiations, so it tells me they're getting very close to making a deal here there's a few sticking points. i wouldn't put too much in it. you see the market's already bouncing right here.

kelly, if you want to figure out where the markets might be going, try watching what a bunch of fund managers are doing and do the opposite. every month, bank of america merrill lynch conducts a survey of global fund managers, widely watched on the street. trade community loves watching their long and short positions because they're contrarian indicators take a look. for nearly three months, the market's been going up but fund managers have turned defensive, long cash, long reits, utilities, health care, all defensive stuff. they are short equities in general. allocation to stocks dropped to their lowest level since september 2016 they're short industrials and the uk and the eurozone. what listen, if you're a con train, this is a sign to sell those reits and utilities and buy industrials and european stocks. the managers said their most crowded trade, short european equities again, this is another classic contrarian indicator not surprisingly, short european equities is showing signs of playing out. look here. after underperforming in the united states for a year, europe is now outperforming the united

states this month! that's what i mean when i say contrarian indicator kelly, back to you. >> bob, i also like your point about what might be playing out with these trade talks, and is it a sign that we're closer to a deal also want to ask about fedex are people going to be looking there for insight on the global economy, bob, or is fedex dealing with some challenges of its own with amazon and everything >> well, they are dealing with challenges of their own, but independently, remember, fedex went down 30% in the fourth quarter because, number one, concerns about china slowing down, and number two, just concerns about europe slowing down now, the good news is they're going to come out after the bell and they're going to certainly talk about this. and yes, the chinese lunar new year was weaker than expected, but the market's already priced all that in, kelly so my hope is this is all going to be very well known. unless the news is dramatically worse than we already know about, i think there's a very good chance that the stock could do fine in the after hours, each with them acknowledging the global slowdown to an extent it's already in it, pretty much. back to you. >> bob, thanks very much

bob pisani now, with the fed's decision on interest rates looming tomorrow, let's get to cnbc's own fed survey with a look at what the expectations are. steve liesman is sheer with the exclusive results. >> yeah, kelly i hate to affirm our producers, marie and sandy's idea that i can do everything quicker, but three quick headlines. >> nail it down. >> one, fed survey takeaways, less growth, less fed. tariffs hurt a lot, but china trade deal will happen three. threes are out no 3,000 on the s&p forecast this year or next, no 3% on the ten-year yield that's it. >> that's it yesterday you told me that people did actually think some of the respondents did think a rate cut was a possibility. >> yes by the way, back to your threes. 35% now forecasting in 2020 a rate cut there's still 51% who says it will be a rate hike. this year it's about 60% saying there will still be a rate cut, down from 78% , and 13% say there's going to be a cut, a sliver

it's a minority position, but you have a few friends around you. >> and we've seen firms like jpmorgan recently throw in the towel on their call for rate hikes, right >> there were guys who were up to four or three rate hikes. i thought there would be possibly two, and we'll be watching very carefully the statement tomorrow and the statement of economic projections to see how much that comes down it might have come down more, but i don't think the fed goes in leaps so, they had three forecasts they went down to two. we may go down to one, possibly zero, but that would be a jump. >> one at a time. >> exactly. >> stay right there. let's bring in kayla tausche with more reporting on what's exactly happening with the u.s./china trade talks. >> the market's whip sawing a bit on conflicting headlines about the status of u.s./china trade talks. on the one hand, you have the "wall street journal" reporting that trade talks are in final stages between the u.s. and china and that there are at least two more negotiating rounds first, the u.s. trade delegation led by the treasury secretary and the u.s. trade representative will go to beijing next week. and then the "journal" reports

that the week after that, the chinese delegation led by advice premier leo hoe will be coming back to washington, but this story is hitting just after "bloomberg report"ed that there are some u.s. officials who are concerned about the level of pushback that china has demonstrated against some of the u.s.'s demands now, it's important to note that both of these stories can be true talks can be in the final stages and also there could be some concern about china's willingness to accept some of the u.s.'s demands we'll see how this plays out over the next few weeks, but one of the things that could play out in addition to the discussion over enforcing this deal, whether the u.s. would be able to enforce it in a one-sided way or whether china would demand the ability to levy new tariffs as well if the deal falls through. in addition to that and language around structural issues, i'm told there could be an issue around the level of purchases, that china's level of purchases over the next few years, that the president wants more, so that could play out as well, but we'll see what these teams

negotiate over the next few weeks. kelly? >> so, kayla, what both stories have in common is the idea that these talks are moving to their final stages, but if the u.s. isn't satisfied with beijing maybe pulling back on some of this, could that be a problem for reaching a resolution here >> or if china isn't satisfied that the u.s. is recognizing what it already is doing china wants all of these tariffs to go away u.s. officials have said in congressional hearings and in interviews that they're not quite sure they're there yet they want the ability to levy new tariffs if china doesn't fall through that's not sitting well with beiji beijing. >> kayla, thanks kayla tausche. let's bring in rick santelli from the cme, davis russell from the brookings institution. steve liesman is still here on set with me. you said by the way you had some reporting. >> yeah, 80% of our respondents think there's going to be a deal between the u.s. and china this year. >> wow, okay. >> and that underpins a lot of their view for the economy and the market this year you take that away and i think that changes the calculus. >> and rick, we talked a little

bit about lately how strange yields are when you have the one-year yield not much below the ten-year yield at this point, we were just talking about rate cuts and all of that. what do you think trade means for what the fed might do next, if anything? >> well, i think that a good chunk of what rates are experiencing is overseas relative pressures, with bund yields, gilt yields, all of them pressuring down in japan, but i think there's an aspect that will pay attention to global growth, and i do believe that trade is a much bigger issue for the global horsepowered growth numbers than many think. i really believe that the u.s. is a very important part of global trade, even when not directly part of the puzzle. i heard the survey i love our survey, but i think 3,000 in the s&p, 30,000 in the dow, and close to 3% sometime this year is still much more possible than many of those

respondents because of the trade implications. >> playing poker with rick threes are wild. >> let me bring in david wessel. speaking of bonds, i thought it was interesting. you said even more important than the size of the fed balance sheet is the duration of the bonds it holds can you explain that in as wonky terms as possible? >> sure, there is a focus on how much the fed will let the bond portfolio shrink and there are concerns that at tomorrow's press conference or a subsequent one they'll put a date sometime at the end of the year, maybe $250 million less than they have now on the overall balance sheet. but there's an unresolved question about is the fed going to be holding a set of bonds that are equal to the maturity of the treasury's issuance or are they going to move more to short end? and i think that will have implications for both what difference it makes to yields -- obviously, if they hold fewer long-term bonds, that should put upward pressure on yields, but also how prepared they are for the future the argument for being short is

that then in the future, if you have to use something like quantitative easing, your first move can just be to go buy long-term bonds and sell your short-term bonds -- >> twist. >> -- as they did during the crisis. >> that's the old operation twist, right, sort of? >> exactly. >> all right, they're back into the pretzel, steve, to try to get us out of this odd situation where interest rates are pretty low, yet wages are strong, the unemployment -- is it just going to be a lag before this feeds through to the overall inflation number or is there a reason why that's not going higher? >> the key is getting they want to get rates up a little bit without ammunition without tearing down the economy or stopping the expansion they want to do what david's talking about, which is to i think put the balance sheet in a position where it's as small as it can be and as short duration as it can be in order to allow for the things that david talked about. one thing i do want to say to rick is, rick, our survey respondents agree with you, and this is an emerging line of thinking, which is how much the tariffs have been responsible for weakening the global

economy. 45% say that that is really one of the things that's out there so, it's a big circle here in the sense that you have the tariffs have hurt the global economy, the global economy have in turn been dragging down u.s. growth, and i think that's why, by the way, when the "economist" first estimated the impact of the tariffs, it was a minimal impact and i think that's growing beyond what they originally estimated. >> rick, i wonder if that means tariffs lead to rate cuts. it'd be interesting. >> you know, i understand and i do agree tariffs are important as a matter of fact, they are so important that longbefore income tax was around, it paid many of the bills of the country. but i don't think tariffs, per se, are the issue or the sticking point like growth isn't accelerating i think it's more psychological. i think that many managers -- you know, why is capital spending so low at the same time i think it's all part of the same picture i think that when we get more forward visibility, all these

things will fall into place. and i really do love the notion that tariffs is the conversation now, because if we are close and tariffs would be middle in the discussion, so in my opinion, just looking at the fact we've taken out all these tops in the s&ps, the top in october, november, and december, it's very difficult for me not to think we're going to build momentum and there's not going to be a raft of people and investors that think they missed the last train out of bull market that are going to be jumping on. >> david, we'll give you the last word. >> i think the tariffs aren't the only issue europe is not doing well and china seems to be slowing down tariffs may be part of the china story. that's not the europe story, and a lot of what's going on with yields here, the stock market and the dollar, is that we're still doing better than the rest of the world. >> fair enough germany ailing again guys, thank you all. david wessel, rick santelli, steve liesman. appreciate it very much. here's what else is coming up today on "the exchange.

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welcome back lyft and levi's are putting the spotlight on dual-class share structures leslie picker has a look at the track record of those kinds of public offerings and joins me now with that. what do you find >> hey, kelly. it's interesting that the two companies going public over the next two weeks plan to make their debuts with two classes of stock. lyft's founders and levi's' founders' descendants own a special class of shares with super voting rights. proponents of dual-class structure say they help the company invest for the long term, but prominent investors have been pushing back billionaire paul singer called lyft's structure lopsided corporate governance and said that the public ownership must mean public accountability and the counsel of institutional investors which represents firms like blackrock and wellington called the structure egregious and said that lyft should phase it out with a sunset provision

a recent s.e.c. study found that companies with sunset provisions for their dual-class structures had better relative valuations than those with perpetual dual class structures, kelly, so, that would suggest that it would be beneficial to phase these things out over time because the bin fit of holding that super voting majority diminishes as the time goes on post ipo. >> that's super interesting. so if you start with it and it's temporary, that means the dual class share structure would only exist for -- did they say a period three years, five years? anything like that >> it seems like the benefits of it diminish after about five years. over time. and there are numerous studies that show that a single class of share structure is kind of the ideal, the holy grail so to speak for ipos in that it does outperform numerous studies show that they do tend to outperform companies with a dual class share structure, but if you must have one, the s.e.c. says, and some of these institutional investors say, then phase it out over five-seven years, and you know,

no love lost if that's the case. >> i wonder would they ever make that a requirement if it's the s.e.c. conducting this study and they've basically allowed this but kind of frowned upon the practice, at some point would they say to companies you have to do it this way >> interestingly, investors have been lobbying the exchanges, the new york stock exchange and the nasdaq to make that a requirement for listing on their exchange to say -- >> but it's hard any one of them is going to say we're just going to lose the business unless they do it all at once. >> and you know they have such a fiercely competitive business that anything they do that will drive someone somewhere else. >> absolutely. >> and that was the issue with alibaba. they couldn't list in hong kong because they had something akin to this and hong kong wouldn't allow that that's prohibited on their exchange. >> and didn't they change those rules? >> in hindsight they did, after alibaba listed here at the stock xayg so it's really about the business and the question is who's going to win this battle over time. >> it's a good finding and we'll see if action is the next step

but for now, maybe they can nudge shareholders, nudge the company's founders in that direction. leslie picker, thanks. oil prices, meantime, hitting their highest levels in four months earlier today. the sector the second best performer this year and some names like chesapeake, hess and devon energy are up more than 35%. here to drill down on the strong year is mike kelly, seaport's global securities partner and head of energy exploration and production research. mike, welcome. >> hey, kelly. thanks for having me. >> this is a pretty big rally. the latest headlines talk a little bit more about some issues on the opec side. why do you think crude has been able to keep rallying? >> yeah. so, we came into this year, we were actually pretty bold up on the macro situation, and it's proved to be right so far. if you remember, at the end of last year, crude was really beaten down, but it was clear to us that opec just wasn't going to stand for it. they were more interested in a higher price they maintained its market share. had kind of a mini opec meeting

yesterday and our favorite cartel didn't disappoint it said we'll continue to balance the market, keep crude off the market, which is, you know, keeping prices elevated right now, which is obviously good for these stocks. >> mike, why aren't they afraid that just cedes market share to the u.s. >> yeah, they tried it in 2014 it was a disaster. they thought they could really kind of beat down these shale players, so they thought wrongly at the time were the high-cost operators. that resulted in basically the u.s. getting more efficient, continuing to put production on the market we had $26 oil in 2016 so, they've backed off from that strategy and have said we'll be the balancers of markets saudi came out yesterday, their energy minister, and said listen, we'll produce 300,000 barrels less than our quotas in april and may. so that kind of tells you their strategic outlook right now. >> and there's wti crude just under $59 a barrel, kind of at that $60 mark almost and gas prices have obviously

followed it higher what are your favorite recommendations or ways to play the energy space right now >> yeah, the one that we love, kelly, is just the teflon stock in the ep sector is cabot oil and gas. we're about to wrap up a 130-page report we do every year on capital efficiency after we get the 10k'soutlook through everybody's reserves, and cabot is the clear winner year after year in terms of just posting the best returns in the e&p space, which is really what it's all about. so, cabot is kind of a no-brainer to us it's little more gas levered on the oil front, we like two. one, pdce. this is a name, pdc energy kind of gives you the best of both worlds right now, gives you growth and free cash flow. and a really cheap name, too, about an 8% free cash flow yield on its 2020 numbers. it loved that one. and then kind of a comeback name here, a stock in the permian,

parsley. pe is the ticker, a name that has underperformed a lot of these permian peers. it now trades at a discount to its permian peers, historically had been at a premium. it's got a great inventory, very capital-efficient company, looked really good on the '18 numbers, a pretty big performance uplift >> something for everyone in there, mike. thanks, appreciate you joining me mike kelly. coming up, the first u.s. exchange to introduce bitcoin futures now says it will stop listing them we'll talk about what's going on there. plus, a cocktail with the push of a button two major beveragemakers teaming up tma ts ppo kehihaen is it a fad or a brilliant business move? we're back in two.

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welcome back to "the exchange." here are some of the movers this hour dsw is sharply lower following a surprise quarterly loss. revenue in comp-store sales did beat expectations, but the shoe retailer is down 13.5% today it's the exact opposite for arts and crafts retailer michael's, one of my favorites. the stock is up nearly 13% now after earnings that came in above estimates. and the semi stocks which we mentioned yesterday are still moving high. nvidia and micron leading the way. the sector isup 22% this year. now over to sue herera for a cnbc news update hi, sue. >> hi, kelly and everyone. here's what's happening this hour boeing's ceo says they are taking action to ensure the

safety of its 737 max jets in the wake of two crashes that killed 346 people. the aircraft maker releasing a video of dennis muilenburg and his message. >> lives depend on the work we do at boeing, and that demands the utmost excellence and integrity in how we do it. our teams embrace that responsibility with a deep sense of purpose every day as we connect family, friends, and loved ones with our commercial airplanes. pope francis has declined to accept the resignation of french cardinal felipe barberan as archbishop of leon he was convicted for failing to report a known predator priest to police. he traveled by bicycle monday to present his resignation. and there is a new baby in elmira, new york, and she has a big story to tell. harper buckley weighed 15 pounds, 5 ounces at birth. that's double the average weight of a newborn in the u.s. and the

biggest baby born there in at least 30 years the 1-week-old is doing very well, thank you very much. so cute! you're up to date. that's the news update this hour kelly, back to you. >> pains me, sue. >> i know. it's like, ow. >> god bless her. >> exactly >> thank you, sue. we'll see you later. >> you got it. >> here's what's ahead on "the exchange." coming up, netflix says, no, thanks, to apple the s.e.c. fires back at elon musk want a mojito? there's a keurig machine for that and the decline of the chicken nugget it's all ahead in "rapid fire. servicenow put our workflows in the cloud. this changes everything. you're right sir... everything. no not everything, i mean you're still blatantly sucking up to me gary. brilliantly observed, sir. always three steps ahead. six steps ahead. sixteen.

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welcome back let's catch you up on a few stories that should be on your radar. it's time for "rapid fire" and julia boorstin is in the house, dom chu as well, morgan brennan. great to have everyone julie, this is straight serving it right up for you, because the big story of the day is that netflix ceo reed hastings says they will not allow content available from netflix on the

apple service to be announced next week. he says we'd rather let customers watch content on our service. boom >> i think it's not a big surprise here. we'll learn more about what apple is planning on monday when they make their big announcement, but the reality is that netflix wants to sell directly to consumers. they don't want to give a 30% in the first year to apple and then 15% in subsequent years. makes a lot more sense to go directly, and if apple's creating a rival service, kind of makes sense to go their own ways. >> it's crazy only because of the deloitte study, right? 69% of households now pay for a streaming service versus 65% that pay for traditional linear television. >> wow. >> so there's a tipping point at play right now so when we talk about streaming, huge news, but it also speaks to this changing landscape that's been an evolution now for probably five to seven years. >> but it is worth noting that a lot of people do pay for both. >> right >> and netflix is still the giant when it comes to streaming, sort of the first ones out they have the most leverage and they're also the company that's been bypassing apple's app store in the fees there, too, because they have the leverage and

people are signing up for their service. they don't necessarily need to be dependent on the ios app. so i'm not necessarily surprised to see they're taking it one step further with a streaming service. >> it just shows they're in the stronger market position, and i guess, is it a blur for apple? did they ever expect netflix would sign up? as we know, this is basically apple's foray into competing with them. i don't know what they think they're going to be able to do, unless they can match their $20 billion a year spend. >> i think they'll do something different. based on the shows they've already announced and we know they're already making, it will be smaller, more premium, popular more similar to hb onk than to netflix. >> is there room this is the interesting thing. i know we've got to move on, but in the cable bundle, you have hundreds of channels, but when it's streaming, we have just one or maybe two that doesn't make sense to me. >> what's interesting about that angle is because over the last couple of weeks, you saw a lot of traditional media companies like viacom and cbs tank on the notion that at&t with its directv now streaming service would cut back on some of the content. so as we talk about the idea that original content is such a

king in this world, there are distribution platforms that are now being a little bit more persnickety about what they put on there, thereby controlling costs not just for them, but maybe for the consumer as well. >> and controlling the fate of some of the lesser netflix is the giant apple's goal is to be a giant and not be one of these also rands, basically. >> apple was late in launching apple music, but apple music has grown so phenomenally fast, it indicates that you can't count them out. >> but it's the dna. we all had the ipod because we had the mp3. i mean, that's how apple really came to be and i don't see that with content. >> people do pay for these services through apple now and that's what they're pushing to do more of. >> i think this will be a key thing to watch i know julia will be there next week it's going to be original content, but also apple as an aggregator, all of these other content -- >> can they have a special sauce that isn't out there already let's talk about tesla elon musk's battle with the s.e.c. continues the regulator telling a judge monday that musk has never

sought approval for any of his tweets despite it being a condition with his settlement prior to the tweet of taking them public in august. tesla shares are at 52-week lows, down 15% since january what happens next? >> well, we don't know what happens next, and that's the reason why for as long as we've been covering this stock, it's been a roller coaster ride for investors. there is an argument being made at this stage that had it not been for elon musk's social media interactions, that there might have been a more direct and linear path, perhaps even higher for these shares if they focused on the execution of making cars in an efficient way at a profitable level. with this at play, you wonder whether or not investors will run out of patience at some point, but there are acolytes who really fiercely defend elon musk and tesla. >> here's jim cramer, who has a great piece about this today, saying that the judge at the heart of this faces three choices. she can remove musk from the decrce job. she could make this violation

criminal and sentence him to prison, or put a special master on the board to control him. here's my question, if the judge were to do something like this, which still seems like an extreme outcome and say there's a new ceo that needs to be put in at tesla, maybe alan mulally, would shares not rally on the idea that you have a process guy who could come in and maybe take over things? >> i think either way, i think whether it's a new ceo or whether it's a coo, which a lot of investors have been calling for at tesla and which has been something that's worked very well at his other company, spacex, could go a long way in terms of all this. i can't help but think that the judge is going to have to make some sort of, if she determines that, you know, he is in violation, and she's going to have to make some sort of, you know, example out of him. >> there's such a cult of personality around musk as this genius founder he has the special sauce he's able to do things other automakers haven't been able to do i think if you were to bring in a different kind of ceo, more traditional automaker ceo, that would negatively hurt the shares. >> i know. it's an interesting question, especially if he sticks around, but they need someone on the

process side. >> it feels like extra attention and drama at a time when it's like that much more crucial, going back to dom's point, whether they ramp up production, they do so in a cost-effective way, that they continue to raise cash here, but then add this drama to the mix it just seems like it's taking away from that sole purpose. >> even sergey brennan and larry page brought in eric schmidt at one point. >> exactly quickly, because this is julia's favorite story, cboe will no longer list bitcoin futures once the current contract expires and joined the exchange. apparently, they had a hard time competing with rival cme, but it tells us demand overall is kind of down. >> it seems there was a bubble everyone was jumping in, trying to make it part of the sort of accessible, different asset classes. and it seems like that bubble is starting to burst or deflate >> i would say from a trader's perspective, i would have thought the exact opposite i would have thought that cboe futures, because they represent one bitcoin per contract, would have traded a lot more liquidly because it was cheaper to do see. the cme contracts are five

bitcoin apiece, and when they were five-figure prices, it's a big nut to swallow. >> absolutely. >> it cannot be -- so, i don't know what this says about the overall picture, but it sure feels like it's a rough way to go with bitcoin. >> just one of those putting a stake in the ground, now this. okay, next up, brew it yourself is taking on a whole new meaning. makers of the keurig coffee brewer and budweiser are teaming up to launch a k-cup machine for cocktails. this machine will be available in three states after a successful pilot program in st. louis. it will cost about 300 bucks the flavors include mosko mule and old-fashioned beer and cider. >> wow i think this is kind of really smart here i'm not sosure i'd be -- also i'm not a drinker, so maybe i'm not the best person to ask but it's going to make it so easy for people to serve their house guests a cocktail and you don't have to have everything sort of there and -- >> like i have no idea how to make any of these cocktails. i don't think we even have a wine -- >> but if you have a four-pack,

you could spend $16 just on a mixed cocktail at a bar in new york city, so. >> right. >> i don't know. julia, do you have a keurig machine at home? >> i do not. >> i do not either >> and one thing i hear a lot about in california, where there's a lot of attention on environmental impact, those keurig k-cups, if they're not recyclable, they're so bad for the environment. and with this, i guess the real question is you're making a beer or cider out of powder and carb nation is it going to taste gross seems like it might taste -- >> butte keurigs are ubiquitous for coffee. >> you'd need to have a separate one because you wouldn't want to mix your coffee and your beer. disgusting. >> tell me, they have a problem with the k-cups that people are pushing back against their disposability. they're talking about launching deodorant in metal recyclable jars, too. maybe they have to solve that, too. >> seems like they're moving in that direction we're seeing more coffee companies do the compostable pods, but for this, i think the real question is how does it taste? does it really taste like a cocktail or a beer

>> maybe we'll do a taste test here and decide. finally, music publishers are seiching $150 million in damages in a copyright infringement lawsuit against peloton. it alleges the company used songs from drake and lady gaga and others without permission. comcast has a stake in peloton, but the music really is vital to the popularity of these classes. >> this is really fascinating, because we've seen it in terms of the music streaming services before you know, the fight between the company and the publishers you've arguably even see it in terms of video streaming, but this is a whole other thing, right? i think. because it is video streaming essentially that you're talking about, a $39-per-month service with those bikes, but -- >> what do they do >> i think they should potentially be going after them, but i think it will be unlike anything we've seen before -- >> will peloton keep up so 24ek they can keep -- >> it's a hardware company and a software company and a media company.

it's been named one of the disrupters and as this start-up. part of that is figuring out how to play by the rules and this is a perfect example of how they have to figure out how to make their own music or get more popular music that people want to listen to. >> to your point, you talked about how music is integral. you talk about soul cycle. insiders have said how music is at the soul of soul cycle. and if you look at soul cycle's website right now, they have apple play lists that you can download from apple music to go along with your soul cycle experience so, maybe they've already thought about this music thing with apple music in partnership with them and everything else. so maybe this is peloton's next evolution. >> our expert peloton rider torrey says peloton has a feature like that, but they're in studio. >> sure, they're not streaming on a device. >> we didn't get to chicken nuggets. demand is flatlining. >> they're vegan now.

>> you can make them with the keurig -- >> that would be at my house. >> when is the last time you've had a moscow mule? >> they're so popular right now. >> i'm wondering if kelly has had. >> what is it, rum, they queel >> vodka. >> there you go. julia, dom and morgan, thank you all. we're just minutes away from a joint news conference between president trump and brazilian president bolsonaro. "the exchange" is back in two. -it's all about the big picture. with miguel, our certified financial planner™ professional, we looked at business insurance, our mortgage, even our plans to adopt. -it's not about this fund or that fund -- it's about us. -welcome to our complete freedom plan. -it's all possible with a cfp professional. -find your certified financial planner™ professional at letsmakeaplan.org.

welcome back we're waiting for president trump to start a news conference with president bolsonaro of brazil eamon javers is there live for us what are we looking for? >> reporter: that's right, a lot of focus here will be on the body language between these two men. this is their first face-to-face meeting and also president bolsonaro's first bilateral outside the country of brazil, so it indicates the degree to which the brazilian side is ratcheting up the importance of the relationship between brazil and the united states. this is a president who is very

much welcoming this new right-wing brazilian leader here to the white house he views this as an opportunity to reset relations between the united states and brazil this is a brazilian leader who has been called the trump of the tropics, who's been seen as very favorable to trump, who campaigned as a pro american candidate for the presidency in brazil, and this is a situation that this president here in washington welcomes. we saw some good body language between the two leaders as they got together in the oval office earlier today exchanging some soccer jerseys and we'll see whether or not they're able to announce some trade and agriculture deals. officials briefing reporters in advance suggested that there were some trade and agricultural deals that had been agreed to by the two sides, prepared to announce today officials have not provided any specifics on what those might be. so we'll wait for that as well, kelly. >> all right, eamon. let's bring in cnbc contributor michelle caruso barrera. i have whiplash from brazilian politi politics we had such a left-wing regime

so many years and now this guy who's we're calling trump of the tropics. >> so far to the right never has any brazilian president wanted to align himself so closely with the u.s. president. so eamon is right on this guy very much wants to be seen with the president. he wanted his first trip outside or the first bilateral to be with the president of the united states he's an open admirer, big plan they had similar platforms -- law and order, anticorruption, going against the status quo there's so much corruption in brazil, it really worked for him. >> how much work does brazil have to do in order to -- >> so much. >> what kinds of reforms is he trying to push for the economy >> so, there's two really important things one is pension reform. spending on pennings eats up a huge percentage of the brazilian budget that's got to change they've posted that they want to raise the retirement age for everybody in the country to 65, and you're going to have to work for 40 years and for the first time, it seems like the brazilian population might be willing to do that because they've sold it as something that's actually good

for the poor, because the pension system there is actually very regressive. most of the money goes to the people with higher incomes, rather than lower incomes. so, that would free up a lot of spending to improve the infrastructure in the country, which is pathetic and awful and leads to people not being able to get to work capacity utilization, a very wonky term we use, is maxed. they can't load another train, can't load another boat. and so, they've get a permanent governor on their growth when it comes to the economy because they need these reforms so desperately. >> and the stock market is flying ahead of this what is it, 100,000 was the level yesterday? >> yes, the bovespa hit that level for the first time ever, so very good in local currency the currency has fallen, however. so if you're a dollar-based investor, it's not as good a lot of dollars left when he won because foreign investors sold on the news because they know he's got very big hurdles to get through. >> what would the u.s. interest be here, especially with the disaster that's playing out in venezuela and the remarks the

president has already made where he's going to strongly consider apparently trying to either get brazil to be a member of nato or to come up with some kind of similar agreement? >> yeah, so, venezuela will be top of the discussion, i have no doubt, which shares a border, and they have a refugee crisis like colombia with people coming over the border. and bolsonaro is very, very antisocialist, so he's taken a very strong position against, so security is going to be extremely important and top of the list of the discussions that they have here. >> i wonder why, and it's a great point that the stock market is the flip side of the coin of the currency there, but i could understand the market rising in anticipation of some of the pro growth reforms you're talking about. why would the currency, which is usually more of an indicator of expanding deficits or something, be struggling? >> my interpretation of that is when the election happened, the market had already rallied so dramatically, a lot of foreign investors looked at the situation and said, he's got

great plans, he wants to privatize the law, he's got a treasury secretary straight out of the university of chicago, all good things. however, we're not sure he can actually achieve it and get it through the congress so there's some doubt there. but locally, there's huge belief. >> and what about the example in argentina, where you had macri who came in a couple years ago to great fanfare, glowing "economist" article, stock market run-up, international community very much focused. and that's kind of petered off. >> so, mauricio macri practiced incrementalism he said he was going to go slowly he went way too slowly, slowly, he didn't reduce government spending as a percentage of the economy, and as a result, the market abandoned him and they had a run on the currency, and it was a crisis all over again that's a lesson for bolsonaro, that they have to move very quickly. the population just won't take it it's just been so bad for so long economically for the average brazilian that they've got to free up room in the budget with the pension. they've got to reduce corruption

by doing more privatizations, so that way, that economy can function better. >> and eamon, we've heard about why bolsonaro's so interested and attracted to coming to meet u.s. president trump what are u.s. interests u.s. inh new brazilian government >> reporter: there is a huge economic interest on the united states part and they view this as an opportunity to reset what they call a north/south alliance in the hemisphere. and fascinating dynamic, brazilian vips have been taking the opportunity here to engage in a brief impromptu press conference with the brazilian press here the american vi pechlps not doig that so this is the kind of event that puts you on the world stage as a brazilian leader. they will take full opportunity of the advantage to do that to be seen in the rose garden and then for the united states, obviously there is a military and economic need for 24

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we are waiting for president trump to begin the news conference and we'll bring to you live as soon as it begins. in the meantime the white house has released a against of its progress thus far. ylan mui has the latest. >> the administration's main argument is that trump's policies are working and the only way to stay at 3% growth is to keep them going take the tax cuts. are the report scissors that real disposable income was up $640 over trend by late last year because of the new tax law. on deregulation, the white house says it slashed $3.2 billion in costs since president took office and the cost of prescription drugs is down. the white house says the price of drugs compared to inflation is down 11% from the pre-trump trend. the administration warns there is one thing that could throw the economy out of whack, and they say it is socialism looks like the president is about to speak, so i'll happened it back to you >> thank you very much here is the president at the podium with the president of

brazil today i'm very thrilled to well do president bolsonaro of brazil for his first visit to the white house. president bolsonaro, i want to congratulate you again on your tremendous election victory last october. it was an incredible feat and truly incredible challenge and the end result was something the whole world was talking about. i also know that we'll have a fantastic working relationship we have many views that are similar and we certainly feel very, very true to each other on trade. i think brazil's relationship with united states because of our friendship is probably

better than its ever been. and i want to congratulate you on your recovery of the horrible deal and the people of your country know it, the tremendous bravery you've shown for two centuries, the american and brazilian people have been united by shared values including and enduring lover of faith and family and country the united states was the first nation to recognize brazil's independence in 1822 and in the second world war, brazil was the only south american country to contribute troops to the allied war effort. today the united states and bliz are t br br brazil are the two largest economies. we are in close agreement on continuing challenges facing our

region and we have a historic chance to forge even stronger ties between our two great nations. this afternoon the president and i discussed many of our mutual priorities including venezuela brazil has been an extraordinary leader in supporting the venezuelan people's efforts to reclaim their liberty and their democracy. brazil has helped so much. along with the united states, brazil was one of the first nations to recognize venezuela legitimate interim president juan guaido. i also want to express our profound gratitude to president bolsonaro and all the brazilian people for their efforts to provide humanitarian aid we also thank you for allowing the united states to station extensive aid on the brazilian

border together we could and have been really very happy to feed thousands and thousands of starving venezuelan people they have appreciated it and if the maduro forces would step aside, it could be a truly great and successful humanitarian project we call on members of the venezuelan military to end their support of maduro who is really nothing more than a cuban puppet and fin finally set their people we are also united in the support of the long suffering people of cuba and nicaragua the twilight our of socialism

has arrived in our great country which is doing better than its ever done economically the last thing we want in the united states is social iism. so president bolsonaro, i will tell you that we'll be consulting and talking a lot we'll be working on our both problems and assets and we are making tremendous strides. we had a great meeting today as i told president bolsonaro, i also intends to designate brazil as a major nonnato ally or even possibly if you start thinking about it, maybe a nato ally. have to talk to a lot of people, but maybe a nato ally. which will greatly advance security and cooperation between our countries. our nations are already working together to protect our people from terrorism, transnational crime and drugs and weapon

trafficking. also human trafficking which has really become something that has come to the forefront of crime horrible, horrible situation. we look forward to an even deeper partnership in working together in our meet beiings we also discussed our strong economic ties grounded in thel principle of fairness and reciprocity. my favorite word, reciprocity. we're committed to producing trade barriers and supporting innovation across a range of industries particularly energy, infrastructure agricultural and technology the president's willingness to free the economy is a right way for brazil to achieve economic growth and our great countries are ready to go when the table is flat and free to improve our business relations,