look for really interesting stuff, unfortunately, kate fazzini. thank you. that does it for "the exchange." join tyler and melissa for "power lunch" which begins right now. see you in a few, kelly. tyler mathisen new at 2:00. disney ready to unveil the grand plan to take on netflix. what's at stake. marijuana in america the battle over vaping and e-cigarettes former fda chief scott gottlieb will join us live and esg, three little letters getting a lot of attention on wall street why you need to know about this and how it's going to impact your portfolio "power lunch" starts right now >> welcome to "power lunch." i'm tyler mathisen i hope you have a good day stocks though, not under pressure this hour, despite renewed optimism over those trade talks with china headlines from europe about negative interest rates fueling the declines, as you see, but

the declines are very modest lyft, however, is rebounding following a steep sell-off but the stocks way below its ipo price of $72 a share now at $61 but remember the first day of trading it was up there in the upper 80s, kelly. >> wow, tyler, thanks a lot. fed heads weighing in on the trade debate and president trump's top economic adviser larry kudlow might not see another rate hike in his lifetime let's get to steve liesman with these headlines. steve? >> reporter: thank you, kelly. good friend and former colleague is entitled to his own forecast. as for the fed, the fed officials actually make policy they don't make lifetime forecasts. what they don't seem to be planning in the way of interest rate hikes at least this year. the president said the normalization process is over. it's done. we're now totally data-dependent but the fed has to tread carefully due to low inflation the vice chairman on the federal reserve said monetary policies in a good place right now but

growth is going to slow this year do overseas weakness like brexit and the u.s. fed president said the worst fears for the economy have receded we have seen firming in the data, by the way and the fed has the space to be patient. as for the kudlow comments, larry will live for sure, for a very long time and almost certainly be wrong eventually. when the minutes released yesterday said there is a group in the fed that sees growth rebounding from the low levels this quarter and in that case, they do see the possibility of rate hikes this year i do think if the administration is right on there being better growth this year, probably going to be wrong on there being no rate hikes and fairly certain it would prefer that being wrong on growth to the downside and having rates on hold at the same time, tyler. >> steve, thank you very much. all these fed comments come as we're just hours away from the official start of the earnings, can you believe? just hours away.

minutes, get on it. welcome. good to have you here. i can't contain myself >> you're waiting on jpm and wells fargo. >> and disney, all of these companies. >> how many quarters we've done this 35 times four. >> still enthusiastic about it folks. they're going to start saying get moving, so let's say interest rates off the table what is the worry in the economic outlook >> i guess earnings, right they've lowered expectations the irony is the expectations probably lowered enough that the numbers will come in above greatly reduced expectations, so you might have some upside the risk is still u.s. eu tariffs, unsuccessful resolution to the u.s. and china and then some, maybe unusually strong data if that were to pop up somewhere along the way that

would change peel's pople's perceptions about the fed. >> it's challenging to say interest rate risk is off the table. if we were in a more balanced position and didn't have the inversion of the curve and the expectation they had have the next move being a cut, maybe we could make that argument i think we've seen investors jump from one side of the boat to the other dramatically because the biggest fear of last year was that the fed was on auto pilot and continue hiking if we were more balanced, i would say interest rate risk is to that degree and then if anything, now the expectation might be too optimistic. too benign, too optimistic and a little bit of too much risk. significant inflows into fixed income a demand for bonds so to say the interest rate risk is off the table might be a concern moving forward. >> internationally, ron, we've seen strong performance in china, in particular and other places in the world. the china data seems to have turned more recently with the

pmis, ppi and cpi coming in line are you more optimistic or feel like that's an area of the so-called boat where people are sort of crowding on to the other side at this point >> i don't know if they're crowding it just, emerging markets of china started to outperform since last november. so a pretty good run there and china down 50% from 2015 so there could be some additional room there. assuming they continue to stimulate their economy. having said that, probably want to look more at individual stocks than play indexes anywhere in the world. but global growth is slowing and the fed has made that point rather explicitly that the rest of the world is slower than the u.s. and could act as a drag on growth going forward certainly see that in europe where the preponderance of negative interest rates reside as tyler mentioned, that is a concern that spreads beyond the confident even though good news on brexit lately. >> it would depend on inflation. even this morning, producer price index may be high for the month but the core trend still

down pce, time and again you look at these gauges that would be the biggest upset to the whole global financial markets, wouldn't it >> i think what's always interesting, try to peg where inflation is coming in one of the big variables is energy, right? as we see right now, if you look at a year over year comp, starting point for oil versus a year today, considerably lower and starting to pick up in the headline numbers or core pci, pce, cpi, not showing that yet but let's go out six or seven months where our base effect is that oil having collapsed in the fourth quarter to the $40 range or at a $60 or $65 range, that's going to be a substantial increase on the year over year basis. >> but the inflation that is occurring to the extent that it's occurring is showing up in areas where the fed has no control. energy prices, education, and health care. fed cannot do a single thing about that with ratings. >> we go into earnings season. these are the costs that corporations face, right

along with rising wages. so what are we going to hear on those conference calls when they start talking about the effect of rising oil prices and rising health care costs and also a stronger dollar, by the way. >> this has been the concern since late last year, right? you are not going to get favorable comps when it comes to earnings on the year over year basis because 13 points of the 26 percentage point increase we got in profits last year was from a tax cut so now, it has to be organic growth and then has to pick up in order to presumably get multiple expansion even though we've seen some of that so far this year. >> ron, thank you. appreciate it. latest pharmacy chain taking a stand on the vaping epidemic it will no longer sell vaping products, but the cbd oil, non-cannabis products. the former fda commissioner. dr. gottlieb, thank you so much. you just left the job, so glad to have you here on set. the fda has not come out

formally with regulations, per se, on cbd or the fda will hold hearings some time next month what's your stand? is this stuff safe >> look, we don't know is the bottom line and if you have cbd for breakfast and for lunch and for dinner, you're ingesting it, there are health consequences and it's a cumulative effect it's sold as a drug product. we've seen risks associated with the drug product high concentrations and doses, there are health concerns. what rite aid is doing is selling as a cosmetic. if they're just making beauty claims, they could be just doing that and not violating federal law but if they make drug-like claims that it helps treat pain or other things, they'll probably trip over a federal regulatory line quickly. >> is cbd oil supposed to make you prettier how? >> i think the hype has gotten ahead of the science right now people are putting it in

everything we see it in pet foods, for example. a lot of what the behavior we've seen is cbd oil and pet foods based on the presumption, if you leave your dog all day long and calm the animal. there's no evidence for this >> are we in a snake oil kind of moment for cbd >> well, look. there are approved uses for it there's an approved drug, so we know that these compounds, when they're delivered in specific formulations and certain concentrations with the therapeutic effect and other neurological diseases with cbd oil but a lot of uses we see in these sort of consumer products put forward right now, they don't look very credible there's certainly no science to support it, that would rise to the level of fda satisfaction. >> can i ask you about the e-sie e-cigs as well there's been concern about teen use and getting more involved with vaping and leading them to cigarette use but if e-cigarettes can transition people off of a more harmful product into a less harmful one,

is it something that should not be banned, are they concerned about regulatory risk or should the fda be clear about these are the cases in which this could help public health and in which it could hurt. >> if rite aid was concerned about regulatory risks, they would pull the combustible products out and when we did rite aid and other establishments, a 9.6 violation rate selling combustible product cigarettes to children they're not good from a corporate compliance standpoint with traditional tobacco products i'm not sure why they're doing this when you look at a typical convenience store, about 30% of their sales are combustible tobacco products with a 15% to 20% gross margin i assume rite aid from a sales point is not able to ban tobacco. >> so they'll ban e-cigarettes. >> and that's not what you want. because while they're not safe, they're less harmful than

tobacco. e-cigarettes have a gross margin double combustible tobacco but presumably were not selling a lot anyway and not taking a big hit. >> i hear on the radio, a lot of ads for a brand of e-cigarette where the, it is a personal testimonial that talks about how happy they are that they got off of tobacco by using this branded product. whose name rhymes with cruel when you hear those ads, how does it make you feel? >> the question is whether those ads make a claim that crosses the regulatory line and they've been carefully lawyered so i'm not going to comment whether they're crossing a line or not maybe stepping into a gray area with the kinds of ads they're doing and making modified risk claims i don't think that's something the regulators want to target. if you're trying to educate currently addicted adult smokers about the potential off of combustible tobacco with a less harmful product, that's not low

hanging fruit from a public health standpoint if that's how they try to position the product. that said, they haven't come through to make modified risk claims around e-cigarettes but i think we accept they're not safe but less harmful than using combustible tobacco. if you're using combustible tobacco on an e-cigarette, probably not getting a health benefit. you completely switch off of a combustible tobacco product on to an e-cigarette. >> e-cigarettes, i understand that they are, to the extent they have nicotine in the juice. >> not just the nicotine >> what makes them unsafe? >> we have data now and i talked about this at a congressional hearing last week where we see effects on tissue in the lungs that look like they're premalignant changes, direct affects on tissue. again, i don't want to be alarmist and say that they're going to cause cancer at the same rate that combustible tobacco are, they're a lot less risky than combustible tobacco but not completely benign.

they still have health effects, direct effects on tissue and animal studies and seen some of the data in human studies. that's why we were concerned about kids because you didn't want kids initiating for the first time on to nicotine through e-cigarettes and get the harmful effects of e-cigarettes and somehow, the kids now could perceive the e-cigarettes as safe and feel like it's something they can be using. >> vaping is actually one preferred way people consume or ingest cannabis. and i'm curious, you know, we talked earlier before and you have not gone to a dispensary but the claims made in dispensaries in connection to what is being billed as medical marijuana are sky high whether it be it stops the growth of tumors in people and treats arthritis, et cetera every single thing under the sun can be treated by some thc product. do you think the fda should step in or the role is there for the fda to step in to regulate medical marijuana? >> fda has taken a role in terms

of people making claims. all the claims are, no evidence to claim, certainly from the satisfaction of the regulatory process. what the agency chose to enforce is over the line claims. you know, claiming marijuana can shrink pancreatic tumor. everyone accepts that is impossible in terms of the regulatory scheme, there is no federal regulatory scheme right now it's illegal under federal law. in the future, you would contemplate a federal regulatory scheme, unfortunately, people would look towards the fda to be the regulator of choice and regulate the thc as a drug and this a recreational component with tobacco, i don't think that's preferable. i think that would be a bad outcome and inevitability, some start talking about that because there's a tension between the federal government and the states now over the long run isn't tenable. it's going to be need to be resolved. >> what about the push to legalize in every state?

33 state hav states have recrear medical marijuana. >> you look at the brain developing, it has an impact on executive function and working memory and there's a cumulative effect if people are using thc on a regular basis, it's going to impact their function at work and we're conducting a very, you know, concerning natural experiment in this country by exposing so many kids to thc and nicotine, long-term effects. we already see data with higher rates of schizophrenia with thc, there are health effects of these products. >> and then there's measles. before you go, figure out what the public health solution is to a problem that people first started talking about almost 15 years ago and only this year are the cases starting to take off in a huge way? >> i think the public health solution unfortunately is going to be see more mandated restrictive behavior in terms of acquiring vaccination and their schools and contemplating some federal mandates on local districts to try to get

vaccination rates up >> is that constitutional? where de blasio just said in some communities like brooklyn, he's going to start mandatory vaccinations, preparing right now a fight against this and we saw a similar initiative in rockland county. >> it's unfortunate if we go down that group and plays into the fears of people who don't believe in vaccinations with a statement and i think the preferred student is education but we see vaccination rates tipping below 80% that leaves for measles where you start to see outbreaks before the threshold. you start to see the outbreak there is so we are reaching a dangerous point where there's enough pockets of undervaccination where we have a potential for a national outbreak of measles. >> is there a national emergency declaration? in other words, like you said, if you can't go out there with a regulation or a forced vaccination. that kicks in some day cares that do their own things but going to be piecemeal.

>> you could declare a public health emergency if you had a national outbreak, you would do that but there are ways to contemplate, for example, tying federal aid to districts based on certain vaccination rates so there are ways you could do this from policy to incentivize local districts and compel and encourage vaccination. i think the preferable route is to educate and talk about these issues because i think if you come in with some kind of mandate, it's going to play right into the fears of those who have reluctance to begin with and i think that would be a bad public policy outcome. >> dr. gottlieb, thank you so much earnings season does kick off tomorrow tyler is excited we have results from j.p. morgan and wells fargo. 140 quarters that would have been, guys, between the two of you. we have a look at what one firm's unconventional approach to predicting earnings says about the quarter's numbers, that's later but three words gaining traction on wall street. orshldisn vests ou lte orshldisn vests ou lte that's next. but to us,

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there's a lot of buzz words over three words environmental, social, and governance last year's proxy season, these three were the largest category and s&p global launching a new ratings system to evaluate companies based on these three factors. here to explain how it works is susan gray of s&p global welcome. >> hi, kelly. >> is this related to the announcement that you're launching an s&p 500 esg index >> well, this is a separate

announcement from our ratings business the announcement day was from our indices business and that continues a long stream of sustainability indexes that we've been implementing over time but this is an esg evaluation that is a forward looking evaluation of a company's preparedness with respect to environmental, social and governance risk and it leverages out analytical teams, expertise in sectors and regions and interviews with management and a board member in order to really get underneath what is going on in the company with respect to esg. >> and it's driven on both sides. so there's investor demand as we've discussed and hear about all the time for this. there's also company demand. so what you guys are doing is similar to the ratings business model where you might assign, you know, a level of investability or i was going to say junk, trying to use the nice word for high yield. in this case, the companies will

come to you, ask for this rating, pay for that, and then this operates much like, you know, the bond ratings business, right? >> this is not a credit rating it's a different analysis because it really is looking at how a company is dealing with its, all of its stake holders and the impact that the company's relationship and its stake holders can have in terms of a rebound back on the company. positive or negative so we're looking at it through a very different lens from the lens we look at in a credit rating but it's a similar model in the sense that we will have a meeting with the company and discuss this issue with the company. >> do the companies have to come to you and apply to get this rating and if they apply, what, if anything, do you charge them? >> well, i can't talk about what we charge them because my role is analytical and i don't look at that but the companies do come to us and say, we would like to go through this evaluation service >> so they will pay?

they will pay to receive this rating >> they will enter into some sort of contractual arrangement with us to receive it's a score between 1 and 100 and it looks at, first of all, there's a risk atlas that allows us to align the starting point of each industry and region across the world and then we look at the company's profile and we look at 12 factors in that profile, which really dig into environmental, social, and different governance indicators. beyond that, we then sit down with the company and review the profile assessment and drawn on public and private data. what we do is talk to the companies about their preparedness for the future. as we know, companies are facing a lot of different challenges in their business model in the long-term. >> i don't mean to be

belligerent. i do mean to be persistent on the matter of payment because as you will well recall, one of the things that was called into question years ago with respect to bond and credit ratings was that companies had to pay and pay a lot of money in some cases to receive those ratings you answered my prior question that the complicaapplicant compl enter into s&p global for that does it involve money? do you get paid? that's what i'm asking pretty simple yes or no. >> we have a very strong line between the analytical and the commercial role and i sit on the analytical side. so i can't answer that question, i'm sorry. you have to ask someone who sits on the commercial side about that question. >> i'll do that. >> i have anna edwa analytical

question should investors care? >> there's a lot of analysis on this the biggest does show there's a link between the performance of a company on esg overall there's a lot of benchmarks and data that's incomplete and in many cases, it's hard for the company's full story to be transparent to an investor and what investors are really trying to do with esg is they're trying to understand what other information they can glean on the company, beyond traditional financial analysis to look at how the company can deal with the challenges that it is going to face over the short, medium and long-term. that's what our analysis does because it's not just a

short-term focus or relying on historic data. it's based on a full discussion with the company, a full look at all of the esg factors and a focus on how they can either deal with these issues or address these events or catastrophes going forward. >> i hope you don't think we're all belligerent here >> only me >> only persistent, but still confused if i invest in companies that score well on esg over time and you can pick any time frail you want, am i going to do better than just putting money into an s&p index? >> well, the other thing i don't do is provide investment advice. but what i can say is what our analysis provides is the capacity for an investor to say, i really care about these factors. so i'm going to look to how well this company scores in these

factors and take that into account in my investment decision making, but that's up to they will to decide what they want to look at and how they want to take it into account in their investment decision making what we do know is that the life span that companies have on the s&p 500 has dropped dramatically over the last 50 years because companies are facing more and more challenges. we've got technological risks, technological change, disruption, consumer pressure, social media, we've got, you know, changing regulatory environments. >> uh-huh. >> and what we really try to get at is how well equipped are companies to deal with these changes and how is that going to impact on their performance in the future and to the extent they're not dealing with stake holders, what impact is that going to have on the company >> susan, thank you. susan gray. >> thank you well, disney holding an investor day, widely expected to unveil the details of streaming

service, disney plus what it means for the company's what it means for the company's bottom line coming up. we see breakthrough medicines getting to patients in record time. we see harnessing natural gas unleashing the promise of clean energy. we see engineers simulating the future to improve today. at emerson, when issues become inspiration, focusing core strengths to create a better world isn't just a result, it's a responsibility. emerson. consider it solved.

welcome back everyone. i'm sue herera here's your cnbc news update at

this hour. the senate armed services committee holding its first official hearing on president trump's space force proposal the pentagon projecting it will cost a total of $2 billion over five years to set up the service. >> our military is organized around physical domains. army on land navy on sea. air force in the air given the significant change confronting us, we now need a military service dedicated to space. >> pittsburgh's new gun control law signed by the city's mayor on tuesday is now facing two lawsuits and one of those is being backed by the national rifle association. one of the lawsuits says the new law infringes on the people's right of self-defense. prince harry and his wife meghan say they've decided to keep plans around their baby's arrival private. buckingham palace saying the two look forward to sharing news of their baby's birth once they've had a chance to celebrate

privately as a new family. can't wait to meet that little one. that's the news update at this hour back to you. >> thank you very much, sue. go to michael santoli at the nyse for "trading nation." >> thank you very much, tyler. amazon is issuing a challenge to traditional retameilers to match benefits seems unfazed by the e-commerce giant so far lowe's and costco with double digit gains in 2019. which do you bet on in this knockout round mark newton and erin gibbs your "trading nation" team today. stock up 40% but still $200 a share below where it was at the peak last year at the trillion dollar valuation which would you bet on, amazon or the field >> i still like amazon quite a bit, mike. and you mentioned that it's quite a bit off its highs and that's precisely the reason why i like it.

you look at stocks like costco, a big run near former highs. all of these have had a really good run since december but amazon is the one that's really more technically appealing and you take a look at its broader chart going back since october the stock has been range bound for the last six months. it's really just started to emerge from the base if anything, it looks like it has room to run over the next three to five months i am projecting a move back up to 2015 that would use pullbacks with a chance to buy that. it's more of a reverse head and shoulders formation for those to study technicals and more appealing in my view than the others. >> i know you've maybe been shopping around other retail stocks and come upon one in a very particular category that seems to be able to put up a fight against amazon. >> it has a strategy almost the opposite of amazon it keeps expanding the brick and mortar stores and what i love is ulta beauty. and one of the reasons it works so well is it has the largest product offering, the largest

number of products for any beauty store and it's able to partner with really unique cosmetics and beauty products that nobody else can get so you can get chanel, mac, other stores it keeps expecting to open more. 11% profit growth over the next two years. so just very successful at being a large brick and mortar store with everything to offer there in the store >> and one of the very few stocks better than amazon over the last decade or so, ulta is erin, mark, thank you very much. for more "trading nation," head to our web site or follow us on twitter @tradingnation. ahead on "power lunch," disney set to unveil new streaming platform today how will it measure up to net fl flix and other rivals. how will it match up to this one? elizabeth warren unveiled a new plan to tax corporations and aiming for the green

how states look to raise revenue by taxing golf courses all this when "power lunch" returns. >> and now the latest from tradingnation.cnbc.com and a word from our sponsor. >> a double top is a chart pattern that suggests an uptrend might be ending and ready to reverse. sometimes called an m formation because of the way it looks on a chart, a double top consists of two well defined peaks at approximately the same price traders often view a break of the lowest low as a bearish signal i'm lee bohl and schwab is the better place for traders for your heart...

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if you're under attack, i recommend calling reputation defender. and consider joining their groundbreaking campaign to give every american the right to remove old, inaccurate search results by going to righttobeforgotten.org. vo: if you have search results that are wrong or unfair, call reputation defender at 1-877-492-6705. shares of disney are higher this year but underperforming in the broader market as you see right there. the company holding investor day expected to reveal details about the highly anticipated streaming service that many are hoping will turn disney around. joining us now with the latest hi, julia. >> tyler, great to be here investors hoping to learn how much disney plus will cost consumers. how much be investment will cost the company and when exactly it will launch. bob iger expected to showcase the content that the new service will feature from flag ship

brands including marvel, pixar and "star wars," should we expect new exclusive shows from the brand and how it can incorporate the library of as many as 500 movies in 7,000 tv shows? there has been a lot of speculation with how many subscribers the service could draw and it's a chance of attaining the same reach as netflix. bmo just upgraded disney to outperform along with amazon and netflix to be long term winners in the global direct to consumer streaming market bmo and other firms are watching for what kind of guidance disney gives on how much this investment will impact disney earnings going forward a lot of questions still >> hang around we're going to find out a little bit more see what the street thinks about disney's new streaming service joins us now, bullish buy rating price target of $130 a share

my broader question, tuna, are we getting to the point where there are so many different pay per streaming service offerings that i'm basically going to end up paying exactly what i paid before for a cable bundle? >> reporter: no, tyler i don't think we're close to, you know, kind of anywhere to exaggeration as you might be alluding to. i think we're probably still in the very early and the phenomenon, i do agree that disney and netflix are going to be among the potential long-term winners but i think what's important to realize is that, you know, there's probably going to be a shakeout over the next few years. as we see more consolidation and as more and more formidable companies like apple, et cetera, jump into the fray >> disney is going to be measured for better or worse, fair or unfair against netflix how do you think they'll do? >> i think they'll do just fine. look, i think over the next

several years, quite considerable that disney will quickly, you know, get to 5 million and potentially tens of millions of subscribers in the next several years look at the content they've already, you know, announced, as julia alluded to the one thing that with how quickly they drop out of the gate and dropping closely is the pricing of this service which we expect anywhere from $6 to $8 below netflix with the impressive power to increase over time. >> tuna, i think it's really interesting we're looking at disney less than netflix's bob iger said but at a time when we've seen price hikes from netflix and also, just today from youtube tv, raising the price of their skinny bundle to $50 as the skinny bundle getting a little fatter. the question is how many services will people really subscribe to some analysts say it's three services others say it's six services so i think there's still a lot

of unknowns about how many people can really sustain but, you know, if you look at apple tv plus launching this fall and then you're going to have at&t time warner service, will people really have five or six services or is that too many? >> i would go as far to say that the appetite for these kind of offerings right now are insachablinsac insatiable we talk about content here and to the extent they invest aggressively and the pay tv bundle at risk for quite some time now so you see the secular trend there and then have several much more run way ahead >> we've got to leave it there news alert coming in tuna, thank you very much. tuna amobi be sure to catch us on the street at 9:00 a.m dave will have an interview with iger breaking news, kayla tausche go ahead, kayla. tyler, the white house council for the obama administration greg craig has

been formally indicted by a grand jury on charges related to making false statements to the department of justice about work that he did for the government of ukraine this work that he did while a partner was tied to charges brought against paul manafort, the former campaign chairman for donald trump, as a candidate we're just learning more about the indictment that has been issued by this federal grand jury we'll let you know more as we have it. it has been expected but certainly, a prominent democrat now being caught in the cross hairs of all of the russia investigation issues that previously had been really targeted towards republicans so a legal heavyweight, prominent democrat now being indicted by a federal grand jury tyler? >> thank you very much, kayla tausche in washington. up next, details on a bill that could be way over par for someone state's golf clubs "power lunch" will be right back

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state politicians working on a new way to tax the rich by going after golf robert frank with the story. >> a bill making its way through albany could more than quadruple the taxes. it would tax golf courses at, quote, the highest and best use. so that means rather than taxing them as golf courses, they could be taxed as developable land that would increase property taxes four to ten times their current level. the hikes would be especially steep for westchester and long island where development property is scarce and the new york golf association estimates a third of the clubs in new york would close if this is passed. that would cost a lot of jobs and economic activity. the state has about 250 private

golf clubs and about 500 public courses. now, the bill grew out of a dispute with the trump national golf club in westchester county. financial disclosure forms during the campaign, donald trump valued the club in brier cliff at more than $50 million but his lawyers filed papers with the state declaring the value for tax purposes at only $1.4 million assemblywoman zani said too many used illegal wrinkle to get artificially low assessments that when you have some of these clubs not paying for their fair share, everyone else picks up the costs. this would allow the towns to tax these clubs as developed labd as land as opposed to just golf clubs. a big fight before this. >> what would you say the rough odds of this passing are >> i was talking to people yesterday. a week ago, it was probably 80, 20 chances that it would pass.

now they say that the golf clubs are mobilizing, more like 50/50. >> that's pretty high. robert, thanks earnings season kicking off tomorrow with j.p. morgan and wells fargo. a real read on earnings. don't go anywhere. obvious.

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earning season gets under way tomorrow many are expecting a negative quarter and year on year desccln in profits your in-diks hdex has shown a hh correlation. and so what are you expecting, what is the index predicting >> i think that there are three stories. one is taxes and you need to adjust for the difference in the tax cut. second is u.s. versus nonu.s the u.s. economy is in a goldilocks period.

we see very strong earnings in growth in the first quarter. third story is the continuing supply of new labor to meet labor demands. those three things are lined up to be really helpful for companies that are focused on the u.s. you'd much rather be a chain of veterinary hospitals than fedex. >> and in terms of serving the u.s. customer, a lot of investors look at the russell 2000 to get the more domestically focused companies is this surprising to you in any way that the companies that have more u.s. exposure actually underperforming here >> well, it is somewhat surprising i think it is all about growth and perceived growth we're in a low interest rate environment and multiples are generally speaking very high i think that as growth continues to show through from the u.s. oriented companies, i think that probably on a relative performance basis will change. >> and you point out that gasoline prices have been rising

a lot starting in march. a lot of different factors, whether it be wti and brenting for going higher but also the storms in the midwest. these are costs that corporations have to deal with even though they are not in the core of ppi or the core of cpi so what are you hearing about rising oil prices, rising health care costs and maybe even the dollar for the companies that are exposed more internationally >> right i think one of the things that we see is a little bit of relative weakness on the industrial side. and that is in significant from year over year about a 5.5% rise on the dollar. energy prices right now are about where they averaged last year, so it was a meaningful dip in q4 in the beginning of q1 we have to keep in perspective that it hasn't really changed that much. i think the biggest cost factor is wage growth and we like the

fed same job growth rate which is about 3.1%, 3.2% after you take into account product improvement costs, which is really a manageable thing for h comes that have good control over their distribution channels >> you make a distinction between companies selling in to the u.s. market and those that don't. how big is the growth disparity likely to be between the chain of veterinary hospitals and a multinational like fedex >> big, i think. our data -- the u.s. companies are doing great. the growth rate and revenue and profit is almost as high in q1 as it was for all of 2018. and that is certainly not the message we're seeing in terms of demand overseas. >> lawrence, we'll see you next quarter. thank you. check please is next and be sure to catch "squawk on

the street" tomorrow they will have an interview with bob iger bob iger don't miss it. 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. onmillionth order.r. ♪ there goes our first big order. ♪

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when yowhat do you see?itical issues facing our world, we see a billion more people breathing free. we see access to fresh food being the global norm, not the exception. we see homes staying cooler, without the planet getting warmer. at emerson, when issues become inspiration, focusing core strengths to create a better world isn't just a result, it's a responsibility. emerson. consider it solved. time for check please. for somebody who doesn't usually ruffle feathers be bob iger a had some strong words. he said hitler would have loved social media it is the most powerful

marketing deal that extremists could help phone for. it allows evils to operation on lost souls and he goes on. one of the strongest things i've ever seen against social media from somebody -- >> someone so prominent. >> and remember there were rumors that disney might buy twitter. >> i guess they won't be buying twitter. >> yeah, that is put to bed. we had a guest on talking about social governance. and i think it is a very interesting concept. people should be aware of these issues certainly governance plays out in terms of the stock performance. but you really have to understand what is in the etfs in particular. some of the biggest holdings are micr microsoft, 3 m and going google >> and the governance question

is so critical so many of these companies that are clean tech companies have the dual share classes where one owner controls it. >> and then is social media -- does that qualify? >> yeah. all right. thank you for watching "power lunch. "closing bell" starts right now. and it is the final hour of trade. we have an interview with rich clarida. we'll get his take on the economy, inflation, trade and much more. uber expected to file its ipo after the bell we'll break down those numbers and the countdown to disney's investor day is on we'll tell you what to expect when it kicks off ."closing bell" starts right now