population as it has been for every population dealing with this thank you, appreciate your insights and that does it for "the exchange" today. i'll join tyler and melissa for "power lunch" which begins right now. >> thank you, kelly. see you in just a moment i'm melissa lee along with tyler mathisen new at 2:00, stalemate over trade talks and u.s. tech starting start ing to comply with huawei. chips getting closer to bear market territory the sector caught up in the trade war but with the strong run so far this year, is this a group worth sticking with? and tesla tanking. shares tumbling on a bull and that analyst calling tesla's situation a code red when investors need to know right now. "power lunch" starts right now >> hi, everybody welcome to "power lunch. welcome to a new week. i'm tyler mathisen glad you could join us here at 2:00 stocks under pressure right now. tensions with iran and china

front and center, but we are off session lows the dow now more than 200 points earlier and nasdaq getting hit the hardest down more than 1%. 1.25%. apple having the biggest negative impact on the dow today but not everything is down utilities are hitting a record intraday high. and that rally in utilities highlighting the more defensive positioning the market is assuming right now bob pisani tracking all the action from the floor of the new york stock exchange. robert >> reporter: and the important thing and this is quite remarkable, we've seen half of the s&p's new highs today. about 24, half are utilities you don't see that very often. next, com ed and then eversource energy hitting two week highs. why? a low rate environment s&p yielding 2%. look at some of these utilities. most of them all are in the 3% to 4% range. edison international, 4% and

3.7% what is driving the growth it's not just the yield. you've got a combination here of earnings growth that's got pretty good right now. looking at close to 7% earnings growth that's the long-term average for the s&p 500. this is the estimate for the next two years along with a dividend growth of 5% put this together, you could get a 10% total return every year and that's very important. that's what people are looking for. the real problem right now, guys, isn't really the earnings growth it's the fact that some of these are getting very pricey. so com ed, for example, now trading for about 20 times forward earnings that's a pretty pricey multiple. as these prices go up, just remember, it gets a little tougher to justify the prices. back to you. >> bob, thanks very much are you smarter than a high schooler when it comes to economics? andrew ross sorkin hosting the national economics challenge where students are tested on knowledge of economics principles they're about halfway through. let's listen in.

>> tokyo exchange. >> no, that's incorrect. it's the niky. >> oh, whoops, i apologize that would be my mistake >> it's okay >> we're going to throw the question out and start it again. i apologize. >> i'm going to go directly to question number 21 when a company that makes soup decides to also produce the cans that it uses to package the soup -- >> vertical integration. >> that's correct. >> there you go. as you see, the competition is hot and heavy there. the alex trebek successor obviously on stage there, that

would be our andrew ross sorkin. back to the markets right now. we'll check in later with that exciting competition throughout the show and later today all right. the markets expecting a rate cut later this year but if you listen to feds speak, a cut is less certain atlanta fed president raphael bostick tells steve liesman his take earlier this morning. >> the market is ahead of where i am, so i would say i am not expecting a rate cut to be imminent, certainly not by september. i'm open to move in either direction and right now, not really tilted to the cut side as opposed to the hike side. >> let's bring in sareek kumar joe, let me start with you are you on the side of the fed, and you think the markets may be leading us a little too quickly down the rate cut path >> well, i think the fed is going to take its cues from the market and what you're seeing is

when you look at the 10 year now going under 2.4, you see the 30 year collapsing as well, the whole yield curve is telling you that something is going on and when you have a trade war, the hint of a trade war, it has an impact on gdp growth, not just here but around the world and that's what you're pricing in right now, is that this is not going to be an easy resolution it doesn't appear we're very close at all and maybe, we might not be done by year end. that's going to have an impact on global growth, supply chain around the world not a positive impact, unlikely we see a rate increase and leaning more towards a rate decline sometime this year. >> what do you think rates are going to come down >> the equities market, tyler. even though it is supposed to follow the economy, the economic growth and inflation, what we

saw in december/january is that the fed followed the stock market in two weeks, we went from two rate hikes in 2019 to no rate hike at all. nothing much happened with the economy during two weeks so i think the same thing is likely to happen and i think a rate cut could even happen by next month's federal board meeting. 18th and 19th. >> you think there could be a rate cut that soon >> it depends on how the trade war double ups and then the stock market fall by then and then if it does, then the fed is going to react. >> how do you look at it another 5% decline in the stock market and the fed steps into action despite what the fed funds futures say? >> absolutely. that is exactly what happened in december and january, melissa. you had the fed all primed up and you had a big drop in the equity markets in the second half of december and the story changed on january 4th when you were looking for --

>> that seems like a little bit more than i would ever imagine would occur. i mean, it would take much more than a 3% to 5% drop in the market we've already experienced that i think if we had a 15% to 20% and i don't see any reason why that would occur, remember, the end of the year was a unique time there weren't a lot of market participants you had a lot of selling and chaos going on, not just because of what was happening with interest rates but also, the talk about china, fact that we did not have a lot of market supply i think that's highly unlikely we are due for a correction after the recovery but i think, again, the fed is unlikely to step into save it if it's just a normal 5% to 10% correction which i think, again, is unlikely because we've had most of the news, most of it is priced in. my expectation is that around the fall, late summer, if we haven't got a resolution, the markets are still a little weary. i don't think they're going to

become pel-- be compelled to act i think that's unlikely. 33% to 35%. >> i think we saw what happened in december and january again to make it and two weeks is actually a long time for this fed to change its approach, and the trade war is taking place on a daily basis is extending beyond china to other countries of the world and that in turn has an impact on the equities market i don't know if it's 5% or 7%. if it happens very quickly, i think the fed is going to react and that's my position. >> all right thank you very much, sri and joe duran. why is he smiling? last week, he sold his company for many, many, many millions of dollars to goldman sachs i hope we can count on you coming back, joe. >> i smile a lot anyway. >> that's just a way to announce

the news of your deal with goldman sachs. congratulations on that. sri and joe. thank you. >> more smiley than usual. >> i mean, $750 million in cash. that would make me smile wow. how about the fallout continuing from the trump administration's decision to blacklist huawei chip stocks getting blast. >> the u.s. tech companies breakaway from huawei. let's start with alphabet's google a blow to huawei which relies on andro android's operating system for its phones some of the biggest u.s. suppliers like qualcomm, all of which are down today said to have suspended the supply of chips to the chinese company and it doesn't stop there. while most european chip makers are not subject to u.s. restrictions, germany's infneon,

halting opponents and huawei growing the market share despite the fact the devices are not sold through wireless carrier. rising 50% in the first quarter versus a decline in the broader industry that's according to ibc and continues to come as huawei has been gaining market share in china where apple has been experiencing challenges. take a look at shares of apple you can see it's down about 3% on track for its third day of losses melissa, back to you. >> seema, thank you. seema moby for more on the chip stocks, equity research analyst at rbc capital markets. nice to speak with you again you take a look across the chip sector in every single name that seems to be getting hit today. how do you think about the damage done on this sector right now and what warrants the damage versus what's being thrown out with the bath water? >> two dynamics here first, the huawei piece, i think pretty structural. especially if you can't sell

anything to huawei i mean, that's going to impact adi and broadcom, all of these smartphone players and the other side on the actual china/u.s. trade tensions, i think that sets up a lot better for high-tech. essentially, if you really think about it, a $30 billion tax, right? less than 0.1% of federal income and so when you look at that number, it's really small. so hopefully that gets fixed because essentially, trump does have kind of the, i guess, the royal flush, you call it if he says you cannot buy gpus, the entire infrastructure collapses. i think that one eventually solves itself but the regular component, kind of the boring low tech chip stocks will be hurt because won't be able to solve the huawei. >> getting back to the most leverage to huawei, those are the ones investors are looking at to really benefit from the buildout of 5g does that take a backseat to what's going on in the china/u.s. trade war and

specifically with huawei >> yeah, i think everything that's huawei-exposed will take a hit. that will be your 5g and adi because there's just nothing you can really do about that essentially, if they're denying any sort of shipment, huawei exposure, i think they're impacted but from a structural perspective, this is going to highlight the fact that u.s. companies have the best tech products, essentially. there's only two gpu companies, both american. there's only four semicap companies. three are american and two design software companies and all of those are american. at the end of the day, if this gets pushed to the end of the road, you'll look at u.s. semiconductors. >> any to huawei in that they will be shut off basically potentially from participating in the growth of 5g networks around the world for which huawei is building out that network? so a lot of the emerging markets, for instance, not the developed countries but really,

the chinas of the world and south americas, et cetera. in the long run, will that hurt their growth prospects >> i think it will the chart you showed a few minutes ago is probably the most telling. essentially, anybody with smartphone exposure, those are hurt the most and i don't see that solved anytime soon so avoid near term. >> as you see these stock prices slide on these issues, would you be buying? >> i would be buying high-tech again. synopsis and micro one not going to work near term, and damaged and snopsis, you cannot do any sort of high-tech without those three companies and trump at the end of the day say you can't buy those, if he wants to push this trade war to the end game. so i think something gets done

but i think, again, you want to hide in high-tech because those are the most insulated. >> some concern, mitch, around apple and their ability to pass on price to consumers. cutting the price target today one of many analysts, voicing this concern should we think about some of the suppliers? that they could be squeezed and so therefore, their margins will really be impacted because the squeeze that apple feels >> i think that's absolutely right. eventually, apple is going to have to kind of diversify their manufacturing. when you look at, for example, what cisco did, they took all of their china stuff and moved it to vietnam and the conference call, done something similar and moved their process but a large majority of them outside of china. so i think what you'll see is apple will have to eventually move out if they want to avoid the tariff and kind of the u.s./china dispute >> all right, mitch, thanks for your time of rbc tesla's tumbling again the stock briefly falling below.

the bulls on the stock getting more bearish now and we're going to go back to the national economics challenge to talk to some of the winners. stay with us measure up? a cfa charterholder does. you've worked hard to grow your wealth. make sure you're working with a wealth manager who can grow with you. cfa charterholders have the investment expertise to unlock opportunities other advisors might not see. learn what a cfa charterholdr can do for you at therightquestion.org i'm workin♪ to make each day a little sweeter. to give every idea the perfect soundtrack. ♪ to fill your world with fun. ♪ to share my culture with my community. ♪ to make each journey more elegant.

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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. listen to your mom, knuckleheads. hand em over. hand what over? video games, whatever you got. let's go. you can watch videos of people playing video games in the morning. is that everything? i can see who's online. i'm gonna sweep the sofa fort. well, look what i found. take control of your wifi with xfinity xfi. let's roll! now that's simple, easy, awesome. xfinity xfi gives you the speed, coverage and control you need. manage your wifi network from anywhere when you download the xfi app today. slightly lower as the company announces the plan to

eliminate 700 jobs as part of a goal to save $600 million annually 7,000 jobs, we should say. tesla shares tumbling. cutting price target goals for the second half of the year philip lebeau joining us with more on that phil >> reporter: melissa, that stock now trading above 200 but when it dipped below, it was down 49%. 49% from its august high of $378 as you look at shares of tesla, let's look at them all the way back to that august high you're loobking at a stock unde pressure we haven't seen in years. three things are weighing. there were a slew of comments who said profitability is a kilimanjaro type of hike what is elon musk's next move?

the model w coming up. and then a question of model 3 demand brought up by other people as well if you look at deliveries of the model 3, keep in mind that this is a vehicle that they really had deliveries in the fourth quarter and a dip in the first quarter and now people are saying, will they be able to see sustainable growth through the end of the year and that's when they plan to open the factory in china. so all are factors weighing on tesla today. guys >> it is staggering to think with an outperform price target and that was five months ago it's changed >> all righty. america's top economic students to compete in the council for national economics challenge andrew sorkin is

there. >> hey there we are with the winners. they literally just won in a nail biter, can we agree tell us what high school you're from and you guys, it was down to the wire what was the hardest question for you guys >> there was a question where they asked us for differences in credit and i think that was a difficult fact question we couldn't get. >> and you guys have been preparing for this for a long time so tell us, for those in the audience, how do you prepare what are you doing all the time? >> well, our teacher actually teaches us economics classes, so we're in ap economics and he's done so much for us this year. i can't think him enough, on top of that, all the textbooks, and all of that, and then all the resource banks which the cee posted online, integral in helping us. >> how did you get in economics to begin with?

>> so we actually got recruited the same way that our david ricardo team got recruited and we got recruited at the same time while we were on, but the summer after i left, actually cool things about it and actually really fun to learn and not just something you do for a competition. and that would be my moment. >> we're not just nerding out here is the point. the person who's responsible for all of this, i'm going to come to your side and tell us how you started this whole thing >> well, the challenge was going for a long time before i got here and we were really thrilled to be able to expand it and to get the kids doing not just these quiz bowl rounds but yesterday, i watched this very team compete in the analytical thinking round where they had a case study and had to present and had to tell you, their learning goes far beyond just a recitation of facts.

they really understand how this stuff works and it's incredible and rewarding to watch them. >> famous economist that you love anybody? >> milton friedman >> okay, so we have capitalist any socialists in this new generation i know but i figured i'd ask. nobody wants to take the other side back to you, tyler we're here hanging with a bunch, this is good whole new generation of capitalism right here. >> and i thought they were going to say steve liesman, for sure but congratulations to the winners of mt. hebron high school and andrew, we'll check back with you. thanks very much, guys congrats >> see you in a little bit you bet. let's get to apple now hammered this month on trade concerns losing nearly 10% of its value in machlt y. "trading nation" will tackle that next. talks between the u.s. and china said to have stalled

are we in for a much longer trade r anwath the markets have bargained for? stay with "power lunch." busine. from using feedback to innovate... to introducing products faster... to managing website inventory... and network bandwidth. giving you a nice big edge over your competition. that's the power of edge-to-edge intelligence. your but as you get older,hing. it naturally begins to change, causing a lack of sharpness, or even trouble with recall. thankfully, the breakthrough in prevagen helps your brain and actually improves memory. the secret is an ingredient originally discovered... in jellyfish. in clinical trials, prevagen has been shown to improve short-term memory. prevagen. healthier brain. better life.

tthis is where i trades. and manage my portfolio. since i added futures, i have access to the oil markets. and gold markets. ok. i'm plugged into equities. trade confirmed. and i have global access 24/7. meaning, i can do what i need to do. then i can focus on what i want to do. visit your online broker today, to learn more. now this is training. keeping my reflexes sharp. ha, oh! you were just beaten by a rabbit. you don't even know it. [ ding ] oh, my pizza rolls. welcome back to "power lunch. i'm michael santoli at the new york stock exchange. apple getting hit again today

after hsbc slashed price target on ongoing trade tariff worries. losing more than $100 billion in market cap harry wald of oppenheimer for your "trading nation" team today. we've been here before with apple. these kind of sharp sell-offs, testing various support and losing big chunks of market cap. do you see any place where the stock might collect itself here? >> yeah, and in general, i think what the stock does have going for it is that a bid for the technology sector overall does keep for it in general when the market volatility hits our focus shifts to our highest ideas and apple is probably more mixed on a trading basis versus the sector as a whole but i can offer some levels. the stock has corrected into the 100 day moving average and that's going to be the start to support at $180 followed by the

gap at 173 and the upside, watch out for 192. there's a gap there. you get above 192, i think the stock is trading better again. >> the storyline also is very familiar with apple. when people worry about the stock, it's about iphone and china and then sometimes, the story shifts back over to services and the stability of the cash, so where do you come down >> i think the bottom line is it's a great company and when it gets hit like this, this is one of the instances where you want to be greedy and others are fearful. it's a cliche, overused but ultimately, compounding book value, 26% for the last decade it's exactly where buffet likes this company and when it gets hit like this, you want to be a buyer for sure >> buffet also likes the fact the company buys back its own stock with buffet's position that much bigger on a relative basis. we'll see how this plays out thank you very much.

for more "trading nation," follow us on twitter at @tradingnation. u.s. companies cutting ties with huawei and what's at stake for both sides and first on cnbc interview with the chief of the federal housing finance agency his take on housing. graduating classes, student debt all this when "power lunch" returns. >> and now, the latest from tradingnation.cnbc.com and a word from our sponsor. >> a common mistake that some investors make is searching for stocks with the highest dividend yield. this can be a dangerous strategy because a high dividend yield could mean the stock prices come down sharply or the dividend itself is at risk of being cut so before you reach for a yield, be sure that the stock is also fundamentally sound. i'm joanna payne and schwab is the better place for traders

hello, everyone. i'm sue herera here's your cnbc news update at this hour. in alabama, now facing several

charges. captured 29-year-old grady wilkes this morning. charged in the death of william beatner. >> we're not immune to things that can happen. this will be difficult for us but mainly intend to rally around each other and the families and just get through this together. whole foods planning to eliminate disposable plastic straws this summer believed to be the first national grocery store to make that change. customers will be offered paper straws upon request. whole foods is owned by amazon. an experienced hobyest who doesn't want to be identified found that baby. a 3 pound nugget of gold in australia. the person used a metal detecter to unearth the nugget, about a foot and a half below the surface. worth about 65,000. >> looks like it should be worth more but that's what they say.

the news update this hour, back to you >> you'd think there would be value in just being so big rather than in pieces that add up cumulatively. >> exactly. >> we're on the same page. 90 minutes to go until the closing bell rings and session lows across the board and dow down by 96 points. s&p 500 off by two-thirds of a percent or 19 points utilities eking out a fresh high and the cross route section of the u.s. trade war and impact from the ban on huawei we're seeing the composite down by 1 1/3 percent ty >> dom chu with the news from the commodity desk. >> oil prices for wti west texas intermediate $6.13. up half a percent. brent crude futures, down $71.98 the story today generally positive and constructive for

oil as partner countries specifically saudi arabia have signaled an intention to be disciplined about their production cuts and that is helping to put at least a bid to oil prices a close eye on $61.92 well above that level now for wti but the $61.92 represents the 50 day moving average for oil prices and one quick note guys, kelly, gold prices on the heel of that nugget story, back to you. >> thank you, dom. dominic chu. trade tensions are rising, starting to see u.s. companies complying with president trump's ban on doing business with huawei specifically, google cutting ties with the company and appears that the u.s. and china have hit a wall in trade talks have both sides. chief strategist at silver crest asset management and hamilton placed strategy's founding partner. welcome to you both. patrick, markets are really kind of shrugging this one off. is that because they still think somehow we're all marching along

towards a deal >> markets have been very volatile in response to the news on trade and u.s. and china tensions because they're trying to decide whether this is sort of a manageable problem that has limited cost and will be resolved maybe at the g-20 and whether it's a bigger unraveling of the relationship with the two largest economies in the world and if that's the case, it has much more serious implications that are rather difficult to price. >> sure. tech is the hardest hit sector today and the nasdaq, seeing the damage much more so than the s&p or the dow is that because, i mean, it's kind of interesting because you think our tech sector, and this goes back to the interview we were having earlier with the serk semiconductors >> it's true certain segments of the economy, we forget that in the united states, if you're thinking about the broader market

it's relatively small and a big economy with a relatively small tradeable sector we'd love to see it much bigger. that's why the impact isn't so broad but you see it with certain individual firms like apple and others, agriculture and the ges of the world companies that are not just going to lose maybe some markets in places like china, but also, where their global competitors have an opportunity to take some market share away from them. it is an impact and very real for certain companies but doesn't get worse than it is now. >> some fraying in terms of growth obviously even at the margin, right? >> it really depends on the context of the u.s. economy and what i see when i look at the u.s. economy is one that is

softening or weakening people pin their hopes to that, but if you actually, you know, look beyond headline number, whether it was business investment or consumer spending, it was slower and the same thing is happening with earnings that's going to, i think, the news that we get, last week, we got bad economic data from the united states and from china and you have to think that, it should raise questions about what both countries have to lose if this becomes an all-out trade war. >> tony, you said basically, buckle your seat belts this could be a long and bumpy flight between the united states and china. >> yeah. >> let me spin it forward a little bit do you think in his heart of hearts, the president is comfortable with or maybe even welcomes the idea of a long-term economic adversarial relationship with china that ultimately, in his view, might

mean that more manufacturing jobs come back to the united states do you think he's comfortable with that? >> i certainly think that's what he believes his goal is. whether that's an attainable goal is another thing. i do think he is comfortable with having a relatively long trade dispute that goes on for a very long time without an agreement on these certain things there are positives and negatives to the kind of things that they were discussing and part of this agreement but it's not obvious this will bring back a lot of jobs back to the united states. >> do you think he sees it as a positive campaign issue for him? >> i think he does look, i think he sees it as a positive campaign issue he's out there fighting on these issues, but i also think that instinctively, he has told us this he's the tariff man. he really does like tariffs. he likes them. >> but i think it's also, you know, he runs, all the time with his trade policy, runs into the

fact that the market doesn't like it and, you know, he has pinned his success on the u.s. economy and success of the u.s. stock market, so if, you know, pushing tariffs then turns around and weakens the u.s. economy or weakens perceptions of the u.s. economy, going into an election year, that's going to be very problematic >> tariff man and stock market man at the same time and they're the two that may not meet. >> he looks like tariffs on, like trucks, for example, pumts in t -- puickup trucks in the united states you can't replicate that in other sectors and doesn't translate to almost any other sector in the united states or any other product but i do think he sees that as a virtue and when he talks about, don't make them there, make them here or somewhere else, that's what he's talking about. he likes the idea of a tariff as a mote to force manufacturing

back to the united states. it's not something that you can sustain in this economy and these days but i think he desires that. >> thanks. tony, patrick, thank you so much >> thanks. >> let's get to dom chu with the market splash on sprint and t-mobile. >> sprint shares halted. just reopened, up about 14%. they open down a little bit from there, up 11%. the reason why, because of a bloomberg headline coming out saying that according to a source, the doj is said to lean against approving the t-mobile takeover of sprint that particular headline sent sprint shares down, halted for volatility, reopened again and starting to stabilize. up 20% at the highs today and up 11% of the trading halt lifted up about 14% now and watching movement in t-mobile as well but that's the reason why. i will say this. we have reached out to justice department officials for comment and as well as the

representatives at t-mobile and sprint as well, bring you any updates as we get them over here but that's the reason they're moving, melissa. back to you. >> dom banks, we should check on shares of verizon and at&t higher on this report earlier today. the cell tower also sold off on lessened competition the pieces connected to the story bigger than the ones involved. >> up a little bit less than a percent at this moment rick santelli is tracking the action at the cme. rick >> thanks, melissa lee two days of 30s gives you a lot of information crop back up to 283 which is unchanged on the day all other maturities up a bit. the 30 year is the only maturity, should it close here, wouldn't be higher than every close last week. 2s through 10s are, 216 to 220 last wooek at 222. 10s last week, 37 to 241 and 242 now and happening with the squishy stock market

look at the dollar index it's going sideways but at the top of it should it break through, the best prices in 24 months t it's been raining a lot in the midwest. we don't talk about commodities enough corn been up every day hard to get seeds in the ground with so much water the highest prices since last june but a 10 year chart shows you the reality of commodities, whether it's corn or soybeans. they haven't had an easy time of it lately, even with these related rallies. melissa lee and the gang, back to you >> i'll pick it up, rick coming up, big interview with the new head of the fhfa fannie mae and freddie mac udt anho's wiping out the entire stenlo debt. how did he earn his money next on "power.

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once again be public companies that's the plan of the fhfa. diana olick speaks to him now at the mortgage bankers conference and a first on cnbc interview. hi, diana. >> reporter: hi, tyler and just told a room full of mortgage bankers that the status quo is no longer an option. it is over and he's here to explain thanks so much for joining us. talking about fannie mae and freddie mac conservatorship. they need to be applied to come out of that, they already paid $100 billion. >> build capital, you need to be able to end the sweeps to retain earnings that's start number one. emphasize, however, still in negotiations with treasuries and looking for the administration's plan not calendar dependent it's process. >> so no win but you just lost the chief adviser on that. craig phillips just resigned

is that going to slow down the process of taking them out >> i hope not. my understanding is that the report is done, secretary mnuchin and i have a long working relationship and i was with the vice president. i'm absolutely confident that secretary mnuchin and i can get to a good agreement. >> you said changing the treasury sweep would not be good enough but recapitalize by taking them public how would that work and when would that work and what would it mean to current shareholders worth about 2.5 bucks now? >> emphasize that we've been on the job about a month. looking to treasury and reports forthcoming. the look in the numbers to me is if you simply let them retain earnings, what the end of this week does, we'll be years and years before they're ever going to have enough capital lead. it does seem like we have to find other ways to raise capital. as you know, treasury has 80% of the stock and we'll look at what treasury is going to do and we can build equity and one of the options on the table, certainly be a public offering but we

don't know that yet. an option on the table if we need to build that large amount of capital. >> current shareholders a part of that and get any of their investments back >> a common shareholder and a public offering, trade again never wiped out, whether we can do a conversion or way too early to figure that out but certainly, in the current environment, leaving conservatorship with or without offering, this existing shares will get the trade. >> leaving conservatorship would put them back into the implied government backstop. is that enough to keep buying the mortgage backed securities that you need them to buy? >> i think, first of all, my job is to make sure they're safe and sound. so if i'm doing my job and get them in a good spot where there's plenty of capital, where there's actually good supervision, part of the problem pre-crisis is they weren't all regulated. looked like nobody was on the job and make sure the regulatory structures are there and keep

them safe and sound and the loans are safe and sound so it's a bunch of different levers that we'll try to pull to get investors comfortable and me comfortable and protect the taxpayer. >> no government backstop. you think private investors come back without that government backstop >> i can't speak to what treasuries will report we'll be suggesting to congress that congress come in and do an explicit backstop that's limited, defined you know where the lines are and who's covered and who's not. only congress can do that. i suggest congress do come in and do that, but we're going to do what we can do within our existing statute. >> you told the mortgage bankers you weren't going to wait for congress what can you do without congress >> if i can end the sweep, we can get them out of conservatorship and start the capital and monitor loan quality, get them in a safe and sound fashion. focus the footprint and the risk so there's a lot i can do. i can't create competition i can't create a guarantee those are going to be in the

hands of congress. i'll call for those they thiingt congress has got to play its part diana, that was fascinating stuff. hear him work with congress, do an explicit, limited and defined backstop of fannie and freddie and that a capital raise could be one way to capitalize them thank you both appreciate it very, very much. coming up we'll learn more about the man who made this generous donation to an entire graduating class. >> and my family is making a grant to eliminate their student loans. let's build a better world for investing. let's hold ourselves to the highest standards of ethics. as investment management professionals, let's measure up. cfa institute.

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it is the story everyone is talking about today. not the "game of thrones" finale >> no. >> we're talking about the big graduation gift from a billionaire to nearly 400 students robert frank has more on this tremendous gift and the man doing the giving robert >> yeah. such an inspirational story. billionaire robert smith was giving the commencement speech to 396 graduates of morehouse college in atlanta yesterday when he made this surprise announcement >> on behalf of the eight generations of my family who have been in this country, we're going to put a little fuel in

your bus now, i've got the alumni over there. and this is a challenge to you, alumni this is my class, 2019 [ applause ] and my family is making a grant to eliminate their student loans. >> wow now, the exact amount of paying off all those loans is still being negotiated, but morehouse says it could be tens of millions of dollars. so lots of people asking today, who is robert smith? well, he is the richest african-american in the country with a net worth of 4.5 to 5 billion dollars. his fortune comes from private equity he's the founder and ceo of vista equity partners. that's in austin, texas. they focus a lot on enterprise software and data companies. he grew up in denver his parents were teachers. he went to cornell and then to columbia for his mba he started out as a chemical engineer at kraft and goodyear

and then after working at goldman sachs in san francisco in the tech m&a practice he founded vista in the year 2000 now, smith lives large and gives even larger. he bought the most expensive home in downtown manhattan last year, the $59 million penthouse of the new getty building. he also owns homes in malibu and austin, texas. he was the first african-american to sign the buffett-gates giving pledge. he's given 50 million to cornell and given a lot to the smithsonian and carnegie hall. >> and some of the articles said he is kind of morphing into more of a philanthropist and maybe even eyeing politics is that right? anything to glean there yet or -- >> i haven't heard any of that but after today he has a lot of votes. i mean, this was one of the most creative and extraordinary and direct acts of philanthropy that i have ever seen i wish more people -- >> it cost less than that penthouse apartment, right >> absolutely. and i just wish more of the wealthy billionaires would be a little more creative, rather than just write a check to the red cross, to the united way, to give directly to somebody like

this, that sends a message to other wealthy people, you can solve these problems directly. >> he wasn't even a morehouse grad >> no. cornell and columbia amazing. >> cool guy. check please is next we're going to give him the check.

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days and down today as well though off the lows. down 121 points on the dow but note for the year to date the dow is up about 10%, the s&p 50013%, and the nasdaq about 16%. >> it just happened but if you missed it go watch diana olick's interview with mark calabria fannie, freddie equity up 4% after he talked about ways to raise capital like including an ipo. >> and a tweet alert from kim cash dashian west. this is very important it actually impacted the stovg jack in the box. she tweeted about an hour ago hey jack in the box i have a serious complaint but i won't fully put you on blast check your corporate e-mail inbox or send me a dm with a direct person for my team to contact pronto she then says i would like to add it's not about me or wrong order. it's something i observed that affected other customers at this particular location that was concerning we did see an intraday softness. >> did she just have the baby? >> she didn't have it. the surrogate had it >> psalm >> that's the baby's name is psalm? >> i believe if i've got my kardashian right.

i'm not sure there are a lot of them. >> you would know. >> i'm not sure i would. >> we're watching that the impact of kim kardashian west and her tweets. >> it's such a sinister suggestion what happened at that jack in the box? >> i want to know more now thank you for watching "power lunch. >> "closing bell" starts right now. welcome to "the closing bell." i'm wilfred frost. >> i'm sara eisen. here's what's moving in the final hour of trade. we've got stocks lower across the board. dow down about 126 points. low of the session down 203. so not quite as bad. tech is getting hit particularly hard you see the nasdaq there tech heavy, down 1 1/2%. those chip stocks really in the crosshairs of the latest flare-up between the u.s.-china trade war. >> within the s&p the tech sector's down close to 2%. some individual names on the move tesla hitting its lowest level since december 2016 after one analyst said the company's facing a