fully participating now in the up markets and still has more defense attributes and way more liquidity. something like 77% of all of the names that trade $30 million or more a day are in the u.s. >> great having you back best luck on the new firm. dow is down right now about 100 or so points that does it for us. "the exchange" starts right now. thank you, scott hi, everybody, here's what's on tap, you're a hero or zero in retail today nordstrom becomes the latest department store to get pounded after missing badly on its bottom line. we will look at answers ahead. and shares of qualcomm of tumbling after a judge said they broke the law with chip competition. and the key settlement with apple an cross the tech industry plus, boomers are bucking the downside trend wall street is piling on tesla now and bieber is trying to get millennials to do good by

smelling good. it's all ahead in rapid fire so the markets don't smell so great but it's not terrible we or by just about a third of a percent across the major indexes. dow off by 100 points, s&p 500 down nine points, similar percentage move nasdaq, off by 1 1/2% as well a couple places to look in particular in the markets, we're watching closely what's happening with shares of apple because it continues to be one of those companies more affected by trade headlines than others out there. they get a significant amount of their business in mainland and greater china region those off by almost 2% at this stage and analysts at goldman sachs say if in a hypothetical scenario iphone sales were banned in mainland china, apple could take a 29% hit in its profits. one more stock to watch, shares of twitter, the second-best

performers in the s&p 500 up by almost 4%. this after the company, some traders say, is getting some optimism over some of its experiments with targeting more ads to a certain subset of viewers. this is a stock up 40% after its lowsst year but still down around 19% from its high twitter getting some optimism. we will see if that lasts. back to you. >> and if users revolt against the ads as well, don thanks in a surprise twist this morning president trump in a rose garden speech said he would not work with democrats on infrastructure saying they have to choose between investigating him and working on the country's priorities let's get to eamon javers with the latest at the white house. >> moments of high drama at the white house. i'm told the president walked into the cabinet room, told the democratic leaders he was frustrated with their continuing investigations of him, and said he wouldn't be able to work with them if they continued to investigate and turned around

and walked out the whole thing, i'm told, was about seven minutes long afterward the president assembled all of the press corps in the white house unexpectedly in the rose garden with a few minutes' notice. a little chaotic here for a couple minutes the president came out and explained what just happened behind closed doors. here's what he said. >> i walked into the room and i told senator schumer, speaker pelosi, i want to do infrastructure i want to do it more than you want to do it. i'd be really good at that that's what i do but you know what, you can't do it under these circumstances so get these phony investigations over with >> kelly, the president's remarks were a little bit unclear. aides right now are not explaining exactly what he meant. is he drawing a line in the sand there on all allegation or just infrastructure not entirely clear aides simply referring back to the president's speech, not offering any details about what

it is the president said he's not going to work with democrats on it's unclear as of right now we might get more clarity this afternoon with the president saying he's not going to work with them on just infrastructure or all legislation or all legislation and budget negotiations or what exactly he is saying he will not work with them on. ultimately this is a president very, very frustrated and emotional about the ongoing investigations up on capitol hill he says, at least for now, today's meeting is over with. >> the infrastructure etf even did not move that much so people have been skeptical about this deal for a long time. but you go back to the april meeting where schumer and pelosi had such positive things to say about the tone, and they agreed on this big number so is all of that out the window now or is this just posturing? >> yes, some of it was posturing then too at the time they said they had a big number but they didn't say in any way what they would do to pay for it they said they will come back and cover that that's the difficult part of and an infrastructure. everybody likes to spend money

nobody wants to raise taxes. that was the log jam they went around it to have something positive to say today. today would be a difficult meeting. there were not a lot of positive expectations infrastructure would move to your point but ultimately the question now is this a president who is saying he won't work with capitol hill on anything? that is something -- i can't think of a president in modern history anymore for a president saying that but that may be what just happened. we're trying to find out, talking to aides who themselves are trying to figure out and looking back at the tape to see what exactly the president said. >> eamon, thank you very much. we will check back in. and on that note, steve mnuchin was on the hill to testify before house financial services committee today and he made some headlines. let's get over to ylan mui for more >> been getting a lot of feedback as lawmakers

contemplate whether to move forward on the second round of products imported from china he said talks about sems like baby items that perhaps should be removed from that tariff list. >> i can tell you i'm monitoring the situation very carefully i was on the phone with the cfo of walmart, obviously one of the biggest sellers of the items that you described specifically, i understand from walmart what things that they can source from other areas, and what items they can't. i would say we haven't made any decisions yet but we will be especially sensitive to the consumer items >> after the hearing was over i tried to press mnuchin on what other retailers specifically he had spoken to. he wouldn't answer any question but i did hair from a retail industry source that said the message from these companies is because of the rapid nature of the effect of these tariffs, likely all of that cost would have to be passed on to consumers.

they're telling me it's unavoidable. mnuchin did tell lawmakers, guys, he expects to have a final decision on whether to move forward in the next 30 to 45 days . from washington to back street, markets are focusing a lot on retail. seema has a look at the movers for us. >> retailers putting together their play books on how they plan to get around 25% tariffs home depot opening a source in vietnam. urban outfitters looking to cut china exposure from 30% to 20% target saying it's building contingency plans to help mitigate the impact of tariffs target's earnings still better than expected, up about 9% now while the broader universe traded down. the xrt, retail down 7% in the month of may, underperforming the s&p 500 ever since trade rhetoric started ramping up.

kelly >> seema, thanks for more on retail, let's met bring in morgan stanley's retail analyst and worldwide enterprise ceo and cnbc contributor. great to have you both here. jana, and i will just start with you. we talked about separating the winners and losers in retail is that the theme today? what is target getting right when they're supposed to be one of the most impacted by tariffs? >> the tariffs are really not hitting hard yet what they've done right is basically retailing 101. they've gone back to being the target they tried to be in 2006 when i thought they were the best retailer in the country and they're getting that consumer they're doing things like buying collections and it's working they're doing a great job. i would not avoid, they, amazon and walmart can all be great at the same time. >> and you had just upgraded them to equal wait on monday after a five-year underweight call, is that right?

what gave you the confidence to do it then and what are you seeing today? >> as jan said, i think they recaptured the cheap chic. they got their merchandising back and rebranded merchandise and enhanced their stories it's a place consumers want to go even during a five-year underweight call, we say the consumer would be receptive to it we had concern about margins but saw the recent pull 13s back as an opportunity to lessen our view. >> let's talk about profit margin for a moment. won't it be hurt by these tariffs on china >> most certainly. i was talking to jan earlier most of our companies talked about tariffs in isolation of their business and you don't see a lot of impacts to earnings so far out. we factored into guidance or net neutral impact i think what that is missing is the net impact on the consumer the wallet will take a hit in one forum or another. >> it has to.

>> but retailers are saying we are just passing that along. it's interesting to see how much of that will they absorb and how much a hit to their profit margins? how much pricing power do they have >> i say first 10%, pendulum swung in favor of the retailer they were able to push back suppliers and make changes but now i don't think there's enough in the supply chain to absorb that hit without the consumer. >> you think they will take some hit to profit margins but the streak not worried about it today? >> if you're target, no. but in general a little dismissive stocks priced in on certain days but in general in the hard line retail space we investigated something like a 10% eps on average. >> you don't think stocks priced that in? >> partially. >> it's interesting in this environment you say someone like nordstrom should be great.

they have high-priced merchandise. they should be able to sneak that through, less price to the customer total opposite is happening. what's the big challenge for nordstrom now? >> big challenge is that space is crowded and amazon made it more crowded >> how could amazon make it more crowded? >> now they're doing fashion it takes dollars out of the system in the real case there's nordstrom, macy's and lord & taylor in macy's, just macy's in that space. and then there's penney's, khol's and still some sears. you need to be protected from your brethren because you're eating each other's lunch and everything is putting pressure on you the other thing that's changing the model is resale. it's a $35 billion business growing 40% a year. >> you're right. i'm really just waking up to this we're going to talk about what urban is doing next hour but i have not done the rental thing myself but anecdotally i realize everybody else is.

what should nordstrom do in that environment? >> they should play the game everybody's going to have to play all of the brands need to play if you're gucci, any of the high-end brands, you should be doing this. >> could that be a great business model if they make that transition everything else is in the world is being offered as a service. they can jump on board and get a tech multiple, right >> i think that's a great idea if you don't do it, somebody does it to you so do it to yourself. >> and simmon, you're a fan of target who else would you say now as we navigate this somehow dangerous season for retailers do you like >> i say we compartmentalized in the haves and have nots. haves can grow their sales and end of margins profitably. and walmart is one we just recently came -- >> you like the home centers, home depot and lowe's? >> home centers generally, yes. >> even with lowe's move today >> i think the outlook for

housing is still decent. there is optimism you will sigh an improvement on existing home sales as the year goes by. there was gross margin issues that i think the market and us are still trying to sort through. so that's one space. the other is walmart. >> yeah. >> the biggest retailer that most people have heard of who is telling the market, hey, look, we can lose money in e-commerce but we can grow profitably that's a pretty tricky way for other retailers to navigate, the person with the largest scale and purchasing power will lose money in the most important business and still grow profitability. >> like you said amazon, target and walmart all winning at the same time, that's an interesting environment and that's where we are. guys, appreciate it. still ahead on "the exchange" today -- >> coming up -- a federal judge ruling that qualcomm is violating antitrust laws the stock slumping investors are wondering how much of a threat this is to the company's future plus, steve bannon's bulldog

keep china off wall street and this mansion has become a symbol for the high-end housing bust alright boys, time for bed.

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. welcome back it's certainly the news qualcomm did not want to hear the judge presiding over the

lawsuit against the chipmaker ruled the patents violated antitrust laws, a conclusion qualcomm vehemently disputes and vows to appeal but the ruling sent shares spiraling. the stock is almost 12% lower today. it's having its worst week in nearly a decade. let me bring in cnbc's jon fortt and ed lee, cnbc contributor, to talk more about this welcome. ed, first to you, we just had this huge settlement with qualcomm and apple where if apple effectively blinked, would they have done that now if they knew this ruling would come down >> also you have to wonder if that agreement can be reopened in light of the ruling now cal come is challenging the ruling so there's a whole lot more steps to go through of where this might land for apple. if the apple ruling does hold, that could benefit foreign makers like huawei or samsung, since they can stand to benefit from cheaper license fees on these things.

>> i saw great reporting with david fasher in the show earlier that spoke to about this directly and said look, it doesn't sound like the hearing is go that well against you guys are you worried about that he said no, we're not worried. we think it's going just fine. so they obviously misread the situation, right >> yes, it seems they did. but any time there's a lawsuit someone is actively involved, i never heard a company say it doesn't seem like it's going too well we're preparing for a loss cal come is used to long, protracted legal fights. wut but it looked like this one was over and they had gotten over it and pushed on. as ed said, it's not clear at that point that's at stake in this 5g era it seems most of the oems, except huawei, said we need to go on qualcomm with this one despite their business model so they're moving forward.

does this put it in jeopardy we have to wait a few weeks or months to find out. >> sure. cal co qualcomm has done business since basically its inception. understandably its customers do not love this but it stood up in court and said this is how we want to operate. why shouldn't they be allowed to two so this way? >> the ruling reverses, as you pointed out, this historical practice and if it stands they have to revise their entire business model can you argue it's too harsh a ruling and there might be concessions, a way to get around this and go for a softer ruling if you will. but it flies in the face of what has been historically going on at the same time these handset makers have been crying about fees for years and years and years and they keep going up there need to be settlements all around, whether it's in the mode of the apple deal or some version of that, that seems to

be a potential outcome here. >> this isn't hqualcomm's alway done business but pretty much a specific of the smartphone revolution it's the combination of those two things, smartphone chips and broad technology ip that's an issue here >> leave it to jon to get the nuance here. >> but the nuance is important because on that point, in the kway qualcomm is a victim of its ensuccess, the government is saying your patents are essential to this industry, qualcomm made it that way. they basically folded and said we can't come up with a cost effective chip for 5g and that was part of the settlement with qualcomm, right? are they a victim of their own success? >> i think the question is, would the market have looked different if qualcomm had played its business model and hand differently? part of what job lucy koh goes

through here is did qualcomm too closely tie will you got chips for the smartphones you needed to whether you had a license for their ent lech chul property beyond the chips qualcomm testified they did not tie those two things together. the judge cited documents where she interpreted they did tie those two things together and strong arm some of the oems. some of those things and issues of fact will come up on appeal i obviously am not a lawyer and don't know how it will work out but the fight continues. >> i like this, guys, the two of you next to each other too it's a good vibe let's do it again. john ford and ed lee, thank you very much. coming up -- a big vote just wrapped up as amazon shareholders push back against the company's face recognition software we will take you to seattle for the results. and baby boomers may be retiring but they're not ready to give up the big homes yet that's straight ahead on "the exchange."

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guggenheim named it one of the best giants, due to organic growth and emerging markets. in fact, he will join us next on "power lunch." and a chinese company seen as a regional competitor to starbucks is trading down today by more than 12% and significantly it is now below its ipo price of $17 it's around $16.22 now to sue herera for a cnbc news update. hi, kelly. hello, everyone. here's what's happening this hour house speerk nancy pelosi along with senate democratic leader chuck schumer holding a press conference after president trump canceled their infrastructure meeting at the white house. >> for some reason, maybe it was lack of confidence on his part, that he really couldn't match the greatness of the challenge that we have he just took a pass. >> an investigation ordered up by a virginia medical school failed to determine whether governor ralph north am is in a

1984 yearbook photo in a man in blackface, standing next to someone in a ku klux klan hood but investigators say they found no evidence the photo was placed there by mistake or was a prank. and tuft's university researchers compared diet data with cancer cases in 2015. diet-related factors may have accounted for more than 80,000 new cancer cases with colorectal cancer having the highest proportion low grain intake was the biggest culprit. you are up to date that's the news update this hour kelly, back to you. >> sue, thank you very much. here's what's still coming up today on "the exchange" -- ahead, wall street piling on tesla. baby boomers are not downsizing th t and thbie ebs wants you to smell just like him. the flexible class schedules

allowed me to go to work full time, run my catering business and be a mom and parent. when i reached this accomplishment, it was like, it's here, it's happening, it's now. we at southern new hampshire university are the ones who succeed. we are the ones who break through.

let's catch you up on a few stories that should be on your radar. it's time for "rapid fire. here to break down today's headlines leslie picker, dom chu wearing his deowedant.

>> thanks. >> tesla's shares are plummeting as another firm laid out the worst-case scenario for the stock, now citigroup, dropping down to $80 a share. tesla today ask under $200, that $196 >> $192, $193. >> we're down about 4 1/2% this afternoon consumer reports are saying tesla's autopilot function raises, quote, serious safety concerns, the test showing it performed worse than human drivers, guys. >> i would say this, it appears we know how bad it's gotten to tesla but every time it gets down to the $193, $195 area, it seems to have found near-term support. >> we haven't been down here for a while. >> we haven't been down here for a while but 22% of shares outstanding are held short so it could be a idea as the trend goes lower, that's part of the equation

but we're also talking about a company that's been so beaten up over the course of the last year that maybe it's now out of the realms of downgrading and maybe this marks a nearby contrarian type bottom. >> sure, america was blaming short tellers for the drop which i learned from you is very rare these days, shorts people have shorted the stock for years and usually blows up. >> yes, and they lost money the last three years in a row because the stock price just continues higher this month alone short sales in tesla made $1 billion in nonpaper profit. the month of may is not even over yet $4 billion so far this year. just from tesla shares finally declining. i guess it goes to show you that patience can pay off potentially. >> and the autopilot issue, which they keep saying people have to use it correctly and this is a way we're going to help safety in the long run, but

this is a pretty damning report from consumer reports that it performed worse than human drivers, which we talked about on the show before what does that wind of doing for sales if tesla is banking on this for the future and they have to put drivers at risk to jump in and correct what it's doing? that can't be a good thing. >> more than anything else it probably puts a time frame issue for elon musk's plans for fully autonomous fleets. it's not to say the jetson's world is not coming but it may not be as quickly as elon musk would like in the next two to five years. >> but it's a major decision and it should be right before it's out there. >> that's a major decision in terms of trust when it comes to tesla. what the price of the model is going to be. we've seen them kind of shift that over the past couple of months or so or safety issues that go along with it. there are a lot of headline risks here and whether you're a consumer or investor trust is a big factor that seems to be missing these days from the company and that is contributing to the

sentiment. next, former white house chief strategist steve bannon pulling no punches on china. he's calling for the u.s. government to shut out all chinese governments throughout capital markets. he made these remarks in a bombshell interview with the south china post he said huawei is more important than a trade deal and the answer to ipos here in america, we just had the biggest and most last year since 2010. didn't perform that great. down about 13% on average. should wall street be taking this pretty seriously? i heard him say this a couple of times, not with this specificity but we should use our financial markets to shut china off. >> it's an interesting idea. i don't think it will have much weight with the sec our exchanges that list these entities because they have gone out of their way to be this destination for foreign companies to access our very deep and what a lot of people around the world consider to be some of the best capital markets. and so i do think his plan would probably run into some issues.

but you're right. >> unless they just said this is the new law. >> anything can happen. >> how much did all bab wa rais? >> $25 billion in 2013 and double the year prior which was really kind of the thick of the trade war. so i think a lot of chinese companies stayed away. another thing you see a lot of chinese companies historically have made acquisitions in the u.s. and due to some of the issues surrounding cfius, the agency that improves foreign deals, they have largely kind of maimed in the sidelines as well as the trade war continues >> i'm curious if nyse and nasdaq are hit too, saying we lose too we will see if it gets there more news out, baby boomers are not opting to downsize their homes as they approach retirement 50% of boomers say they will never move from their home reasons include putting off retiring, having millennial kids

at home and shortage of small, inexpensive homes across the country. >> it's interesting millennials are staying at home longer and as a result there are fewer cheaper houses on the market the basements, as we say and not buying their own first house people are working later and later in life. those 60 and up, 25% are looking for a job, double what it was in 1996 we talked about the mcdonald's pr and a lot of us laughed but this is an important point to remember. >> for someone who wants to capitalize on long-term demographics, because for millions of americans, vast majority of americans actually, their entire nest egg is pretty much their house and if it's paid off or not. so the equity value of their homes has been a driving factor of how they can afford to live in environment a lot of times you can sell that house, realize the cash out and take that cash out to buy a smaller property and pocket the

rest of the money to use in retirement that's the game plan that could be changing and if it really does, then maybe a company that's a large home builder in america says, we want to build smaller homes for people, and that could be something big. >> by the way, i wonder if there's a little -- i see this anecdotally in my neighborhood, new jersey is not emblematic of the country however people paying high property taxes and still in the house after the kids moved out, i wonder if they go, they're still there. they haven't done the appropriate thing and moved on yet. that's not fair. they bought the house and want to stay in it 50 years, they should be able to without feeling peer pressure to move out. no one's going to argue with me on that? >> no. my parents would get that. they are so proud they just redid the kitchen and backyard they love hosting the big family we will quickly show the footage as we circle around to

autonomous cars could be replacing the delivery boy as ford is partnering with the robotics to create a uk walking robot that can deliver items right to you the prototype known as digit walks upright on quote/unquote legs it can walk up and down stairs and carry items weighing up to 40 pounds. it would travel on one of ford's self-driving cars. no word on when it will head to the market. >> anybody else freaked out about this >> i will have to ask to you stay in the car. i don't like it. i think obviously one of the things that's interesting here is that they're partnering with all of these different companies, dominos people don't necessarily want to get out of the car, right? they want their food or what they're ordering brought to them you can see a lot of value of that in the future but it's creepy. i would rather go and get what i ordered. >> i would not if dominos delivers and no one's driving the car, it's weird to go to the last mile to the last 100 yards. >> the sad part too is there's

less and less human interaction as society evolves i mean, 100 years ago people had a milkman coming to their doorstep you don't do that anymore. we're not bog to ggoing to get . >> but we want to talk deodorant, partnering with pop icon justin bieber to develop a deodorant called here just now describing the special edition deodorant -- and this is my favorite part of the whole thing -- inspired by the idea of self-care and being present. it's expected to hit stores this fall. >> does it smell good? >> there was an even better quote by the ceo let me see if i can find it. he said the name here plus now is intended to inspire a conversation about health, wellness and optimism for the future this deodorant is a means to talk about the issues we all face day to day and how we can support each other and our collective journey to live our best lives. >> you think of mindfulness and being present, i think about the

dalai lama, not justin bieber. is that the collaboration next >> a simple question, has anyone smelled it i would be kind of curious. >> he launched an ad on instagram with his arms all out on the air. >> all of the tattoos and everything. >> there we go there's the instagram post. >> there it is right in the pit. >> apparently schmidt made big inroads at retailers because the younger generation want these all-natural products but the amount of hype and messaging that had to go into this deodorant is my favorite story of the day we can talk about all of the challenges we face. >> these celebrities often wind up getting big bucks for whatever celebrity their teaming up with. we're laughing but they may laugh all the way to the bank. >> it's self-care. and i use the aluminum one. >> i do too. staying traditional. >> leslie picker, dominic chu,

thank you. coming up -- bitcoin doubled since january. we will talk to a man who predicted bitcoin would be worth $250,000 a coin by 2022 tim draper to managing your fleet... to collaborating remotely with your teams. giving you a nice big edge over your competition. that's the power of edge-to-edge intelligence.

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year of the unicorn. those long-awaited tech start-ups finally going public and making billions. but many of the big ipos this year have been disappointing with uber being the first company with a $4 billion plus offering to open lower than its ipo price. how does the longtime venture capitalist rate the field? we're live at the collision conference with more and system draper >> thank you very much for joining us. >> my pleasure. >> back in 2013 you said venture capital may have reached its peak we saw uber, lyft, raise a billion dollar fund. what are we seeing now as these companies come to public market?

>> i never said venture capital reached its peak. >> you did in 2013. >> i said there's so much farther it could go. so many interest thngs can come from venture capitalist and entrepreneurship now with all of these interesting technologies coming along, i got to see the internet boom i'm getting to see the bitcoin boom now all of the bitcoin, smart contracts, blockchain, they're transforming many industries so there's a lot of entry capital out there, a lot of good entrepreneurs and you're going to say seed changes in the world. >> i know you're focused on bitcoin but what about some of the other companies going public after being private for decades, like uber, a decade or more rather, like uber and lyft, how are you judging their perception in the market? how closely are you watching >> here's what happened. sarbanes oxley and all of the things on top of it made it so no company unless it's hundreds of billions of dollars wants it

to go public what's the point it just cost you $5 million a year in regulation so i actually like the markets that are kind of in between there where forge and equities create marketplace that are less regulated and more open and we can see more excitement. i think what's happened is the public is going, huh, who cares? we've known about uber and lyft forever. they're boring it's not going to grow at 100% a year it's going to grow at like 10% or 20% a year. >> but you're talking about -- >> its investors are just bored with the public market because there's so much regulation on those public companies that they are already way big. >> and on that point you said, i asked you about facebook in particular, you said it doesn't need to be regulated why is that? >> actually, what's interesting is every company after 20 years, when it's 20 years old, there's a ripe opportunity for an

entrepreneur to come and challenge it that's happening now i am seeing a lot of interest in competitors to facebook who are coming to me and saying, hey, i can do this and it can be more private. i can do this and it can be more open it's actually both sides of the scope. but the entrepreneurs are coming and saying this is going to be the way it is. >> got you. >> so i think what happens is the regulators come in when it's already a foregone conclusion that the company is going to be challenged in the marketplace, and people are going to move to other social platforms. >> quick question, yes or no if you can, would you invest in another company started by elizabeth holmes >> that's funny. if she's chief science officer i think i would. >> thank you very much, mr. draper we appreciate it back to you guys at headquarters. >> all right, guys,thank you very much. chief science officer, interesting stuff. straight ahead, we will take you to bel air where one mega

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no matter what you trade, at fidelity do any of you know captand here we go. [ "good to be alive" by andy grammer ] it's snowtime baby. [ screaming ] oh, snowball. uh, is he ok? not in any way no. take that ok. you were just beaten by a rabbit. you don't even know it. [ ding ] oh, my pizza rolls. welcome back he built a fortune after being

the hollywood plastic surgeon to the stars but after building a $30 million mansion on spec, his price may go under the knife >> reporter: as the plastic surgeon to the stars, dr. raj has worked on everyone from kim kardashian to jennifer aniston but his latest project, 34,000 square foot mansion in bel air, has an uncertain future. he built the home in hopes of flipping it for a big profit >> the beauty of architecture is basically the beauty of the face of a human being so using that desire to create, that's what started me to want to create a house. >> reporter: but as it grew in size and cost, kanodia struggled to find lenders and investors. his real estate friends told him he made a big mistake. >> they said you're way out of your league. it became more and more challenging. for me, if i have a vision, i want to fulfill that >> reporter: when it was finished, he listed it for $180

million but like many high-end communities today, bel air has an oversupply of mansions. many built on spec or speculation to sell. prices and sales are falling and the modern white white mansionse become the empty white elephants of the housing markets there are over a dozen homes for sale in l.a. for over $100 million. a speck home built right next to his was asking 250 million and just got a $100 million price cut. >> the ones that have had to drop prices by dozens of millions or 100 million, that's a disappointment but perhaps it was overreaching. this market we're entering is going to shake it out. >> lily. beautiful. >> he beams like a proud father as he tours the team with gardens, eight bedrooms, state of the art gym and spa and infinity pool.

it's still for sale. he says he would consider offers of over 120 million, and he will rent it for $1.5 million a month. if all that fails, he hopes to live there himself if he can afford it. >> in las vegas term, it's called all in, like i'm all in times a million. sometimes you learn as you go along. and yes, it could be a mistake, but in my heart, and in my soul, i think it will all work out >> i mean, how did a plastic surgeon afford this -- that's -- he must have done incredibly well i understand the house costs how much to build? >> the house cost somewhere over $70 million to build >> he had that kind of money to spend on building it >> no. that's the issue this is leveraged. he borrowed from every source that he could. he borrowed from his own house, not this house, one across the street he borrowed against this property he has all kinds of loans from all kinds of banks that are now

coming due, and he said i'm doing as many plastic surgeries as i can every day to pay these loans. >> if i'm his patient, i don't want to hear that. i could see at a million and a half maybe there's a better prospect than trying to unload >> and saudi families come to l.a., they rent the homes for $300,000 a month that's what he's hoping to do. amazon shareholders cast their votes on the controversial facial recognition software. we'll bring you the results and what it could main for the stock. stay with us

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so if an auditor shows up, i can be a step ahead. that's the cloud i want. is that to much to ask? expect more from your cloud. ibm cloud. welcome back the votes are in over a hot button issue at the amazon shareholder meeting. two separate proposals involving the facial recognition software. the use of which has been banned in three u.s. cities including san francisco. we have the latest >> reporter: hi. shareholders wrapped up the meeting. the protesters and you can hear them, talking at the moment about climate change

facial recognition technology was front and center at the meeting, and both proposals involving facial recognition technology were rejected one would have banned amazon from selling that technology to government agencies. another would have led to an independent study of that program. there's recently been a ground swell of opposition to amazon's use of facial recognition technology among the aclu, the employees and policy makers just last week san francisco voted to ban facial recognition software by city departments. other cities are considering similar bans amazon says its facial recognition technology program or recognition is a powerful tool for businesses, governments, and law enforcement. kelly, back to you >> aditi, thanks taking a closer look at this issue the house oversight committee holding a hearing on the impact on civil rights what's at stake for amazon and other companies, let's bring in steve co-vac

the defeat of the proposals, are we less likely to see these types of proposals going forward. >> reporter: i think we need to look at we've seen this pushback from employees at big tech companies at microsoft they have a contract with the military to provide hallow lens headsets to people in the field to make them better killers microsoft has pushback they said we created a new level of computing not to help people kill people on the battle field, and now it's hitting amazon. we've seen it with google and amazon now i think what's really interesting here is big tech company employees and now shareholders are feeling uncomfortable that governments might be using the tech knowledge that were used for consumer practices >> steve in fairness this was a specific campaign by a group that had civil liberty concerns

to build this and turn it into a shareholder proposal to try to come this way at the company versus other ways. again, they could do that with other companies. there were two proposals one would say they would be banned from selling recognition to government agencies unless the board said it would not violate human rights the other wanted an independent report to look at the impact do you think we're going to see amazon, microsoft, the rest of these companies having to come up with separate boards that can decide when this technology is appropriate to sell and even after its sold, is anybody able to police its use? >> well, that's what is interesting. i'm in toronto at a collision conference that's what a lot of people have talked about the idea of creating a public/private partnership to create the standards around when a private tech company comes in with something that can be used by the government, is it being used properly. yes, i think there is going to be more of that. but right now it's kind of like

the wild west. they can go out there, sell this technology to government and there's no oversight in how it's used amazon's position is we don't know if it's been misused. i don't think it goes far enough and doesn't give the shareholders enough confidence that they're doing it correctly. >> at the same time, jeff bezos says there are ways they can be used the last thing i want to do is stop the progress of new technologies especially with chinese competitors are happy to move forward with it >> isn't that the facebook response too but you look at how this kind of technology is being used in china. it's being used to go after religious minorities and literally jail them. they can identify them using facial recognition no one is saying that's going to happen to that level of extreme in the united states, but it is a concern when governments are using technology like that from american chinese competitors to american tech companies. >> appreciate it, steve.

at least we have the constitution >> thank you >> that does it for "the exchange". i'll join "power lunch" which begins now >> thank you seconds away from breaking news from the fed out of washington d.c taking a quick check on the markets. dow down a quarter of a percent or 69 points s&p 500 down by 6. let's get to steve liesman with the fed minutes. >> thank you the minutes of the main meeting say a is appropriate for some time the first time they've put a time period on the idea of a patient approach they say a patient approach to rates even if global, economic, and financial conditions continue to improve. there was expressed growing concern about low inflation. some view the downside risk of inflation has having increased several members of the committee said they are concerned if inflation doesn't rise in coming quarters that there was a risk that