>> steve. >> i'm going with xbi in biotech. i think it's been slaughtered too much has to go higher >> begin to take a small position in nike. >> interesting, okay keep our eyes on that. speaking of the dow, the dow is up about 59 points that does it for us "the exchange" begins now. >> here iswhat's ahead the economy, rates or china. who is holding the reins time to hail a ride? uber said to report results today for the first time as a public company that stock stuck in neutral since going public tariff breaking point. the ceo says chinese suppliers are giving him the cold shoulder and lay-offs and store closures could be next. we begin with today's volatile

mark dom cuh. >> dow industrials up about 92 points at the highs, down 32 points at the lows erring by a small percentage the nasdaq up .3% as well. a close eye on transportation stocks relative to their performance verses the dow jones industrial average a couple of the etfs dow industrials versus the dow trance ports the dow transports up about 8-some percent you can see here down six days in a row and down eight of the last nine days from the current peak weave seen in this last move, down about 10% the dow only down about 6. we'll watch that trade dynamic the stock of the day, at least today, the only s&p 500 stock that has hit a record high that's dollar general up 8%. this is the high of the session right now.

since the beginning of the year, this stock, kelly, is up 18% interesting comments, better profits, better sales, better same-store sales growth. the cfo of the company said consumers should expect higher prices later down the line this year because of tariffs. back over to you. >> they are amazingly resilient with that headwind welcome to "the exchange." i'm kelly evans. the fed vice chair said just last hour that the u.s. economy is strong, but if a material downside risk evolved, it could prompt a change in the fed's policy state pending home sales today dropped 1.5% the midwest was the only region to see a rise. the biggest housing news of the day, the average 30-year mortgage rate has fallen back below 4% that's a 16-month low. let's drill down more on these markets with all the reaction to these headlines. seema mody is down at the new york stock exchange. >> the market is starting to

quantify the effect of higher tariffs. we have earnings from the second quarter showing wall street sees profits growing by less than 1%, down from the 2.8% estimate in early april. why have that come down so much? three major factors. the dollar is getting stronger, right around the two-year high which makes goods more expensive for customers overseas that could weigh on sales growth as will higher import duties, especially the retail and comer names that produce goods in china. don't forget, wages have been on the rise in 2019 the most exposed sectors as we've been discussing, and costco, ulta are getting set to report after the bell. those stocks have had a very strong 2019. costco up about 2019 this year we'll see if they can maintain those gains. >> that's one to watch seema mody, thanks to the latest in the trade war where china is making the

next move. let's get to kayla tausche in washington. >> u.s. soy bean farmers hit from multiple forces, delaying and stockpiling crops. china halting good will purchases that would have totaled nearly 6 million metric tons on saturday the total tariff rate on soy products entering chain will rise from 28% from beans and 34% from oils. trade sources say the fight is likely to intensify further before it cools down i'm told vice president mike pence is planning a speech on china's human rights record tied to the 20th anniversary of the tiananmen square massacre and could mention human rights sanctions. a white house official plans commemorating the speech around the anniversary. one of many hawks vocal about china within this administration, it's important, kelly, because as we expect potentially this administration to weigh further sanctions on

companies like hick vision, my sources are saying this speech is a potential venue for that announcement >> kayla, that's huge news that would be next tuesday now you have all weekend of speculation going into this about what the vice president is or isn't going to say which i don't think he would have chosen that date without saying something about it if he does, how could china not respond? >> it's a significant date, of course, in history, kelly. i'm not told it will be on the date, june 4th that is the anniversary, but it will be around the date. it might not be next week, but just that the speech is in the works and the content is currently being crafted at the same time as some of these additional sanctions are being weighed. we'll wait and see exactly what that speech turns out to say, whether it is hawkish, whether it gets watered down china is ramping up threats of its own. >> fascinating, kayla, thanks very much. is it trade? is it bond yields? is it the economy? is it the fed?

investors digesting a number of issues on squawk box earlier today, dallas fed president richard fischer made the case that sometimes a downturn is inevitable no matter what the policy. >> at some point the cycle turns. you've got to have something in your pocket to spend to mitigate a downturn i hope the fed saves some of those nuts for when winter comes. >> let me bring in bill smead from smead capital management. rick santelli is here onset and joins us as well joe, i'll start with you because you differ substantially with what richard fisher had to say there. >> the fed basically drives business cycles, not always, but mostly if the fed is too aggressive, the economy will slow. the weakest part of the economy is housing which las no relation to tariffs or anything, housing starts are down 9% over the last four quarters.

that's the weakest since q4 of '09. >> the drop in bond yields especially goes back to the fed because our fixed income, they said, look, they've dropped every time they've had a meeting or statement it's the fed that's pushing us lower here others are saying, no, it's the tariff issue it's the fact that after the president's tweets on china, that's what's driving things down you're in the fed camp >> rick is a bond guy and know we broke out of the range on tens when powell kept talking about transitory inflation it's not that trade isn't a factor it's not the dominant factor in fact, import prices are decelerating year on year. not that it won't be a bigger issue. to me this is all about how much the feds raise rates at this point in the cycle which has been a lot. >> so the collapse let's hear from the expert in the house on this. it's because he didn't sound dovish enough that he spooked markets because he said it was transitory >> absolutely. >> rick, what do you think >> on trade i couldn't agree more to me, if you didn't know there

was a trade infraction going on, just monitored the data, still look at first quarter holding out at 3.1, maybe you get an inkling that inventory might have something to do with it all in all, it isn't what's going on i agree that all the other issues you brought up are important to treasuries. the economy isn't what it was in early 2018, but it's still very vibrant, just not as good. the biggest issue i see is mario draghi in europe i think what's going on in europe and japan, and the uk to some extent, is pushing rates lower on a relationship that the fed can't reach. >> explain to me because i don't understand why now so we're here in 2019, rick, the beginning of the year. the german data has been awful for months it's bad but been bad for some time so why is it now, this week and this month that we're plunging new lows in europe why? >> because now it's pretty apparent that the central bank missed any window it could have possibly had to try to address the stimulus issue now what they're looking at is

going into an extended downturn, potentially a recession, we don't know yet but they're going in with no bullets. when we talk about the fed -- >> the very thing richard fisher was talking about. >> -- it's very logical to think maybe we need to ease, fed funds pushing us in. markets have hissy fits and the feds always want to accommodate them in that relationship. at the end of the day, those nine quarter points are our insurance. i think they ought to be really stingy in giving them back because we don't know what size moguls are down the road. >> you're reading from the hymnal that fisher is reading from. >> absolutely. >> bill, what about you? >> i would agree with joe in that within a 12-month time frame, what the fed does is incredibly important but to make the most money over a ten-year time period, you have to think in long-term time periods. i'm kind of clicking my heels together like dorothy and going, there's no places like home, there's no place like home let's just think about there for a minute

rick, i think you'll like this the baby bombers were a 75% bigger group than the group that preceded them. so when they borrowed their money in the '70s and '80s, we had the highest interest rates in u.s. history. when they followed them in the savings group, the 45 to 60-year-old age group, we had the lowest interest rates in u.s. history 75% more saving, and the group behind them was 17% smaller. the next ten years, 17% fewer people are going to be in the savings years. the baby boomers are going to have to eat some of their seed corn and there are 89 million millennials coming i'm sorry to beat on this dead horse, but they're so spoiled that we've still got 4% mortgage rates for them right now. >> 3.5, bill >> when you look at what's going on right now and we look at existing home salesor pending home sales of existing homes, there aren't any homes for sale because 75-year-old people are

living in them and not selling them so we have to build them so what i would argue is to get the fed out of the equation, we have to have the millennials coalesce they have not coalesced yesterday which has been very frustrating to buffet and to us. >> you're saying it's a demographic shift. from bill smead's point of view, invest in the bullish trend, wait a couple years and you'll get there. >> the home builder stocks are anticipating it, up substantially in the last six months. >> joe, give us a quick last word wrapping all this together. >> current quarter growth is soft, only around 1% the back half my guess is will be weak and lag response to overly excessive monetary tightening the fed will cut rates, probably december, rick agreed with me off camera i hope you still agree. >> i totally agree as long as the current glide path continues. >> the yield curve is sending us a message of slower growth and

the fed has to take back some of the tightening thank you, joe rick we'll see you in "rapid fire." bill, we'll seep you around. >> house hunting. >> exactly, in omaha and those kinds of places. here is what's still ahead on "the exchange. >> coming up, uber rolls out their results. will it least investors to hop on board or will the pain continue one ceo says he's hit the tariff breaking point and will have to raise prices, and why his suppliers are now giving him the cold shoulder. plus the new target in the tariff war beer and mattresses. this is "the iks change" on cnbc let's talk. you blaze trails... but you have the power to do so much more. let's not just develop apps, let's develop apps that help save lives.

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combined for the first time. when you're near an xfinity hotspot you're connected to wifi, saving on data. when you're not, you pay for data one gig at a time. use a little, pay a little. use a lot, just switch to unlimited. it's a new kind of network. call, visit or go to xfinitymobile.com. welcome back uber is set to report results for a first time as a public company after the bell today the streets have already been warned net losses could hit a billion dollars or so. shares are lower today and the stock down 11% since the ipo andrew hawkins is the transportation reporter over at the verge. we'll start with you what's the main thing people need to watch for? >> the main thing they need to watch for is losses. i think the company would like

investors to look at gross bookings because that's an indication of their market share. in reality they're still not making money and still a long ways off i think that is going to be the key point investors are going to look at because their losses are accelerating you said about $1.1 billion this quarter. that's actually speeding up the pace of those losses from last year at the same time that revenue growth is slowing. sequentially quarter over quarter revenue growth could be 5%. >> dee draw, what did lyft stop reporting? these are the only two companies to compare apples to apples and it's a hard thing to do. >> lyft stopped reporting gross bookings and investors were really upset over that uber, we expect they'll continue to report that number. >> andrew, are you going to be watching that and are investors going to be more for giving of losses or any signs that they're losing share >> i think it depends what story

about uber do you believe. do you believe they in the few through have autonomous vehicles and delivery robots making all their money for them and won't have drivers to pay anymore and that's how they'll become profitable or do you sort of believe the bearish story about uber which is that they're massively unprofitable, really no path to profitability and which can't trust the things their executives say because the technology isn't there, won't be there for decades to supply them with these autonomous vehicles so we have to look at the present day picture which is, as you can see by these numbers today, extremely grim. >> i am curious, andrew. we've seen them unveil a lot of types of services. when you open the app now, there's a lot of different options for using uber, different kinds of ubers, different preferences. what's that all about? >> an incredibly crowded app they went through a process of trying to streamline the app over the years now it's gotten incredibly

crowded again. you have the core ride railing service, uber black for the premium and these other options which is scooters and bikes in a lot of markets they operate in that goes towards uber's ultimate goal which is to become this one-stop shop for transportation, all ways you want to get around town. do you want to take a car, an suv, maybe a bike or scooter, perhaps eefr public transportation they rolled out a new service in denver providing ways to for people to buy tickets in denver's public transportation system >> also interesting announcement is that uber is going to kick people off the platform if their ratings are low enough >> i'm a 4.63. i think 4.6 is the threshold. >> 4.6 is the threshold? >> i'm worried i'll be booted off this i assume you had to be a two star kind of person. why would they be close to

pushing people off to use the platform >> it's better in the drivers if you have someone acting up on a consistent basis they want their drivers to be as happy as their riders. that's what it's about i've gotten so much advice on twitter about how to be a better rider, don't slam the door, be nice it's tough i'm worried now. >> if that's true, we'll have to look into that if 4.6 is close -- >> that's the rumor anyway they won't say. >> what about uber eats separately that's the big topic of growth and conversation >> what i'm interested in is the take rate. they take off all the money they pay to the drivers and to the delivery people. with uber eats, they're also paying the restaurants as well their take rate percentage is a lot lower with uber eats they've said in their filings ahead of their ipo, as they're expanding restaurants they're losing more and more money and the take rate looks worse and

worse as uber eats continues to grow. >> andrew, what's your uber rating >> i think 4.8, which i feel pretty good with that. >> deirdre, what are you >> 4.83. we had a little competition here at the bureau yesterday. >> i'm worried a lot of good stuff to watch for this afternoon. coming up, one store is literally hanging by a thread because of tariffs the ceo of joann fabrics stores joins me with some of the difficult decisions he's had to make to make things work. a galaxy not so far away anaheim, california, has rssney's new $1 billion star wa themed park it opens its doors tomorrow. we'll take you there live straight ahead ta ke care of us. it was an instant savings and i should have changed a long time ago. we're the tenney's and we're usaa members for life. call usaa to start saving on insurance today.

welcome back to "the exchange" here are some of the movers this hours. shares of kraft heinz are falling again after a warning from credit suisse, lowering its price targets to $26 sanderson says a cold wetsprin in the u.s. has put upward pressure on prices that's helping the case there. we're still showing kraft heinz still down 3%. shares of beyond meat which are lower now, bup more than 7% earlier today to touch $105 a

share. that stock is up 290% since its ethiop ipo may 2nd. let's get over to sue herera for a cnbc news update. >> hello everyone. here is what's happening at this hour jared kushner and special envoy jason green blat greeted by israeli prime minister netanyahu as they arrive for a meeting to discuss the trump administration's long-awaited peace plan. >> the security of israel is something that's critical to the relationship between america and israel and also very important to the president in his heart. we appreciate your effort to strengthen the relationship between our two countries. it's never been stronger we're very excited about all the potential that lies ahead. >> leaders of arab and muslim states gathering in saudi arabia to discuss rising tensions with iran the foreign minister urged muslim nations to confront with all means of force the recent attacks in the persian gulf that

some arab and u.s. officials have blamed on tehran. here at home, former mississippi senator thad cochran has died the seven-term republican senator died this morning at a nursing home in oxford he used his seniority to steer billions of dollars to his home state. cochran was first elected to the house in 1972, he was 81 years old. you're up to date. that's the news update this hour kelly, back to you. >> thank you very much. we have a news alert on juul here is aditi roy. >> juul is considering opening up u.s. retail stores. that would only allow people over the age of 21 to enter. >> wait a minute first we have to wrap our heads around an e-cigarette making having stand-alone stores. are they going to have people at the door checking your i.d.? >> presumably, yes it's all stemming from the fda cracking down starting last

fall so the thought behind it, and juul has no comment so far and there's no former plan for stores opening but essentially it would give them a chance to control the distribution essentially you've seen the fda crack down on retail stores. >> we've seen the drugstores take a hit they're saying instead of relying on third parties who may be breaking the law and making us look bad -- >> exactly. >> how many locations are they going to have to have in order not to undermine their own sales? >> a lot of it is about brand evangeli evangelizeation, too they're looking at texas as a possible first state. >> that's fascinating. i want to know if these will be in shopping malls, strip malls, who is checking at the door or maybe not? they could let people in and maybe just not buy anything. >> it's also preliminary i think there would be a mechanism to check at the

stores kind of like if you go to a state that has recreational cannabis, legalized and you go into a dispensardispensary, thek your i.d. at the door. here is what's still ahead on "the exchange." >> coming up, the pph ceo isn't holding back when it comes to the state of retail. kegs and eggs is about to get more expensive a stalling niche automaker what lyft, the apple wchat and the avengers have in common. that's all ahead on "the exchange." nt wildfires. al: but, i'm filling in because there's a lot more to report! like when there are parched or windy conditions out there, you gotta be extra careful with things like burning yard waste. after all, wildfires can start anywhere, even in your neck of the woods. go to smokeybear.com to learn more about wildfire prevention.

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have more mornings. let's catch you up on a couple stories that should be on your radar. it's time for "rapid fire. mr. rick santelli himself in the house. courtney reagan and bill griffith welcome everybody. first up, pvh, the owner of brands like calvin klein and tommy hilfiger, ceo manny chirico was on with jim last night on "mad money" and they talked about the slowdown they're seeing. >> we really saw a slowdown in growth and a slowdown in retail

sales in general as we're looking at it. big impact here in the u.s. is lack of international tourism and tourism purchasing. >> strong dollar. >> and the strong dollar continues -- currencies from when i was here three months ago are down 3% to 6%. we're really feeling it as well. >> that's exactly what we're talking about. yesterday with the drop in chinese tourism, they're really feeling the drop of the international visitor. >> this is going to affect some retailers and not others macy's is another one that saw international tourism get weaker and weaker all the way through 2018 and effectively a continuation of that that hits macy's when they have these big flagship stores in big city if you're a company like pvh and selling internationally and you have a global brand recognition, you also attract that tourism dollar in the united states. that's a big issue. >> i think something else is going on i have a close friend who has worked in the textile business

for many years i saw him recently he's usually a good barometer of what's going on. he said over all the retail industry is very challenging they love to use that word it's not just tariffs, not just the dollar i think we're seeing a slowdown in retail sales anyway i brought it up until he brought it up, rick. he was very unhappy about the strong dollar. these results even lag a little bit. every day we check it, it looks stronger the argument in the urinal today said the fed should lower rates because the dollar is too strong. >> they're making a big assumption there they can lower rates, that doesn't mean the dollar is necessarily going down i think a lot of excuses personally i think retail goes in cycles, and i think that tariffs and the dollar, strong dollar are great excuses. really when it comes to foreign exchange, it's how much it moves around, how rapidly the dollar's volatility is. the fact it's been going up steadily since april of last year, it's much easier to hedge, and i think it's more easy to

deal with in terms of forecasting how you deal with demand and which country you trade in. >> kind of like oil, right it's like, okay, we can see you're not expecting it. if it's been slowly and stead y steadily -- >> exactly. >> the u.s. commerce department is cracking down on kegs and mattresses in china, saying the products are being dumped on the u.s. market at less than fair market the u.s. is imposing duties up to 79% on kegs and up to 1,731% on mattresses. >> how is that even possible >> the dumping or tariffs? >> how much does that mattress cost after all that? >> they already cost a lot if they're being dumped -- >> one thing i was thinking about with the mattresses is, you're supposed to replace your mattress once every eight years. i doubt anybody does that. >> how many years? >> once every eight years. >> i'll turn mine over every eight years. >> exactly

my point is, if you only buy it -- let's say you bye it once in a decade, do you really know what the difference in the price of the mattress was? that could be one saving grace for the mattress industry. >> we know how it's going to end. people will cut back on everything so they can buy their kegs and they'll be sleeping on the floor. >> worried about college parties -- >> aen mattress -- >> there's so many enumerations of how this can work in practice >> how do you define is? how do you define mattress >> if the cost of kegs goes up that much, we're talking about i would imagine bars and restaurants everywhere absorbing this, not just frat parties. >> this is one area of the trade war we haven't discussed much, and that is dumping. you get the subsidized industries able to bring them in at vastly lower prices this is an area that does need to be addressed.

>> the irony is, it's stuff that is consumed a lot and not -- that's a very vocal population the people making it, interestingly i think they raised the prices a little bit on german kegs. >> and mexican kegs as well. >> and mexican kegs. the washing machine issue. >> we thinks american keg needs to bring their prices down a little bit. >> this is giving them a chance. up negligent, elizabeth warren is pushing back, going old school the massachusetts senator and presidential candidate set up a billboard in the middle of san francisco just a couple blocks from corporate headquarters of companies like air bnb, lyft and drop box there it is. it simply reads "break up big tech." >> before rick starts his filibuster, let me say i don't understand this myself we all know silicon valley is a democratic stronghold. so this is her base that she's

talking to >> you mean the democratic party. >> right i didn't say democratic. i said democrat. she's alienating -- this would be like a republican candidate putting a billboard on wall street and saying break up the banks. doesn't make a whole lot of sense. >> not only does it not make sense, the issue is that politicians and governments are eager to say get rid of this, close this, change that. after that's done and we break it up, wlas going to exist afterwards what's going to keep the broken-up companies from not doing the same issues they're trying to address? i think that's the biggest issue. it's easier to say this isn't right. but what i'd rather see is a billboard explaining what her idea is after the breakup. >> that would take up too much space, too many words. >> a lot of words. >> short attention span. >> so hard to break up, though >> warren has been at the forefront of all the candidates it seems and having very

specific proposals hardly a day goes by that she doesn't have a plan for something. you have to watch everybody else figure out, like bernie has, is he going to adopt some of her plans? kamala harris is repositioning herself to be a little bit less progressive. they're seeing joe biden's numbers hold up relatively well. is this part of a strategy of warren's even? >> i don't worry much about it because i'm pretty sure that the senate probably isn't planning on voting for many of these programs or packages -- >> even a democratic senator >> you know what i don't think any congress is going to want to put their name on some of the issues they bring up we have a $21 trillion deficit all of the plans of many of these candidates are going to take a big chunk of that and add it on within the next handful of years. >> there's not much pushback these things come out and very few people -- >> i don't think anybody will take any of this seriously to be honest with you. these are 23 people trying to

climb to the top of the grease poll we know when they get elected, they'll slide right back down and not do much. >> what ross perot called free candy. we hand out the free candy and when we get in office, we take it back. >> potato chips and computer chips. nba finals are tonight er eric, come on down. >> i thought you would be in toronto. >> couldn't get my visa worked out. >> which actually is -- the international angle is probably the most important thing here. >> first time the finals have been outside the u.s there's only one canadian team after vancouver gave up and went to memphis toronto is in the nba files, they have home court so the finals start in toronto tonight. it makes for an interesting game that you can immediately blame them when the ratings go down. they'll say toronto is not in

the u.s. the ratings don't count. >> explain this for a second everybody will be focusing on the fact that there's no lebron and how do the ratings hold up the fact that half the games are in canada, it doesn't count -- >> it means the audience of toronto fans are not u.s. household. they're not part of a nielsen household number they have an easy scapegoat and can say, look, it was in toronto. >> only half of the households counted. >> still will be millions of people in new york and b new jersey. >> the fan base of the two teams. >> of those two teams. >> the first time that lebron is not in the sniems. >> he made the last eight. we knew that a month ago >> i thought he would pop up elsewhere, maybe an announcer. >> the reason i brought that up. that was 2011. the last time -- that is when the lakers were the two-time

defending world champion we still had a basketball team. >> lakers fan from the past. that's not happening. >> we should mention we have a lebron expert onset with us. >> it's funny. i feel like i don't remember a time when lebron wasn't in my life i grew up in ohio. >> in your life? >> in ohio. >> where are you going with this >> i grew up in ohio my brother is lebron's age my brother played basketball from the time my brother was very young, i was very young, we heard this name lebron, this phenom kid from akron. people would come from miles around to watch a middle schooler play and he would sell out arenas in high school they had to use a lot of o his games to the university of akron because of a lot of people coming it's therein thrilling to watch him. i am sad he's not in the playoffs he left cleveland. i'm just saying. >> you have lebron in the eastern conference the last eight years. he was the big star. there's no real big star in toronto other than kauai leonard. he doesn't talk much

you won't get much out of him. you get rapper drake who is a brand ambassador. >> it's true how many headlines around the playoffs have been around drake's interaction with the coach. >> shoulder rub on the coach that caused a lot of heat, and the nba had to talk to the raptors. >> there it is that happened in the middle of the ame. >> not supposed to do that. >> like ever. >> the nba had to talk to the raptors and said tell drake to cool it. he needs to stay on his side of the line. >> final question to put you on the spot what is it called? the spread, the line whatever for the playoffs it would seem the warriors are a favorite. >> the warriors are definitely the favorite >> for toronto to get here was a major upset. >> right. >> half the population of toronto is foreign born? >> that's why a lot of leagues want to expand into toronto because you get a different type of diverse audience. their population is big. they'd be the third or fourth biggest city. >> there are viewing parties all

over the city right now. >> deirdre bosa is a big fan. thanks everybody rick, are you here tomorrow? >> i'm here tomorrow but i'm not going to talk basketball >> back to the debt. i want to hear about trillions of debt. >> about trillions of debt, not all the money we lost betting on the bulls over the last -- >> thank you all appreciate it. coming up, tariffs had a major impact on some companies my next guest says his is no exception. he's at a point of no return saying he has to raise priceors lay-offs could next. the ceo of joann stores joins me after this

welcome back to "the exchange." the trade war with china drags on pain for retailers and consumers a lot. my next guest is ceo of a retail chain that sources two-thirds of its products from china.

it's going to force them to raise prices with consumers and relationships with chinese suppliers are getting more fraed. joining me is wade miquelon of joann stores tell us what's happened so far with these tariffs. >> we're been in the growth phase as a company and investing in our growth and refreshing the change we've been hit pretty hard with tariffs as you can imagine the first category three has been 10% we have category three going to 25%. the potential risk of category four going to 25% as well. >> sounds like a hurricane i'm sure it feels like that for you as well. what's happened with the suppliers? as you've said, they're already getting concerned. it's not so much just the price. it's just that general business relationship >> at the end of the day, the suppliers are obviously concerned. we're working with the suppliers to make sure we get the best pricing we can we're doing what we can to divert product elsewhere there's limited opportunity there. ultimately we may have to raise

prices on consumers if we can't resolve this. >> what do you think happens if you raise prices how much of an increase are we talking? >> it's hard to say at this point. the message i'd e looic to get across is we're supportive of fair trade for sure. in that vein we also have to make sure we're running our business model which is a little unique to other retailers, in the fact that everything we sell is to someone who is making something. they're making it either to sell to small business, as a small business they're making it to give to charity, hospitals, underprivileged, veterans and the like in fact, our people are manufacturing in the u.s that's sort of the unintended consequence of this tariff rule is that many of those categories, the finished products are not tariffed. so it's sending some of that finished production to go back into china. >> you're talking at cotton fabrics, fleece, yarns by the way, i love joann stores. i remember going in there as a

girl and looking at the patterns it was always so much fun. you have lots of relatively low cost supplies in your store. but where those price increases you think could turn a significant number of customers away, right? if so, are we talking about store closures are we talking about lay-offs. you have tens of thousands of employees. >> the concern is for our customers, again, about a third of our customers are making for charitable organizations they're often on a fixed budget. significant number are small business people. so they have economic models that are very difficult to take any kind of inflation for the finished price they have to charge i don't know if i would go there yet. the reality is we're still very hopeful that common ground can be found we're doing everything we can to avoid taking prices up where we have to and also to make sure that we don't put undue pressure on employees either on wages or hours. again, we've been on a very successful run, an investment growth phase i think the key thing we're

trying to do is make sure we don't have to make any kind of right turn away in that success. >> sure. wade, thanks for joining me. please keep us posted. good luck. wade miquelon, the ceo of joann stores. if you ever wanted to fly in the llnimienal falcon. galaxy's edge set to open in california we'll take you there live after this so, why don't traders have coaches? who says they don't? coach mcadoo! you know, at td ameritrade, we offer free access to coaches and a full education curriculum- just to help you improve your skills. boom! mad skills. education to take your trading to the next level. only with td ameritrade.

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go to xfinity.com/moving to get started. welcome back disney's new "star wars" themed park is set to open at disneyland tomorrow and we're getting a sneak peek because julia boorstin is there live to show us what it is julia? >> reporter: kelly, that's right. this is an imperial echelon. we have some storm troopers behind us. this is all part of disney's largest ever parks expansion called galaxy's edge disney worked for five years to capture the look and feel of the "star wars" movies "star wars" theme with the centerpiece, smuggler's run ceo

said they're already seeing galaxy's edge lift demand for this park. this comes as the company looks to grow the park's division, brought in a third of the fiscal revenue and should drive demand not just for the parks but the studio and even the streaming service, disney plus >> of course, yes. i think interest in "star wars" will be heightened because of that and that will heighten interest in "star wars" in a variety of other forms including on disney plus, vice versa >> reporter: disney recently raised prices ahead of this new land launching but iger said no negative impact from the higher prices back to you. >> i bet especially now with the storm troopers behind you. thanks very much julia boorstin coming up, a lot of talk about rare earth but what are these metals and minerals?

do they really give china a powerful edge in the trade war we'll talk about that with one expert next. look at crude, down more than 3% now. it's been on a slump lately. it's back to the lowest level since mid march. we're just over $57 a barrel we're back in two. [leaf blower] you should be mad at leaf blowers. [beep] you should be mad your neighbor always wants to hang out. and you should be mad your smart fridge is unnecessarily complicated. but you're not mad, because you have e*trade which isn't complicated. their tools make trading quicker and simpler. so you can take on the markets with confidence. don't get mad. get e*trade and start trading today.

welcome back to "the exchange." china reportedly considering cutting its supply of rare earth minerals those are the ones used in smartphones, electric cars and defense equipment. a closer look at the potential disruption that would cause to the u.s. economy joined by yew neen who served in the pentagon, an associate professor of the university of notre dame and morgue morgue here as well why is this strategically important to the defense industry, not just the consumer products we mentioned? >> yeah, so rare earths are going, for the department of defense, accounts for 1% of u.s. demand, so not a lot a little bit goes a long way but you see rare earth metals and minerals used in everything from lasers to guided missiles to fighter jets, just to put it

in perspective one f-35 fighter jet requires 930 points of rare earth materials according to the congressional report there are broad implications this is something the department of defense raised the alarm about for quite a number of years now, including in a very big defense industrial based report last year >> yeugene, let's talk about wha happened in 2010 we saw the prices surge and saw the smugglers kick in and often get that product where it needed to go, right >> there was a lot of adaptation markets are resilient and people don't just give up when one mechanism doesn't work so smuggiling out of china. hard for them to cut exports also in china, people found new recipes for the products they were making and used material available from other places and the industry didn't grind to a halt >> so here's my thing.

if we have a very powerfully worded editorial in the communist paper yesterday that says we may use this weapon, eugene, with the u.s., and this is the strongest weapon they have, does that suggest they don't have many strong weapons >> i'm not sure this is really the strongest weapon they have it's a weapon that seems like a silver bullet and is attractive, grabs attention and in fact, as morgan pointed out in the united states, we've said a number of times, government officials have said they feel vulnerable about rare earth so this is like a flashing signal use rare earth to try to manipulate us. it doesn't mean it could work but it attracts their attention. if china wanted to cut off trade with the united states across the board, they could do that. it would just be hugely costly to china and the united states >> when we were discussing why

there's no production in the u.s., one of the guests said because it's not eco-friendly. is that true you think an inversion or inability to produce this stuff in this country? >> no, the united states produced about 15,000 tons of rare earth material last year. it's on an upswing to produce more in the united states, very innovative technology and it's not a big ecological problem it's the illegal mining in china that is the eco-problem. >> because, morgan, if we have, like, said you have to use u.s. ships for u.s. goods at u.s. ports but we're not saying it's important to have a strategic supply of this stuff come on. >> i mean, just look at how many tariffs we've seen enacted in the name of national security. there is a national security element when you're talking about things like steel and aluminum and the defense industrial base. the same could potentially be said about the rare earth materials. mind you, they're not tariffed, those coming into the u.s. currently. whack be interesti

what can be interesting, the pentagon requesting new funds to go towards this production if you see the government get involved in that, that could be very interesting as well just from a national security standpoint >> i think with everything else going on, for sure, right? guys, thanks i'll leave you with the rhetorical question. morgan brennan and eugene, thank you. i'll join tyler and melissa for "power lunch" which begins right now. >> see you soon, kelly i'm melissa lee with tyler mathisen new at 2:00, china now accusing the u.s. of economic terrorism as the tit for tat escalates the trade war drags on, what's the biggest fear for investors right now? missing out on a rally or in the getting out ahead of a sell-off? we'll debate that and facebook kicking off its shareholder meeting at this hour protests, angry investors and a new threat from a presidential candidate. "power lunch" starts right now