and investing in the future of wealth management, schwab gives you a way to play both it has come down and so i think you buy it >> mgnx looks like it could pop. >> good weekend to all of you. "the exchange" begins now. >> thank you, scott. here is what is ahead. president trump slapping major new tariffs on mexico unless they stop letting migrants into the u.s. business groups so furious they may sue over this, but peter navarro says investors should look at it calmly. and an ugly month on wall street, major averages all down more than 6% in may. bond yields are slumping too the 10 year below 2.2% we'll look at how best to position your portfolio. and retail stocks are having their worst month since the great depression all bad news here. gap, kohl's, foot locker and

nordstrom are getting crushed. are more store closures next we'll get in to that but we begin with the selloff and dom chu has the numbers. >> so how about less bad still red across the board, but still less bad means that we're down about 280 points overall in the dow jones industrial average so far, but we were down about 329 at the low so, yes, it is still bad, but knots a bad. the s&p 500 over 1%, declines to the down side here again, we focused on it yesterday. the transportation stocks, namely on the heels of this u.s./mexico trade issue because transportation stocks including railroad companies like kansas city southern taking a move lower. dow jones itf iyt has moved lower by about 12% and then one industry group in particular, auto stocks, auto parts stocks, those stocks all

moving to the down side. general motors off 5%. fiat chrysler do you knwn 6%. general motors has 14 manufacturing plants in mexico, many spliof the supply chains w be a focus the rest of the day and of course the trade dispute. welcome to "the exchange." i'm kelly evans. let's get straight to the latest on the new tariff threat to mexico kayla tausche has been lighting up the news wires all day and just got off the phone >> reporter: we're trying to learn exactly how the policy which was hastily rolled out yesterday afternoon, how it came to be and where the support and where the opposition was from within the white house and beyond we've learned from our sources including one close to the white house, one source briefed on the matter and senior administration official that the treasury sect and the trade representative boast b ambassador bob lighthizer were

opposed to the mexican tariffs i received a call from jeff emerson who tells me on the record that ambassador lighthizer supports the president and says he supports this strategy. that is directly against what we have learned from our sources, but we will present both of those pieces of information to you are viewers. and i've also learned that the president's frustration this week originated from his trip to gentleman can pan where he spent a lot of time with stephen miller, his hard line immigration adviser, and miller i was told had the president's ear on the surge in border crossings and that the president returned from the trip riled up about the search in border crossings and was further frustrated by a lot of conservative radio commentary about that topic so that is certainly interesting to note where this policy came from and why it came this week and what some of the catalysts were here. so where was everybody else? we've learned that the white house counsel assured the president that this was a

legally ironclad proposal to put forth, which is an interesting characterization that will most definitely get dissected as business groups weigh their legal options here and we also know larry kudlow one of the free trade advocates was out this week recovering from a hip procedure so that is certainly something to take note of as well. so we are trying to parse exactly where this came from and why the president decided do it now. but we should note that the acting chief of staff mick mulvaney said that perhaps there is a chance they don't have to go into effect if the response from the mexican government is sufficient >> and i notice they said we'll decide what is sufficient. and bd i'm oi'm wondering, do yw what the standing of the claim better than of commerce or other groups would use to sue? >> reporter: i've heard that they are exploring potential legislative resources. a lot of republicans especially

in the senate have been trying to figure out ways to potentially tie the president's hands on tariffs, that they want to be able to limit the scope in which the president can actually put some of the tariffs into effect and when congress returns from rece recess, could you see some of those gain new steam >> kayla, thanks very much all of this sending stocks lower. the last trading day of the month in fax the dow was on track for its sixth straight weekly loss and this would be the first time that has happened in eight years. let's get more on the selloff and seema mody >> right now stocks across the dow, nasdaq and s&p 500 lower by 1% we're off the lows what is unusual about the situation is that in the past tariffs when it pertains to china were being used to reduce the trade deficit, but in this account it seems like tariffs are being used on tackle border security so an unconventional use of

tariffs which is the market is trying to fully understand the exposure to mexico is significant. if you look at the sectors that are sending us lower, it is autos, industrials, energy sectors that do have exposure to the country. and then this rotation into the defensive sectors, [']you are seeing real estate, but real estate sector up about 0.6%. and it is the only sector that is higher on the month >> and these tariffs are really a mixed metaphor in how they have been used in the past based on precedent but what is really fascinating this week, if you look at consumer confidence from the conference board, that was 134.1. solid number if you look at chicago today, 54.2 michigan final, 100. solid numbers. but interest rates are moving down, stocks moving down, doesn't paint an optimistic picture. steepening on 10s and 2s and 10

year down 16 basis points on the week >> and down 32 for the month i believe. >> so looking at the ten year, that is the spread right there, but the level of the 10 year itself really went lower last night. >> absolutely. and in the past we've always talked about how a lot of the pressure and our rates comes from overseas. i think on this one it was safe to say that we led rates lower >> for once. all right. thank you both mexico had been one of the biggest early beneficiaries of the u.s./china trade war these tariffs may erode that edge peter navarro saying that the tariffs are strictly a matter of national security. >> this will get everybody's attention in mexico. we'll work with them they are our friends they are our allies. but let's face it, they have been standing by and letting this happen. there is a transnational criminal organization that thrives in the entire country of mexico they are a conveyor belt for

illegal migrants coming from central america. that has to stop >> i'm joined by a former mexican ambassador to china and currently senior director. and also james jones is former u.s. ambassador to mexico who work order nafta under the clinton administration he is currently chairman of monarch global strategies. and so if you both don't mind, i'll use your first names to differentiate you. >> that is okay. >> and michelle caruso-cabrera is also with me. you're our ambassador to the world. let's start with you this is strictly meant to be a weapon to change next copy's behavior on illegal immigration because the white house is upset that congress hasn't done anything >> i think that absolutely the president is extremely frustrated by what is going on at the border. he thinks he could solve some.

problems by changing the structure, but he needs congress and that is not happening. so he has gone to the other method he loves tariffs for everything. and they are trying to use the national security justification which would in theory give them legal justification for about doing this it will be tough for mexico though mexico itself -- the mexican president this morning gave a news conference 7:00 a.m., he is just as frustrated about the search in migrants from central america and they have been working on policies to try to stem them because even the mexican population is frustrated by the surge >> so jorge, what is the mood like in mexico about the migrant problem and what do you expect the reaction to the tariffs to be >> well, clearly mexico is not happen about president trump threatening to impose tariffs on mexican exports. but nevertheless mexico has all along acknowledged that there is a migrant problem. the foreign minister was in town last week, in washington last week, presenting a development

program for central american countries to stop the flow of migrants, which is the way that you keep them in their country he came to washington. pompeo was not in town to meet with him so i don't know how much head way he got but he is flying in today to address the issue, which again mexico has never denied is an issue and we will work with the united states to solve it. >> so ambassador james jones, he worked under the clinton administration when nafta itself was instituted now we have the president pushing hard for his new nafta and reports we heard from kayla about whether or not this will interfere with that progress do you think these tariffs could help congress move forward on new nafta or do you think it undermines that movement >> i think that it undermines it considerably

it is another new policy that makes no sense, has no coordination with the rest of our foreign policy or trade policy the tariffs are the baby pacifier for trump and for miller and that crowd that really don't have the information that is going on mexico has been working with our country trying to work with our country for quite a while now to stop this flow of migrants from the northern tier of countries in central america we don't even have an ambassador in mexico to do the coordinating and hopefully that will be remedied before too long but that is unheard of >> what about the white house's claim that says that the democrats have done nothing on this issue we're resorting to this, it may be his favorite weapon, but we're resorting to this to change mexico's behavior no one is stepping up including mexico to do that. >> well, i think first of all that is false. mexico has been doing quite a bit to stop the flow and they have had something like 150,000

or so interruptions at the mexican border with guatemala. and they have been working, trying to work with our government this is not particularly an issue for congress the overall immigration policy is an issue you for congress and it is terrible that they haven't dealt with that. >> right >> but this is basically an issue of how do we stop this particular flow, not overall immigration, but this particular problem, and in that regard, i do believe that what mexico and the united states had been working on, which is to have development money go to central america to try to keep the people who are leaving there at that particular location and that has gone nowhere. as a matter of fact trump has taken away that aid. >> and let's remind everybody that we are talking about 5% on

the 10th of june that goes to 10% on july 1 and then 15% and then 20% and then 25%. we're talking about they have a matter of weeks really to avoid that happening >> it would be incredibly disruptive, catastrophic for some industries, some importers because the costs will be driven up so high whether or not they can get it done, i'm not sure two on things have to happen the changes have to happen in central america. the president cut off the money to central america because they have been getting billions for years and nothing happened something is about to happen in latin america, el salvador gets a new president tomorrow a guy who actually believes in the markets. since 2014, they have been led by a former leftish guerrilla and you can see the results have meant no growth, slow growth so we need to see better policies in central america.

>> those issues of gang violence, the poverty, of course we don't blame anybody for trying to create a better life in the u.s., but even a change to the administration like you're talking about will take time >> yes so i'm not optimistic that there is going to be that much solved in a short period of time unless when there is a foreign minister from mexico comes, the president this morning said he was coming with data to show she aw they ae working on it. >> it's been suggested that the biggest winners could ironically be china because now instead of moving to next cho to avoid tariffs, they might say it will be more expensive because tariffs are still going up on mexico do you think that is a possibility that actually china comes out ahead because of this? >> no doubt about it basically mexico and china compete. when mexico wins, china loses. when china win, mexico loses the one who won the most is president xi jinping xi jinping was under pressure in

china because some of his teams were accusing him of having misjudged the united states in the trade negotiations so yesterday he could go back to the people and say china did not make any concessions to the united states and got the same result as mexico, so china won so yes, without a doubt yesterday was a great day for china. >> all right we'll leave it there gentlemen, michelle, thank you all very much. frls tunl e into "closing bell"t 4:00 for an interview with the head of mexico's trade and nafta office and here is what is still ahead on "the exchange" -- coming up, a may to forget will this month's big downturn be a buying opportunity or are we setting up for more pain? plus with nearly 3 million autos imported from mexico to the u.s., investors are fleeing the sector today we'll look at what the potential

new tariffs could mean for the industry and falling flat one beer maker is falling hard today as wall street fears new mexican tariffs will hit them hard details ahead. most of us don't know how much data we use.

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welcome back to "the exchange." major indexes are on track for their first monthly loss of 2019 and worst month sichbs tnce they december let's bring in kim forrest, chief investment office with boca and jim karen is at morgan stanley. welcome. jim, i want to start with you because we're getting a lot of forecast changes now i'm not sure that it is the last night per se the mexican tariffs so much as everything piling up now. so jpmorgan says now we will have two rate cuts, barkleys thinks three so what do you make of that? >> i think that we need to take a dispassionate look at the level of rates yes, this is a big change. there are four things that really -- >> let me stop you there why is this a big change people might say it is just 5%, but granted it looks like it could quickly escalate >> we thought that it was just a

u.s./china trade war and now it has opened up and culminates canada and possibly even europe. so if we are dispassionate about this and we think about what is going on, for interest rates there are four key komg poe nents. one you are changing your growth outlook, second isinflation outlook, third is the if he had policy outlook and fourth is risk premium all are headed down. >> would you say that about inflation? >> i would say that about inflation too because i think that it comes with closer growtgrowt -- slower growth. >> so short term bump? >> but i think it is overhidden by the fact that global growth is probably slowing down so it makes sense that forecasters would start to think about cutting the rates. key point is the dollar. if the dollar gets stronger, that will trigger the fed to go aggressively the other is credit spreads.

if they get aggressively wider, then that will also prompt the fed to go faster >> kim, do you hear all this and think i better change everything, i better sell, i better buy december was a great buying opportunity. what do you think of conditions now? >> well, it is a turbulent time, we know that because we've gotten some good news execly speaking today and then the tariffs and fear of what the world will look like short term and long term. but short term, not much can change you can't put up a factory or started onning fr inordering fr factory that doesn't exist but there is a whole lot going on in the world, not just in america. there is a change of guard happening in europe. there is friction in china and we have next year's election

so longer term, we still don't know we neff know but i'm going to make the bets that we are still going to be globally integrated at some point just because that is the way things have worked for the last 200 years >> and if that is the case, so last time we talked about a couple names including intel that you would like and own here and obviously it has been an awful month for intel. so do you buy more or has your view changed >> no, my view has not changed and indiana tell is a poster child for what has to go on in the world. even if you would like to pit up a new fab somewhere else in the world and you are not intel, you will make your own semiconductors, you have to figure out that process and it will take you years. so i don't know how economically or even politically viable rebuilding all the industries within your own walls is good. so that is what gives me hope, that things aren't going to change terribly much in the next five years >> and yjim, what if growth doe

slow that much, what if inflation doesn't change that much and what if for all of the changes, they happen way back in the supply chain and that isn't a big impact here? >> that would be an upward shock to the market, a strong positive and look, there is stirl a possibility that that could be the case we hold out some hope for that >> but you're right, even would be caught flat footed i think and not just in the market jim, kim, appreciate it. coming up, a closer look at why new tariffs could be painful to the auto industry and plus retail is on pace for its worst month in more than a decade we'll look at who is leading the declines this time and what it says about the state of e nserheweomback ride safe? i assembled it myself last night. i think i did an ok job. just ok? what if something bad happens? we just move to the next town. just ok is not ok.

especially when it comes to your network. at&t is america's best wireless network according to america's biggest test. now with 5g evolution. the first step to 5g. more for your thing. that's our thing. about medicare and 65, ysupplemental insurance. medicare is great, but it doesn't cover everything - only about 80% of your part b medicare costs, which means you may have to pay for the rest. that's where medicare supplement insurance comes in: to help pay for some of what medicare doesn't. learn how an aarp medicare supplement insurance plan, insured by united healthcare insurance company might be the right choice for you. a free decision guide is a great place to start. call today to request yours. so what makes an aarp medicare supplement plan unique? well, these are the only medicare supplement plans endorsed by aarp and that's because they meet aarp's high standards of quality and service. you're also getting the great features that any

medicare supplement plan provides. for example, with any medicare supplement plan you may choose any doctor or hospital that accepts medicare patients. you can even visit a specialist. with this type of plan, there are no networks or referrals needed. also, a medicare supplement plan goes with you when you travel anywhere in the u.s. a free decision guide will provide a breakdown of aarp medicare supplement plans, and help you determine the plan that works best for your needs and budget. call today to request yours. let's recap. there are 3 key things you should keep in mind. one: if you're turning 65, you may be eligible for medicare - but it only covers about 80% of your medicare part b costs. a medicare supplement plan may help pay for some of the rest. two: this type of plan allows you to keep your doctor - as long as he or she accepts medicare patients. and three: these are the only medicare supplement plans

endorsed by aarp. learn more about why you should choose an aarp medicare supplement plan. call today for a free guide. welcome back to "the exchange." check out these movers shares of dell are sharply lower following a revenue miss shares are down more than 9% for dell right now meantime william sonoma is a bright spot today. they beat on earnings with revenue matching forecasts comp store sales coming in more than double what was expected. the company raised its full year earnings outlook and shares up more than 11%. how about big lots this is also higher the discount retailer beating on the top and bottom lines comp store sales were below efforts, but shares up 4%. now a cnbc news update

that will hello, everyone. sarah sanders is defending the president's tariffs on mexican goods. >> we've been giving them advanced warning for months. we've asked them repeatedly and told them they have to do more let's not forget that the average individual that crosses over the southern border of mexico, it takes 21 days before they reach the united states border >> a former aide to roger stone is in a washington courtroom after agreeing to testify before a grand jury that was initially used in rmtobert mueller's russa investigation. andrew miller fought the subpoena for nearly a year an appeal's court rejected the challenge of mueller's authority. and rising water forcing evacuations along parts of the mississippi river. local emergency management officials say the levees have held overnight, but river communities are still at risk as more rain is in the forecast for

saturday you're up-to-date. kelly, back to you here is what is still ahead on "the exchange" -- >> ahead, what gap's dismal quarter could mean for the upcoming spup k upcoming spinoff and why beer makers could be caught in the cross heirs of the trade war. and is amazon getting in to the phe siss that is ahead in rapid fire. to simone, i leave the van gogh.

to harrison, the we collection. to craig, this rock. the redwoods to the redheads. the rainbows to the proud. i leave these things to my heirs, all 39 million of you, on one condition. that you do everything in your power to preserve and protect them. with love, california. it's snowtime baby.

[ screaming ] oh, it's just this weird little guy. ow! ow, ow, ow! ow, ow, ow! [ screaming ] not cool. welcome back let's catch you up on a couple stories. it is time for rapid fire. here to break down the headlines are morgan brennan, tomorrow dominic chu and courtney reagan. constellation is down today. get this, morgan stanley says 75% of constellation which owns corona among others, 75% is imported from mexico so they are saying if tariffs go up to 25%, it reduces the company's profit by nearly 20% shares down about 6% at latest check. >> so this is an issue about whether or not you have pricing power to pass on those costs to consumers. i do like pacifico which is one

of those mexican brands. and so i'm prepared to pay a bit more for my beer a stwe12 pack is probably around $12, $15 right now xwlp so i feel like i'm okay, equipped to pay for that i'm not sure how many americans will want to pay that much more for a beer and if it changes their habits if it really was a pre-dick door that they would all change their habits, the stowould-be stock wn a heck of a lot more >> so will they substitute bud light? >> i guess it depends. i like both, so if i had the choice and i'm at the supermarket and i'm faced with the prices, i might go to bud light instead. at a restaurant, probably not. >> but i think the whole thing about mexican beer, it is the

water, the ingredients, et cetera and it has been the bright spot in beer sales and demand it is what people have been spending money on. but i think that there probably is room for a price increase on a from duct like thproduct like. >> and the real threat is the auto sector. but how about gap shares they are tanking because they missed on both the top and bottom line in first quarter earnings the ceo says the quarter was extremely challenging and he blamed cold wet weather for keeping shoppers away. but the comps were down 10%. >> for the gap global brand. so the total store gap inc., the total parent company, that was down 4%. which is still an awful lot and even old navy which has been the bright spot which will be spun off into a separate company in 2020, those comps were down. >> what will happen to all the gap stores

>> i don't know. truly art peck is doing his best to figure it out and at least he tells it like it is. this was a crummy quarter and we're not happy about it and so i think part of what has been gap's problem for a very long time is how long it takes them to react to changing trends and that it has to do with the supply chain if you are fighting up against h&m and that is fast fashion, they can turn things in six to eight week and it takes gap four or five months >> and the old navy numbers, the fact that they saw a decline is probably one of the things that if i were an investor, i'd be most concerned about when you are talking about a spinoff and seeing weakness there -- >> but at that old navy price point, who is getting it those sales aren't falling off across the entire spectrum old navy is losing to somebody else right now it is not abercrombie.

maybe store brands, private labels >> and could just be an additional pain after that is when we're talking men's and boys' jeans are the biggest apparel import so 35% of those jeans here in the united states come from mexico we've reached out to gap inc. because we nomar ket share-wise, gap is one of the leaders with old navy for giants in general general -- for jeans in general to see how much of a hit that would be. so my gosh, just another hit to the business 21% currently all their goods manufactured in china. >> and let's talk amazon because they might get involved in prepaid wireless they might buy boost sprint is looking to unload it amazon would get to use t-mo's wireless network for at least

six years after the deal according to sources they did it tthe hardware, but s would be a totally different play >> it would. and we don't know what amazon would use it for that being said, it is interesting because we've heard about how saturated the u.s. market was there is a big old fashioned bidding war starting to brew around this particular brand right now. we had founder of boost mobile on "squawk alley." he has other private equity entrepreneurs looking to bid on this project amazon just got their ground stations up and running for aws. and there is spectrum involved in that. and now building out the satellites to beam down -- >> so they got the stations up for amazon web services? >> yeah. so they are doing -- connectivity is everything with them and that is the big play in general. so whether you are talking about satellites for a potential

future broadband service, whether you are talking about satellites and bringing the data down and process it more quickly here through the ground stations, in general they are focused on connectivity. and spectrum that would be associated with boost might be something to look at in that broader picture. >> and spectrum has been one of the most valuable things talking about especially as we look to 5g only question i guess is whether amazon is asking for of the elizabeth warren billboards to come to seattle. look, it is in san francisco, it is not in san francisco. we're not hearing a ton about breakup amazon lately. but is this going to invite more of that. >> i can't imagine that it wouldn't >> it is like the ultimate case study in vertical integration. finally, history made at the scripps spelling bee officials crowned eight champions. and then they are not champions.

>> yeah, i don't get it. >> and the reason is because officials ran out of challenging words. don't worry about them having to share the limelight. officials decided to give them each $50,000 for winning because apparently kids are now paying to get into the spelling bee >> and thank god they are because it means that they had enough to give them each $50,000. i think the headline is that they couldn't come up with anymore words. >> has this ever happened before >> i don't know. >> i don't know if it takes a little bit of the luster away from the scripps national spelling bee there was one big winner at the end and now you've got people that can all claim -- i'm not saying all only eight but still there is a champion. there is one ken jennings on champion and there could be a holzhauer guy on top of that, not like eight that were all in the same realm of reason

>> and i can't even pronounce any of these words >> no. you should see the fight we're having at home over what skrable words are allowed. sonde the fact that these are enwords is a joke. it looks like a word jumble yet all the kids know them anyway, guys, thanks you're three way winners of rapid fire today shares in cigna are falling despite a may bounce back. david cordani will join us for an exclusive interview next. if you're turning 65, you're probably learning about medicare and supplemental insurance. medicare is great, but it doesn't cover everything - only about 80% of your part b medicare costs, which means you may have to pay for the rest. that's where medicare supplement insurance comes in: to help pay for some of what medicare doesn't. learn how an aarp medicare supplement insurance plan,

insured by united healthcare insurance company might be the right choice for you. a free decision guide is a great place to start. call today to request yours. so what makes an aarp medicare supplement plan unique? well, these are the only medicare supplement plans endorsed by aarp and that's because they meet aarp's high standards of quality and service. you're also getting the great features that any medicare supplement plan provides. for example, with any medicare supplement plan you may choose any doctor or hospital that accepts medicare patients. you can even visit a specialist. with this type of plan, there are no networks or referrals needed. also, a medicare supplement plan goes with you when you travel anywhere in the u.s. a free decision guide will provide a breakdown of aarp medicare supplement plans, and help you determine the plan that works best for your needs and budget. call today to request yours.

let's recap. there are 3 key things you should keep in mind. one: if you're turning 65, you may be eligible for medicare - but it only covers about 80% of your medicare part b costs. a medicare supplement plan may help pay for some of the rest. two: this type of plan allows you to keep your doctor - as long as he or she accepts medicare patients. and three: these are the only medicare supplement plans endorsed by aarp. learn more about why you should choose an aarp medicare supplement plan. call today for a free guide. welcome back cigna is hold be its annual investor day shares are down about 23% so far this year. despite the managed care sector bouncing back. cigna's ceo is joining us in a

cnbc exclusive interview with bertha coombs. >> thanks very much. david, thanks for joining us >> great to be with you. >> investors and analysts were very intent on finding out what your outlook is for integrating this company and how to measure growth what is the main takeaway? >> we gave them a good profile of our core operating businesses the fact that we have a great growth outlook in front of us. we are on track for 6% to 8% revenue growth and double digit eps growth and really importantly we're on track to deliver about $8.5 billion in free cash flow just a year out from where we stand so all is tracking well. >> and you talked about an ambitious growth outlook for medicare advantage plans, 10% to 15%. >> yes >> how are you attacking that? >> so we've spent a lot of time the last two years strengthening the base of our medicare business which is really focused

in a few markets in the united states, about 12 markets we have the ability now to expand that business into a lot of the markets where commercial business is thriving and business partnerships are thriving and we've built the capacity for significant growth over the next five years >> and the uncertainty over how the medicare drug plans will be priced in terms of rebates next year, that is not causing a problem? here it is we're about three days away from filing deadline >> it is an odd dynamic. there is uncertainty, but the macro headline is it is not an issue. we're positioned to be able to handle either with the new rule or without the new rule. and whenever there is clarity, we can make an adjustment for it so if there is no rule, if a rule comes in late, we'll have the technological process to pivot and shift. >> and one of the other areas where you want to grow big is china. and you operate in 16 provinces there. how does this trade dispute and

just the acrimony impact your global company >> and we are a large global company. we serve people all over the world. chinese is the fastest growing market important to us. we're very localized business. so we don't run our international business from the united states. we couldndon't run it from an international headquarters we run it in country and the joints venture partner is a nonstate owned bank and we're a part of the social stib fib fiber of the country and so we've glorown over 30% p year the last three years. >> and so you don't worry about the rhetoric coming out of beijing about companies that they might now target in retaliation? >> that is a different question. i don't think it is healthy to have attacking rhetoric back and forth between countries.

but again, we're a global company and we've seen packets of instability over the years. the important part is having a business model that is highly localized and being part of the local community and providing the solutions that the local community values, that has worked for us decades. >> thanks so much for joining us kelly, back over to you. >> i didn't realize they had that kind of exposure to china thanks the world's largest cancer research conference is kicking off today bringing the latest updates in tackling the disease. meg tirrell has a look at two companies. >> reporter: many cancer drugs work by targeting malicious proteins found in cells. some are kras found in as many as a quarter of cases of lung can ser. but because of the way the protein is shaped, it hats been almost impossible for drugs to lock on to it. but that may be changing two experimental drugs attack kras g 12 c.

offering new hope for treating not just lung cancer, but also company low rlorectal and pancr cancers. >> and so you think this is the main area and a couple of the companies to watch >> yeah, this is a huge story because this target is so important in cancer, but for decades it has been considered undruggable. so folks are thinking this could be a way of getting to this target in these hard to treat cancers. >> have the shares already run up to reflect that >> yes mirati is the smaller company, amgen is the bigger company. but mirati's stock went up about 10% two weeks ago and we'll get more on monday but we are seeing some selling off into the conference and folks say that happens a lot, a lot of people selling on the news so we should be aware of that leading into the weekend >> and it will be a big damon. meg, thanks.

let's head over to dom chu >> and earlier we were talking about the idea of all kinds of possible machinations of what is happening with sprint and t moeblg a mobile we have an official statement from comcast which of course the parent company of nbc universal and this network the statement says that we did not, comcast does not, have an interest in acquiring divested spectrum from the sprint/t-mobile transaction. there were earlier reports speculating that comcast could be involved and they are saying they have no interest in acquiring some of that spectrum. and also we spoke to an industry source familiar with the deliberations with regard to t-mobile/sprint and everything with boost mobile. they don't believe any kind of a sp spectrum sale would be enough to create a viable fourth competitor in the marketplace. they also go on to say that they do not believe comcast would have any interest in bidding for

boost mobile if it were to come to that kind of a transaction. so a lot of color with regard to what is happening with sprint, t-mobile, any possible spectrum, boost mobile comcast for the record saying they do not have any interest in buying spec str ining spectrum so back over to you. >> dom, thanks automakers are getting hammered on the news that the new tariff on mexican goods as every manufacturing facility relies on parts from mexico. the potential pain ahead for customers and companies is next. , , helping us find the right suppliers. then here in logistic, to avoid disruptions! here in sales. even here! i'm talking about ai we can build to work... here, predicting trends. and here, wherever our data lives! and here, working with all our other ai! i think we're done here.

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that's great. listen... it is great, gidget. everything is grand. [ meow ] [ purring ] [ growl ] are you finished? [ cooing ] that was weird. oh sister it's going to get way weirder. the auto industry may be facing a grim reality thanks to the new tariffs on mexican imports. the auto alliance criticizing the white house's move saying it's, quote, harmful to our nation's economy automakers with the heaviest exposure down today including gm, fiat chrysler and nissan motor. editor of the revs institute who is most exposed here >> the three you showed there. gm, chrysler and nissan all have substantial operations there and general motors by far imports

more than any other auto maker so they're watching what happens here very closely. >> that being the case, i guess it's not just the automakers themselves but the flow of supplies back and forth as they're building these automobiles, is that right >> that's the big unknown. look, the parts that go into these vehicles go back and forth across the border, two, three, four times will the tariff impact a part or just in the finished vehicle we don't know anything aside from the tweet from the president. the implication for automakers, this could be a huge hit to the bottom line or it could drive up prices substantially. >> do you think this will have a bigger impact for me when i'm shopping for my new car next time or in the long run, does it mean more production moves to the u.s. period? >> i think it means definitely the former, kelly, honestly. look, here's what you have to remember on this tariff equals tax hike

just do the numbers. about 2.6 million cars come to america from mexico every year it's about, you know, 5% or 7% of the market, something like that so it's not a huge number, sorry, 15% of the market, but $93 billion and a 5% tariff on that is $4.6 billion so car shoppers just got a $4.6 billion tax hike or price increase and as phil noted, those numbers are just finished cars it doesn't include the components that come in from mexico virtually, every car made in america has some sort of a mexican component in it because these economies have been so integrated by nafta since the mid '90s. >> that's what i'm wondering it's been a long time now that we've had this drip drip of news about whether the amount of materials that's in the new u.s. mexico agreement that would say

kind of nudge u.s. car makers towards using less mexican imports. now you have the tariffs and the president who is clearly willing to use the tool again and again. if i'm a car maker, at some point, do i unwind that and say it's not north the rworth the ri impossible >> impossible. say you have 300 or 400 cars cranked out down in new mexico do you say, i think the president will do this, let's move to the united states. commit several billion dollars up there it won't be billed for three or four more years. will the president be in office? no, he won't be or may be. who knows if these tariffs go through, that's no way to run a company. this entire supply chain is down there. you have got to manage this best possible but can't switch and move to ohio, michigan, indiana. it's not that simple. >> i can see you agree, paul >> absolutely. the other question i had to

elaborate on what phil said, how many trade wars do you want to fight at once? mexico on top of china, on top of europe. so it's all just sort of beginning to mount and you wonder, is anyone looking at the end game here of the larger consequences and it doesn't really seem that way to be honest with you. >> guys, thanks. paul ingrassia and philip lebeau with what it would mean for the auto sector in particular. t> kansas city getting slammed onhis as well. how bad could it be for their bottom line? we'll explore that next. so, every day, we put our latest technology and unrivaled network to work. the united states postal service makes more e-commerce deliveries to homes than anyone else in the country.

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welcome back railroad names sinking today, especially kansas city southern after the trump administration announces the 5% tariff on mexican goods. frank hollande is here to discuss the impact this is the biggest exposure of the u.s. mexico border, right? >> absolutely. we don't see 85% of those tariffs on trains and trucks, different than china where it comes on a boat because you can just drive across. so when we're talking about this, we have to remember, it's a lot of u.s. businesses directly impacted. let's start off with rails kansas city southern west coast railroad has a lot of

exposure down but more than 4% right now and that's because it does so much business going from california and all the western states down into mexico and citi put out research saying 16% of its revenues will be impacted by mexico tariffs if they go into effect. >> 116, 1-6? >> 116 >> it's not the majority but it's still a hefty size and we see it in the stock move today what about the trucks? >> before we get to the trucks, union pacific has a lot of exposure 5.5% of their revenue tied from goods going from mexico to the u.s. not a major chunk but significant portion of revenues. >> sure. >> trucking, a lot more fragmented most of the companies are small companies so you have to look at it in a different way. rates is where you can see the difference chinese tariffs took effect, rates for trucks fallen by 18% the demand for trucks fallen by 57%, so that industry really feeling the impact of tariffs, i spoke to baunch a bunch of expes

if these tariffs go into effect, a lot of smaller trucking companies could actually go out of business. >> we know you'll be all over it frank holland. thanks that does it for "the exchange." 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 with tyler mathisen new at 2:00, move over china president trump now taking the trade war to mexico. threatening crippling new tariffs. what it could mean for the markets and the economy. shares of the big three u.s. automakers slammed on this new tariff threat. what it means for them and two other crucial sectors of the american economy and the bulls got mauled in may. bigger correction or are we setting up for a june rally? "power lunch" starts right now >> oh, what an interesting day this is turning out to be. welcome to "power lunch. i'm tyler mathisen stocks are tumbling on the last day of what has been a b