>> should i give my smh comments now? >> no. >> all right staying long though for a trade, i talked about getting 6%, 7% playing a little offense yesterday. i think that the etf is the right vehicle versus individual names. >> all right that does it for us. he exchange" begins now. thank you, scott hi, everybody. here is what is ahead. the fed to the rescue. chair powell says they will act appropriately to sustain the expansion and stocks are surging. we will hear from richard clarida beginning just minutes from now plus privacy abuse, regulators have those issues top of mind. our guests will tell you which names are safest and who is most at risk. and the next round of the trade war may be fought underground. should authorities think twice about outsourcing our subways to the chinese? details on that are ahead. but we begin with today's rally.

dom ch dom chu with the numbers >> up about 450 points we were up close to 470 at the highs to be technical. but still almost 2% gains for the dow and s&p. and we'll put a couple stars here why? because these two indexes are on pace for their second best day of 2019. so keep an eye on those. two industry groups in particular we are paying close attention to, one of them has to do with the banks and financials overall because we are seeing a big bounce back in some of the bank names 3%higher for one of the main etfs that track the larger bank complex, kbe but remember, those shows are with down about 11% from recent highs. and it is not amazon heavy, it is the equally weighted spdr retail etf is up 2% after being

down 14% so retail a bit of a relief. banks a bit of a relief. we'll see if it carries into the closing bell back over to you >> a long time coming for both welcome to the exchange, everyone i'm kelly evans. australia is now the largest developed economy to cut rates this year. it lowered its benchmark to 1.25%. meanwhile here chicago fed president charles evans saying the economy is still solid, but the fed has the capacity to adjust policy if needed. and stand truck druckenmiller s bought a bunch of treasuries saying he doesn't want to play in this environment. let's drill down on the big rally with bob pisani at the new york stock exchange >> after seven weeks of decline, a mounts up. haven't seen it in a while you have positive comments from

chinese commerce ministry, saying trade disputes should be resolved with talks not tariffs. shocking as well as even republicans are considering a vote to block t president trump's tariffs on mexico and finally jay powell said that fed will act as appropriate to sustain the expansion. all this is helping deflate some of the huge negative sentiment that has built up in the last few weeks. not surprisingly the sectors that had been most oversold on the trade worries, transport, semiconductor, retail and metals and mining, all decimated in the last month, all are bouncing the most today a lot of damage though already been done. look at this, big transport stocks, all down double digits this quarter on concerns of slow he global growth back to you. >> and a lot of climbing back to do so now we have powell signaling flexibility after james bullard yesterday said a

rate cut may be warranted soon account fed keep a floor under these markets? i'm joined by liz ann saunders, christopher smart, and andrew holenhorse great to have you all here and andrew, i'll start with you because this is an area where rate cuts, two, three are not exactly what you are seeing, right? >> yeah, i think the market has been a little aggressive, maybe getting a little ahead of where the fed actually is. like you said, we have heard from evans and powell and they are talking about the potential to be reactive so i think that we are kind of waiting, watchful and markets may be getting a little ahead of itself >> liz ann, what did you make of the chair's comments >> i would agree with andrew, i think that it set the stage for the potential to consider that, but i still think that the bar is fairly high for rate cuts here particularly the three that

are anticipated over the next year by the market so i think that you would have to see it impact the actual data versus just through the confidence channels which is where we've seen the impact felt most severely. and just beyond the day to day volatility associated with trade headlines. so i think that the bar is still fairly high for multiple rate cuts >> and at the same time, we have a president who is reiterating his desire to impose tariffs on mexico he is not backing down even though they say congress may be trying to interfere. so if you are looking from the market's point of view for relief on that front, you are not necessarily getting it yet, are you? >> you are not indeed. i think the president in fact doubled down this morning in his press conference with prime minister may this is a time where you would have expect the leaders of the uk and united states to provide some reassurance that growth and markets would get policy support. and you have prime minister may headed for the exit door and you have the president sort of saying we haven't really begun talks with mexico yet. it will probably get worse

before it gets better. >> what do you make of this idea that congress will block it? they would still have to override his veto presumably >> i think it is a very long shot the president has wide discretion to reach for a national security justification for these kinds of tariffs i think it is an enormous departure from past presidents and many traditional approach to trade policy we were now sort of saying that not only is any country vulnerable to tariffs if we're going to put tariffs on mexico, but country is vulnerable for almost any policy reason so i think if you are a long term investor, if you are trying to plan ahead what your supply chain will be, you have to take a lot of these things in to account and those are building headwinds for the longer term. >> and that is why i think we've seen a lot of people mark down their forecasts partly on uncertainty, just saying that the cumulative effect will slow down the economy in the back half of the year why are you more -- are you sanguine or just that you don't think things are so extreme?

>> i wouldn't say that we're tid i take it seriously. so i agree that we should be monitoring them. the issue is that you haven't really seen it impact the real economic data. we're still in a pretty good place in the u.s. economy. and it is not really economic day that that would be calling for a rate cut so i think you want to be a little careful if you are the fed and not move preemptively when you haven't seen the day that weakening >> and for those saying but look at the yield curve, 7 out of 7 times we've seen it happen this way, we've always gone into a recession, what about those headlines? >> i think the question right now with regard to the yield curve, is is this one of the seven times that it has been an accurate forecast within call it a year of a recession or is this a 1998 situation where you had a brief inversion, you had a crisis which some might liken the trade situation to the clris

scrie -- cries sses back then. and so you ultimately peaked out in 2000 with the market and you did get your recession so i think that is the valid question to be asked at this state in the yield curve inversion which has been short lived. >> you're right, that might be a good analogy thank you guys very much meantime regulators are ramping up antitrust efforts against google, facebook, amazon and apple. now the house you can addition area committee is also investigating whether big tech's behavior violates antitrust laws pelosi declaring that the era of self regulation is over for silicon valley four major tech names are down more than 11% in the last month. joining me now, tony rand doug

tony, beginning with you the house judiciary probe is the latest salvo in what was a rapid 24 hours of reporting yesterday. how significant is that probe? >> the walls are sort of closing in on these big tech companies like amazon, apple, facebook and goog google house judiciary committee probe that you referred to is a pretty significant threat for these companies because it will put their business practices on full and public display here. i talked to a congressman who runs the competition focused panel that is leading this effort and he says that they will issue temperatures if they have to to get documents, they are willing to bring detech executives to capitol hill for public testimony and they are thinking about what they could potentially do to update the nation's antitrust laws it is just the latest example what we're seeing of really bearing down on the industry >> and fascinating to me, this is not big banks after the financial crisis for example there has been plenty of bad behavior especially on privacy

sharing. a lot of collateral damage from local newspapers but there is not a consumer outcry for this. how much bipartisan support do you think there really is to significantly change these companies? >> and i think google is most at risk if you look at the eus, they have sort of shown the blueprint for what an anti trust case looks like but if you look atapproval surveys, amazon, apple, one and two most recently. google number seven. facebook 44. so they have had a tougher road with the data privacy issues i think. but i think that these are companies that by and large users still love using all of these services >> and it would be one thing if we're talking fines and maybe we are, but it sounds like we're talking about changing their business practices the idea that we will completely update and maybe adopt more of an eu style antitrust law seems a bit aggressive >> we have to take it back to

the start. we're still at the early stages of everything. ftc and doj are diviing up the companies and that is just the beginning of this process. it could be the case that the government doesn't actually bring a major investigation, doesn't actually launch a major enforcement effort that tries to break up one of the big tech companies. and the same thing could be said of capitol hill where we've talked many times about lawmakers making a lot of noise that they are not translating that into law. so i think a lot of the volume is turned up and the risks are much higher for a lot of these companies. but we're still a long way from what i think some other folks have described which is a european style model of the antitrust. >> and that is why it is a fascinating question from the shareholder point of view. one thing to say that facebook will have a consent decree for 20 years with the government, that isn't so bad, fines aren't so bad do you think the share price reaction yesterday was because it looked like this was more

when forcing these companies to he will selloff parts? some said that wouldn't be the worst thing. where do you come down >> the market always hates uncertainty. if you look at the microsoft case two decades ago, from the time the government filed the lawsuit and the resolution was three years. i think to the point of splitting up these companies, worst case let's say google for example, if they have to spin off youtube to shareholders, i don't think that there is more than a 10% economic hit in terms of the actual business models there by breaking up those synergies. i think probably much less than that so in terms of destroying shareholder value, even if the government breaks these companies up, i don't think it should have that much of an impact on the overall value of the company. >> so 10% in the long run of google's market cap is youtube related. is the idea that this keeps them

from funding new ventures, preventing them from creating that next killer product does that become more of a concern? >> i think to be clear that 10% i think is really the synergies of the two companies being one entity youtube as a component of market cap may be larger than that. but i think splitting up the data, separating the two businesses, might make the market more competitive in terms of new entrants to come in and offer different alternative services at least i think that is what the government thinks. >> how much is youtube in terms of google's market cap, is it half >> i don't think it is that much if i had to guess, maybe 15% or so >> so still a significant hit but not catastrophic we'll see if we get there. guys, thank you for now. appreciate it. here is what is still ahead on "the exchange." >> coming up, the street is predicting that the fed will cut rates by the end of the year are they right we'll ask fed vice chairman richard clarida ahead.

plus, from declining admissions to trillions in deficits to the drying up of chinese dollars, colleges are at a crossroad. what does it mean for the future of education and why it could cost taxpayers billions. and china's next move in the trade war, go underground. be good while i'm gone.

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welcome back to the exchange we want to call your attention to one of the key industry groups we've been watching and that is the semiconductor stocks the etf up over 3% right now near session highs all 25 men members are up on th day. keep in mind though that etf is still down 16% from its record high and still about half of the index members are still in bear market territory keep an eye on chip stocks back over to you >> dom, thanks very much calls for a fed rate cut are growing louder and louder on wall street, so will they or won't they steve liesman is standing by with the man who has a big say in the matter, richard cclarida. steve, take it away.

>> i am here with fed vice chair richard clarida. let's talk about the conference which is this fed listens thing. and i wonder if you can boil it down to what the market needs to know about where the process could go is it possible that it leads to a very different way of the fed figuring out how to make policy as in a higher inflation target, average inflation target, what are we really caring about why you are listening and thinking about this process >> well, as we've indicated, we think our current framework is serving us well. so why do this the economy is in a good place and we have the opportunity to see if we can do our job even better we have a job assigned to us by the congress which is maximum employment and price stability and this is all about having the best set of tools and strategy to achieve this. we're early on in the process. this is called fed listens for a

reason we're in listening mode. but later in the year within the committee during our regularly scheduled meetings, we will start drilling into particular ways to refine the framework >> is anything i said a possibility? >> i think some are possibility. i won't say which are or which are not, but we're going into this with an open mind however as we've indicated, this is not about economic theory, this is about refining our framework in a way that can be of practice use. so we'll have a high hurdle for any major change to the framework. >> i want to come back to this concept later because as a practical reality which is not hitting your inflation target, but before, i think in the interest of transparency, can you tell us what you think you know about the impact of tariffs and higher tariffs on the economy? h how does it work >> that is a great question because tariffs have a number of impacts. they push up prices. typically that is not

inflationary, it is a one time increase in the price level. secondly it potentially impacts supply chains and if those impacts are large, then could have impacts on productivity as well i think what i can say is to date the tariffs that have been put in place on the economy have had a small effect in the aggregate and i think the others would agree with that consensus. as we move ahead and consider potentially more tariffs and potentially retaliation, that potentially has a more noticeable effect on the economy and we would have to take that into account >> but how do you -- let me get there in a second. so you are saying you see the sign as negative for growth, but the question is what number you put after the sign is it a large number or right now you think it is a small number >> so far i think we're confident in saying so far the tariffs in place have had a small impact in at all on growth >> so would you say your in-which i nation with moin-cl

inclination is to address the back side of it, which is weakness in growth, or the front side which is initial impulse of higher prices? >> i think that we confront it when we get to it, but the way that i think about it as one member of the committee is i think textbook macro would indicate that you would tend to effect because it is not really telling you about long run inflation. and i think that that would be my first instinct which would be to look through that on the price level and then obviously slower growth means you want to do what you can to maintain growth at its potential. >> would this be something that the fed might consider to do preemptively in the wake of higher tariffs put in place or would you wait to see the effects of this? >> i think that the big picture, it is very important for your viewer, we really focus on what is the outlook for the economy relative to our mandate. and we'll look at a wide range of indicators, not just what you mentioned, but blood range of indicators and if we get a sense that the

outlook is slower -- growth is slower than we expect, and if we get the sense that underlyi lil inflation is below where we want to be, we'll put in place appropriate policy to achieve those goals. whether or not that means acting preemptively or when the data comes in depends on the context at the time. but understand that our goal is to put in place policies that not only achieve, but you sustain price stability and maximum employment and we'll do that if we need to. >> so there are things that you say that you're going to do and think about and there are ways that the market has already figured out -- >> yeah, they come thado that. >> it is amazing so there are two rate cuts built in through this year are you happy with where the market is priced right now >> i don't think that i want to get in to that what i will say is we'll have a meeting in june, a regularly scheduled meeting, and we'll look at a broad range of

indicators not only where the economy is, but where it is going. obviously we'll look at market pricing. you know market pricing can go up and down, so we can't be handcuffed to that, but we'll look at a range. and again, we will put in place policies that need to be in place to keep the economy which is in a very good place right now and our job is to keep it there. >> you spend a lot of time watching the fed and being a major academic so you know you're damned if you do, damned if you don't so i'm hearing you not lean very heavily against where the market is priced right now. so i'm wondering if -- i'm okay with this. i don't that there is a reason to change where the market is priced >> i guess what i'm saying to your viewers, our reaction function is very clear we have in place policies that are our last meeting we thought were appropriate policies. since the last meeting, there is information and we'll factor that in. and that is why we have a committee of 17 now.

it will be discussed but i won't get into market pricing. >> you sat down with sara eisen back in march. and you talked about two things. one was the possibility of an insurance rate cut how do you feel about that today? >> i think what i said to sara and would i'll say to i, i won't look into a crystal ball, but in the past we did have insurance cuts by the fed. we had one in 198 in the fall of 1988 and in part because of global turbulence, in global markets. and the russia/asia crisis and in '95, also an issuers cut. so i won't get into going forward, but that has been in the monetary policy tool kit in the past >> i said we'd get back to the idea of inflation and not hitting your target. how much of a concern is that to you and at what point do you say you know what, we need to do something about it >> steve, i'll repeat what i said in a speech in new york

last week. speaking for myself, there are 17 folks around the table, i think price stability means not just do we have 2% inflation, but that the markets and the households and firms expect to have 2% inflation. we don't observe inflation expectations we have to infer them from the data and my own personal opinion, those measures indicate that we are probably at the lower end of a range that i would consider consistent with the 2% so i think it is very important. >> i've asked so many detailed question, i didn't got your outlook on the economy what happens to economic growth and unemployment >> i think certainly as of our last meeting, which was end of april/early may, our view was for growth in the neighborhood of 2% or perhaps somewhat about 2% we saw in-glaflation gradually rising up, but pressures are muted. the labor mar get is strong, but so far that has not shown any indication of cost push pressure and so so far we're looking at the labor market, but as we said

in may, we think policy was in a good place thin aen and we'll lt the data flow in >> what are the risks that you are most concerned about >> well, there are --reacted to including trade. we've had a slowdown in european growth there is some evidence of some loss of momentum in the global economy. and i think your viewers need to understand that when the global economy slows, it does impact us through exports and financial conditions so i think that those are probably the major risks right now. and we also said muted inflation is a risk. we don't want inflation to be at 2%, we want to our target. >> and one more quick question you're calm about these risks, but the yield kevin, tcurve is less calm. when you met with sara, you were

still on the positive side and you now you are minus 21 basis points what signal is that inversion sending your way >> that is a great point because i do think that you have to look at the yield curve i think historically a flat yield curve doesn't convey a lot of information if the yield curve inverts as you note it has, and if that persists for some time, that is off obviously something that i would definitely take seriously. i think that you have to look at more than just the yield curve historically persistent inversion is something that -- >> what is "some time," six months, a year >> i think there are different indications. i would not view this as a strong signal of concern but we're early into it and certainly something that we'll keep looking at. >> richard, thank you for joining us and listening to my questions. >> as always thank you. >> richard clarida back to you, kelly >> and i don't know if you want to put this back to him, but it sounded to me like a june rate cut might be on the table.

>> okay. i'll put it back to him. kelly evans asked the question that it sounds to her listening to you that june rate cut could be on the table. >> we'll be meeting in june. no need to anticipate what we'll discuss. i'll leave it at that. >> kelly, i asked that question out of respect, but i was 100% sure that that would be his answer >> i appreciate it thank you both very much andrew is still onset with me. forget me, what did you think about that interview and what you just heard >> i think it is consistent from other fed officials that nobody really wants to push back too hard against the pricing of rate cuts i don't think that officials think that we are there yet. but on the other hand, if you push back against that, then that is the tightening of financial conditions relative to where we are you now so i think that we saw vice chair clarida doing a good job

of walking that fine line saying they don't need to cut in june or july, but also not pushing back too hard on the market pricing. >> so both he and powell have left the door open, but they are not pushing it open further, but all the market needed to on kkni the door wasn't closed >> yeah, i don't think that we'll move the market too much on that interview. i think it is pretty clear that the possibility is still there, possibility for cuts is still there and you heard the discussion of insurance cuts which did happen in '95 and '98. so that narrative stays alive as well >> and he brought that up. >> that's right. >> all right andrew, thanks very much let's get to sue herera for a cnbc news update here is what is happening at this hour. virginia governor ralph northam announcing that he will recall lawmakers to the state capitol to take up a package of gun control legislation. he says it is urgently needed to

prevent killings like the mass shooting in virginia beach >> as i said this weekend in virginia beach, god is in control. but we must do more than give our thoughts and prayers we must give virginians the action they deserve. >> first lady melania trump and the uk prime minister's husband phillip may attending an angelo american themed garden party at 10 downing street. they met children in the garden. prench wofrench workers are threatening to bring the biggest nutella factory to a standstill oig. trucks have been barred from entering or leaving the factory for a week it produces 600,000 jars of the spread every day and that is a quarter of the world's production stock up that is the news update.

back to you. >> putting it in the oatmeal every morning. >> do you really you better go to the store >> i know. and it is for the hubby, too >> there you go. >> i'll be in trouble. sue, thanks very much. here is what is still coming up -- >> ahead, a not so sparkling outlook for tiffany. the street goes gaga for uber. walmart's new strategy in the battle for talent. and fame, glory and taxes. why winning a game show isn't all it is cracked up to be that is all ahead on "the chge." dear tech, 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. let's make open source software the standard. let's create new plastics that are highly recyclable. it's going to take input from everyone. so let's do it all, together. ♪ ♪ let's expect more from technology. let's put smart to work. ♪ ♪

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well ccan comome back we're near session highs once again. all three indexes having their best days since january. can anyone read that dow number? >> yeah, we're about 463 points right now. highs of the day >> exactly let's catch you up on a few stories that should be on your radar. it is time for rapid fire. and here to break down today's headline, we have courtney reagan, dominic chu and direct

from the west coast, jane wells. >> and dressed like it i'm in comfy shoes. >> and they are so cool. >> first topic, analysts have arrived. 19 firms are initiating coverage of uber but not a single one rating it as a sell but shares last up just a couple percent. >> and it is conservative, right? there are folks out there that feel as though this could be a really, really aggressive market for uber they are the dominant position player in this whole thing but with the kind of performance that you've seen, it could lend itself to two different arguments. the idea here is that nobody really wants to stick their neck out on this just yet given what we saw with lyft, but the idea of no sell ratings whatsoever could still be -- >> a wall street >> yeah, fair enough >> i compare to beyond me. they both the same age they are both not profitable, but beyond me is earlier in its fast growth curve.

and so people say it is up 3%, so i love uber i'm not a stock picker but what are you more likely to use in the next week an uber or eat a fake meat burger >> i'm going to use an uber. spoil alert. >> but that is my point. long term, everybody is crazy about beyond meat and impossible foods is coming. but long term, what is the bigger company >> i like your analogy because if you think about it, one thing that beyond meat easy to see is catalyst you think another fast food chain adopts them, a bunch more consumers tries it, they expand production, what have you. with uber, you say has anyone really not tried -- >> you'd be surprised. >> you're right, there is still holdouts >> but it is mature in the fast growth curve >> i also saw a story about how fewer and fewer teenagers these days go get a driver's license

>> in california for sure. >> they will have to use it. next, the fda's first hearing on cbd left many concerned about the future viability of the product because the fda commissioner expressed doubts about its safety analysts say the first hearing highlighted the messy state of the industry and companies need clarity asap scientists say we need more research >> absolutely. here is the problem. merck, glaxosmithkline, no american drug company will do research on cbd until it is federally legal. and we know nothing except what everybody says 65 million americans have used it according to reports. >> and this is not the part that gets you high. >> no, this is the part that is supposed to cure you of everything including research. they are doing search oresearche of america, but it will take years to figure it out and the fda is saying we're calling it a drug. >> so the only reason why products can contain it is because they allow hemp now?

>> correct >> because if they haven't yet said it is okay -- >> or you buy it in a pot retail store. but people are putting it in makeup and lotion saying it will make your life better. but we just don't know >> and in the meantime grandmothers are getting arrested for having a cbd product in their purse at disney world. so does it work or does it not, but people are seriously concerned about it >> and there is the public perception, the idea that you -- cbd equals thc equals marijuana equals whatever you want to call it there is this perception right now. and once you get beyond that is when the real acolytes will say this will be great and others will say it is still a drug. >> we need science >> yeah. >> y. wouwhy would we let it goh market before it is ready but it is already there >> it is not hurting anyone in lotion form, but is it a big scam >> i used a lotion one time and

it made me feel less achy, but who knows. >> let's get her purse you you're not going to disneyla disneyland up next, tiffany cutting its full year profit outlooks blaming lower spending by tourists worldwide saying tourist related sales in the americas were down 25% from a year ago with even sharper declines among chinese tourists. shares are holding up relatively well, but this is a major theme even if it is a relatively small part of their business >> and we talked about this before with macy's and they saw that the tourist spending was getting acceleratingly worse throughout the year. tiffany started to see it in the back half of the year. we didn't think that things would turn out well, but they definitely turned out considerably worse the on other interesting piece of this, we talk an awful lot about tariffs, tiffanys will have a concern on the flip side because when they send their jewelry into china, it will be subject to this 25% tariff that

other european luxury players won't be subject to when they move -- or import their jewelry in so that will be another pressure in mainland china where actually they are seeing strength from the local shopper. so that could be another concern. >> and one more wrinkle on this. so we were at the hotel industry conference this week where they were saying it is still reverberating that china warned people about coming to the u.s. last summer. and just today they have warned people again about traveling to the u.s., same thing on the education front, they are talking about some issues there. and check this out, this was the ceo of choilce hotels yesterday when i spoke to him about why he thinks that inbound travel not just from china but everywhere else has been dropping take a listen. >> you ask people the number one reason why they don't travel to the u.s., it is because of crime. >> crime >> crime you get the parkland shooting and that essentially covers a massive media impact around the world when those type of things happen so we have to also think about

just the social cco social cons well >> and they issued a safety warning signing america's frequent shootings, robberies and thefts >> last year for the first time since 2003, chinese tourism to the u.s. dropped >> exactly >> of course at the same time we're saying don't go to china oh, it's dangerous there >> and it is not just tiffany. think about the hotels there is a lot of companies who are getting a fair amount of business from these customers. >> that's what i was thinking today, what is going on in the hotel business >> i think about the universities usc my alma mater has the largest asian student population of any university. and they pay full dollar >> remember, we also talk about the idea that the big real estate buyers around the college campuses, some of the urban centers, has been cash buyers

from china >> and we are actually going to talk to mitch daniels about this in like ten minutes because it is great, such a big story finally today skipping ahead to "jeopardy," you know what happened after 33 episodes, and almost $2.5 million in cash prizes, james holzhauer's amazing win streak came to an end last night. get this, he faces a big bill from the irs because he won his money in california. >> this is why he lives in nevada but he has to pay california state taxes because he won the money there, which is 13.3%. mr. so he keeps -- is it 48% of the winnings >> yeah, it will be just shy of 50%. so $1.2 million. >> a million dollar screw job for a thousand >> but you're paying for the good weather >> but he is also paiiying the isaiah

i kno -- christ i know, thank you. >> it is a great lifestyle in nevada too but we got to learn a lot about his family and they are not making millions he was interviewed just over the weekend before we knew that he had lost and they were traveling i think throughout europe or something like that. but yeah, they will be fine. but they are getting half of what he -- >> first of all, did anybody else feel more anticlimactic because we all knew based upon the leaked footage earlier in the day and the day before that he was going to lose anyway. >> yeah, they are trying to track it down. but when i see a headline spoiler alert, don't find out what happens -- well, now i know >> and congratulations to emma >> oh, yes >> awesome >> i hope she goes on a big run too. guys, thanks chinese rail car manufacturer crrc is making inroads in america as it builds out critical infrastructure in major cities, but there could be

serious risks. eli mo eli moye september has a look at the factory. >> this is going to boston but also chicago, philadelphia, los angeles. i'm going to take you inside to tell you about the controversy that is ckroing the rail industry coming up next

china's crrc is the world's largest rail car manufacturer and it is set to make new subway cars for likes of boston, philly and chicago, setting off alarm bells in washington, d.c ylan. >> reporter: clearly the workers are american, not chinese. and a lot of the parts are made here in the usa. some of the door systems that are actually made in plattsburgh, new york. but the uproar here is over the

fact that the company that runs this factory is a chinese state-owned enterprise, crrc and right now relations between d.c. and beijing are so tense that some lawmakers are uncomfortable with the idea of china building america's critical infrastructure. but here at the factory, the company says that it is getting caught up in the trade war too it has to pay tariffs on these shells of the cars that they import from china and when they applied for a waiver, they got denied >> translator: tariff may not be the solution that works. personally, i think as a u.s. firm now we are also hurt. >> reporter: crrc says it won the bids by being the lowest priced competitor by a lot it can't raise its prices just because its costs went up. >> so i wonder what would happen if -- and i've seen marco rubio and others be very vocal in their opposition to this

what happens to the cities if they can't use this equipment? >> reporter: well, this is the difficulty here. the cities say that they are doing taxpayers a favor because they are spending less on critical infrastructure. washington is not stepping up to the plate to fund some of these projects, so they have to go with the lowest cost provider. and a lot of cases that is turning out to be crrc at the end of the day, taxpayers could wind up paying more. >> and you look at all those wires thinking i don't know, maybe they could bug it if they wanted to. who knows. okay thanks >> reporter: that is wochbtd conce one of the krernfof the concern. the government student loan program is running deficit and colleges are at risk of losing billions we'll talk to one university presenabidt out higher education's next move right after this ♪ lower calories. ♪ higher expectations. the light beer you've been waiting for has arrived.

corona premier. has arrived. the flexible class schedules d me tremendously. 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.

mno kidding.rd. but moving your internet and tv? that's easy. easy?! easy? easy. because now xfinity lets you transfer your service online in just about a minute with a few simple steps. really? really. that was easy. yup. plus, with two-hour appointment windows, it's all on your schedule. awesome. now all you have to do is move...that thing. [ sigh ] introducing an easier way to move with xfinity. it's just another way we're working to make your life simple, easy, awesome. go to xfinity.com/moving to get started. welcome back to "the exchange." america's colleges at a turning point. enrollment down for seven years in a row now the federal student loan could tax taxpayers $31 billion over the next decade and now china is reportedly warning students about studying in america amid ongoing trade dispute and drives

away $14 billion in revenue in 360,000 students joining me now to talk about this and more is purdue university president mitch daniels. governor, welcome, great to have you. >> thanks, kelly. >> by the way, we should mention, not only is your college thriving but hasn't raised tuition since 2012 and every passing year, that's becoming more of a feat. congratulations. but what's going to happen to the rest of the colleges in this country? it looks really bad out there, especially for the smaller private liberal art schools. >> i am very worried about many of our fine schools and we all should worry because we may have seen some of america's competitive advantages erode but we still have the finest network of higher education institutions in the world and try to keep it that way but high cost, unproven, uncertain quality, and new alternatives are really beginning to take their effect and a lot of very fine schools are feeling it.

>> so what's going to happen are we going to lose half of the colleges and universities we have in this country is there anything that purdue, your model, can tell those institutions because obviously, you guys are doing it differently but do you think you're unique in that regard >> we're not unique, but i do think some of those things that are working well for us, we have record enrollments record applications. and i believe that showing some sensitivity to cost is part of that i think offering a rigorous high value education, we have the whole spectrum, of course, of offerings here but over 60% of our students are studying the so-called stem disciplines and going on to very provably successful careers so that's a factor too but the emergence of a variety of other alternatives, a lot of corporate america is now beginning to decide that maybe the traditional four year college degree is not the stamp

of readiness they've always thought it was. >> you have companies from starbucks to walmart today doing what they can to find different ways to partner with students, get them in the workforce and a degree so on the issue specifically of chinese students, this is a life blood for many institutions right now. they pay full freight. may see a drop in numbers coming would that be a hit even for you guys >> we'd be fine. we have had for a very long time, not new at purdue, it goes back a century, a lot of new students, chinese, primary among them a few years ago, for a variety of reasons, but caution about such an event being won, we did decide to dial down the number of our chinese students. it's 2% or 3% of our entering class now, and they've all been replaced by americans from the other 49 states and by some international students from other countries. it gives us a better balance

anyway and we have far, far more applications from china than we're able to admit under those guidelines so i think we'll be all right but i know there are schools very exposed. >> come back, we'd lo ve to talk more about that. governor mitch daniels the president of purdue university >> if growth of food delivery services heating up one cool sector of commercial real estate that's next on "the exchange." with all that usaa offers why go with anybody else? we know their rates are good, we know that they're always going to take 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.

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the growth of e-commerce increased demand for warehouses but a small subset sector really heating up even though you might not describe it that way diana olick is here to explain dia diana? >> reporter: cold is super hot, if you're in the cold storage warehouse business i'm standing in front of a giant freezer unit it's because of your amazon press, your pea pod by giant the new food delivery service is driving it literally from the warehouse to your home it's small now but growing quickly.

>> about 2% or 3% of all goods on groceries bought online and we expect this space could explode to 13% over the next 5 years because of the penetration of the internet. >> reporter: it's also the farm to table and organic trends. fewer preservatives and food requirement more cold storage but still a very limited supply of cold storage real estate. which makes it that much more valuable now, americold the first in the u.s. today since going public last year, its stock is well on fire and that's because as the grocery segment grows, the produce is poised to profit and investors are just hot for cold. kelly? >> is that the only one, diana >> this is the only publicly traded cold storage company in the u.s. there are other companies and you can bet that there's going to be more competition in this space as it grows because you saw the chart on that stock, super high in just a year. >> that's what i learned today

a publicly traded refrigerator thank you very much. diana olick for us today that does it for "the exchange." i'll join tyler for "power lunch" which begins right now. kelly, see you in just a moment welcome to "power lunch. i'm tyler mathisen new at 2:00 today, rally on. stocks surging we haven't been able to say that for quite some time on optimistic comments from the fed and easing trade tensions. we will break it all down for you today. retail stocks on pace for their best day in five months but a major warning from one key name about the impact of the trade war and big tech, rebounding from yesterday's big sell-off regulation risks overdone? "power lunch" starts right now as i mentioned, there is a rally right now up 461 points on the dow. let's get a check on the rally this hour. with stocks ne t