volatility. >> public storage, psa. >> your brother. >> jdx i'm in the dxj giddy up. >> corona beer and as you pointed out mexico tariffs are a smoke screen. >> that does it for us "the exchange" starts now. >> thank you, scott. hi, everybody. here is what's ahead, screeching to a halt. adp report showing the fewest job gains since 2010 what does that mean for friday's big jobs report and for those rate cuts that everyone is buzzing about? as washington takes on big tech, one founder tells us how he was forced to tell his company as google's ad dominance grew and the smaller players just couldn't keep up those details are ahead. plus winners and big, big losers investors seem to be firing a warning shot at retailers this season that's coming up seema mody is at the stock

exchange seema? >> it's all about the fed and the fed's willingness to be accommodative and cutting rates. the dow closed up over 500 points the big question is how much higher the market can do if the fed does, in fact, cut rates data from barclays that shows historical performance of s&p 500 during prior fed rate cuts, 3% gain for the benchmark and 6% gain over the year still, some critics caution an accommodative fed may embolden president trump and trade hawks in d.c. to continue the trade fight with not just china, but mexico as well the market will be watching for talks between vice president mike pence and the mexican delegation this afternoon. reading the tea leaves one part of the market the fed is not helping is oil. it continues to slide down

another 4% here. data continues to show rising stockpiles here in the u.s. >> and we went below 51 earlier, seema, right >> exactly we're getting close to bear markets. some technicians watch that number down almost 20% from its recent high. big moves there. >> it will help out the drivers. >> there is that. >> i'm kelly evans hiring in the private sector dropping to the lowest level or amount in nine years will this put more pressure on the fed to cut interest rates, even potentially at their meeting this month jason brady, ceo of thornburg asset management, ceo of zoe financial and michelle meyer at bank of america/merrill lynch. welcome, everybody where to start michelle, how much stock do you put in the adp number? >> adp has misled in the past. we have to be careful about that there's been a number of head fakes from it. but, you know, i do think we're potentially due for a softer reading on jobs, given that last

month was so strong we had 263,000 jobs created last month. some mean reversion makes sense. we want to look at a moving average in that respect. what we're all really worried about is a confidence shock. how quickly is uncertainty going to pick up in the economy, given the trade escalation how does that feed into the broader economy in will you see companies delay hiring and adding to their workforce because they don't know what the future is around trade >> we've definitely, andres had that shock service number was okay. today was okay listen, i think companies just don't know what to do in this environment, right it's an open ended question. look at the reaction in the two-year yield this morning. that thing was above 2.1% sunday, below 1.8% now do you think a rate cut in june is on the table? >> i think the issue with the fed now basically saying trade is going to dictate a lot of what we do is that if they actually cut -- let's say it

moves forward and they do cut. that will send a message to the market saying we're in really big trouble if the fed cutting rates. >> the market loves these rate cuts. >> they do, until they don't right? until they actually say wow, we must be going into a recession here if the fed has to cut so i worry this idea of getting the fed now, trying to, you know, basically forecast what next tweet is going to come out to decide what they do with interest rates i do agree a lot of it will be, will we get scared of our own shadow >> twhich feels like it's happening now, jason it's too early to tell, isn't it is it too early to be having this discussion about a rate cut in june? if friday's jobs report comes out and disappoints, we added 312 k in the last few months it doesn't really point to us falling out of the sky here. >> exactly i think you can point to the volatility of these month-by-month numbers

michelle knows that better than anybody. jobs picture in the united states remains really, really strong, maybe one of the brig brightest points in the global economy. a quote, unquote, data dependent fed. that data dependency has become so extreme, it's actually adding volatility to the marketplace. that's the real problem for both the market and for congress. >> what are they supposed to look at, the weather data's all they've got, right? >> you don't look at it month by month and say, you know, at the beginning of the year we're going to raise four times and cut two times and move around. this is too quick. this is long and variable lags is a phrase that i remember growing up in the marketplace that the fed used. what happens happened to long and variable lags? is the long and variable lag two months, three months that's ridiculous. >> great point, andres look at the beginning of the year september, gdp of 4%, amazing unemployment and the market dropped, what was it, 20% into the end of the year

and powell had to come out and take four rate hikes off the table. then you had a strong start to the year you start to put one back on the table and within a couple of months you're taking all that off and we're talking about rate cuts. >> i think this is what happens when the market becomes an input into the model, right? instead of the fed basically not looking at what the market's reaction is to one data point saying, wow, the market is timing already for us. that's what happens. right? to your point of the duration of them looking at the data, if you're looking at the data, you would have waited much longer. 6% drop down in the market that says we have to cut. that becomes an issue. >> the inflation story is interesting, because it's on a different track of growth. obviously, anything like that is a real slowdown. it's not catastrophic. >> yeah. >> the inflation story is the real puzzle. it's a good kind of puzzle it's not going up. maybe you get a one-time boost for the tariffs. should the fed be on hold no matter what happens simply

because there's no inflationary pressure >> at the beginning of the year, that was a big thing of what happened market conditions were tightening, slowdown in the global economy i think a lot of it was that the fed was becoming worried that inflation was stuck below 2% and inflation expectations were becoming sticky on the downside. this is a fed that wants to sustain the recovery and they want to see some overheating and they want to test whether or not they can get a wage increase that could push into underlying -- >> would they cut rates in order to encourage the overheating they see here? >> the only way they cut rates, that is our baseline now, starting in september -- >> does it feel weird to say that >> it does in some way so much has changed and we're learning from the fed as well -- what we've realized is that it will not tolerate a slowdown in the economy. the fed and powell said that this week. slower growth with inflation below target, it gives them a window to cut to try to extend

and overheat the economy. >> so, jason, we could talk about this all day bring it down to brass tax, i guess, for us. how should you be invested in this kind of backdrop? is this a green light for being in stocks because there's a backstop or what >> look, the stock market is so variable, it's not stocks monolithically, or bonds, what have you stocks that can benefit from volatility one sector is exchanges. so, even here cme, it's been on a tear, it's true. it's not cheap but as a portfolio position, that clearly benefits from volatility, particularly in the rates market it's a dividend payer. it's a simple business, really hard to get everything out of their business it's a great name to hold as a portfolio position, not just itself but as a portfolio position in volatile times. >> stock exchanges in hong kong like you see there

thanks very much really appreciate it jason brady, andres garcia and michelle meyer mortgage rates are now at the lowest point in a year and a half it still isn't low enough to spur a wave of home buying diana oleck joins me now is there any lift on the data? >> not so far on the purchases side not far enough to offset today's really high home prices. average rate on the 30-year fixed fell to 4.33% from last week, 20% down payment that just refinances up 6% from the previous week, up 33% annually rates, of course, were 52 basis points higher same time next year re-fis are highly rate sensitive. that drop-in rate added 2 million more borrowers who could benefit from a refi according to black knight fell 2% for the week and were

barely .5% higher from the same time a week ago. first-time buyers were a growing segment of this market are just not finding the homes they can afford, even with these lower rates, kelly. >> so the home shortage is still a problem. i remember when we talked to the fannie mae chief economist, doug duncan, and said how low would rates have to go to spur people to get out there he said 1.5 to 1.6%. >> no, he was talking about the yield on the ten-year treasury. >> that's what i mean. >> yes, exactly. 3.5% on the 30-year fixed would be that kind of signal that, wow, we are in super low territory. >> sure. >> and you better get in now or you'll lose the potential for this kind of rate. when year still around the 4% range, people are like, eh i expect it to go up they're also afraid of catching that falling knife if home prices do fall back. >> in order for us to get that kind of mortgage, what does that

mean for the ten-year, 1.5 range or two >> they don't fall exactly the ten-year yield we always use the term loosely they follow the mortgage-backed bonds and demand for mortgage-backed securities it depends entirely on investors and how they're feeling about certain things as the ten-year treasury falls, they will come down eventually but they don't move like stock rates. they don't move immediately on prices they tend to move day-to-day and they're less volatile. when you're in the lower 4% or just below in the high 3% range, that's a great time to get in. we do know they could go up again. >> it's like gasoline prices they rise quickly with oil but they fall a little more slowly. >> lenders don't want to, right? >> i get it. i get t appreciate it, diana thank you very much. here is what else is coming up on "the exchange. the government has its sights set on big tech and one issue, ad domination we'll talk to one company that

was forced to sell itself because it just couldn't compete with google. plus an attempt to make nice high-level talks with mexico set to take place in just two hours. what concession will appease both sides and getting to the core of it tim cook blasts news feeds and says apple isn't a monopoly, all while being sued this is "the exchange" on cnbc with licensed agents available 24/7. it's not just easy. it's having-a-walrus-in-goal easy! roooaaaar! it's a walrus! ridiculous! yes! nice save, big guy! good job duncan! way to go! [chanting] it's not just easy. it's geico easy. oh, duncan. stay up. no sleepies.

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welcome back to "the exchange." my next guest launched a tech company and watched it grow until google decided youtube could not use its tools. the company never made its mark as a result of those changes and eventually sold itself to at&t i'm join bid brian o'kelly, founder and former ceo of app nexis. brian, before we get into your story, julia, remind us what the market share is these days when we're talking about the online advertising market. >> there's no question, kelly, that google and facebook together dominate digital

advertising. 60% of the u.s. market share google has 37% of ad marketshare. youtube is estimated to be about 4% these numbers are according to emarketer. what's really notable here is that that market share has been holding steady and we've seen amazon actually make gains now with nearly 9% of digital ad market share but there's no question when it comes to the biggest players in the business, number one is google, number two is facebook and their reach in scope, especially when it comes to mobile advertising, which is where the growth market is right now, is pretty massive. >> brian, i remember app nexus there were many of these at the time you were basically the marketplace where people could come and you would place them -- that advertising inventory on these platforms. is that right? >> right. >> what happened >> it's really hard when you can go to a buyer and say you can buy anything you want through our platform except the largest video sharing sight in the

world. >> what year was that? >> 2015 when google decided youtube would only work with google products. >> eight years after your founding, and prior to -- did that come out of nowhere that youtube made that decision as far as you were concerned at the time >> at that time, app nexus was growing almost 100% a year, starting to win major deals. wpp, largest ad agency in the world, had made a marriage investment in app nexus, chosen us as their primary platform i think google was worried they couldn't compete fairly and they made restriction to buying on youtube to their own products. >> why couldn't they compete fairly in their minds? >> i don't think it was that rational i think we were growing incredibly fast and they didn't have the internal innovation in r & d to keep up. >> why was it a problem for them if you were placing ads on their platform >> with the growth of youtube advertising going flat they no longer had all of our

content filters, for instance, and major advertising starting to boycott youtube because of content problems like running jihadi video. >> you think you could prevent that >> we did prevent that. >> interesting. >> i think it hurt the youtube business but if you're a monopolist, you're willing to sacrifice some for the larger picture. if they could restrict the growth of third parties they could make up the money on youtube later. >> what were you going to add to that >> what he's saying about youtube and their challenges is really notable here. now, youtube has had a number of issues just today they announced they're taking more steps to take offensive, violent and inappropriate content off their program. this has been going on for years now. one thing we're seeing is there are a lot of third-party players, some of them are content companies like conde nast that allow people to buy their content on youtube what they're trying to do is

help buyers find appropriate and premium content on youtube that they could be guaranteed is safe because youtube has been plagued with these ad safety issues. i think it's interesting as we're seeing youtube try to take control of that market as well because there is a whole ecosystem that has lived on top of youtube and on top of google. and it sounds like what brian is talking about, the pressure now to really have youtube and google control all of that. >> brian, what were you worth at the peak, by the way, your company? >> our highest valuation was around 1.8 billion. >> you sold to at&t for? >> 1.6. >> turn that 1.8 into multiples of that in the public markets instead of having to sell the company? >> right and we peaked in valuation around 2015. we were never able to grow the business from a valuation perspective, partially because the market said what if google takes away more things >> absolutely. final question now that we're talking about a regulatory crackdown, what remedies that are being discussed do you think

could change this problem, as you in that industry sees it with these companies >> well, one thing is clear is that the anti-trust laws would allow the doj and ftc to take action however for the past 30 years, one idea is that if an acquisition doesn't hurt prices that's okay. ad support businesses like google and facebook don't charge consumers. they can buy anything they want without impacting consumer price. >> you're in favor of a rewrite basically of that law to look at it differently than just the consumer >> it's not a law, just the interpretation if congress instructs the doj and ftc that we need to be more broad in our understanding consumer harm then, you know, they will take action and we will see break-ups or significant consent actions by all four of the companies they're looking at. >> very interesting. thanks for talking to us about it, brian. brian o'kelly and julia boorstin, thank you both. coming up, new rounds of tariffs in mexico. would the u.s. and mexico agree

to a deal that would prevent those new tariffs? high-level talks are happening in washington today. how ill-prepared some states are in case of an economic downturn which ones are most at risk and whether more tax hikes could be hexcng imi "t ehae"s back in two. lower carbs. ♪ lower calories. ♪ higher expectations. the light beer you've been waiting for has arrived. corona premier. has arrived. 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.

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now over to sue herera for a cnbc update. sue? >> on capitol hill, house speaker nancy pelosi claiming president trump has used the threat of tariffs on mexico to distract from the mueller report >> i don't even think it rises to the level of policy i think it's notion mongering again. and it's really -- it -- well, let's face what it is. it's a distraction from the mueller report and it served its

purpose, right here we are. >> a judge ruling a former assistant basketball coach for the university of southern california will not be going to prison for accepting a bribe to steer young athletes to a manager. tony bland was sentenced to 100 hours of community service and two years probation. members of the british royal air force taking part in a commemorative parachute descent in northwestern france, group of 150 paratroopers filled the sky before landing in a field west of cannes, honoring the airborne soldiers who descended into gunfire and death ahead of the d-day sea-born invasion june 6th, 1944. you are up-to-date that's the news update this hour kelly, back to you. >> 30 minutes before "power lunch. i'm joined by tyler mathisen. >> little talk about interest rates and monetary policy. the fed, people like to say they can ignore t you can't ignore

the fed. >> never never. >> they are the ones that sent the market into a funk in the fall, brought it out at the first -- and now once again the fed to the rescue. we're also going to spend a lot of time in the next hour talking about housing and what these lower interest rates now down to 3.93% or thereabouts, what that means for house prices in your neck of the woods and what it will mean for borrowers, lenders and the rest we'll take a look at housing on the next hour. >> not a big impact on jeff bezos' penthouse which we'll also get a look inside. >> we'll get a look inside jeff bezos' penthouse probably paid cash. >> by the way, happy anniversary. >> thank you very much number 15 for yours truly, and my wonderful bride, joanne. >> congrats. >> thank you very much. here's what's ahead on "the exchange." >> coming up, tim cook says apple is not a monopoly. is he right? investors are firing warning shots in the retail sectors.

a positive outlook for one ipo. >> and waking up at 4:00 a.m., etngto success or to gti a cold that's all ahead in "rapid fire." -driverless cars... -all ground personnel...

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welcome back to "the exchange." it's rapid fire. here to break down the headlines are bill griffith, kate rogers and eamon javers. >> nice to work inside. >> is there coverage over your head >> there's a little tent we're protected from the rain but it gets hot. >> little warm out there. >> you have air conditioning >> producer gets in your ear and says -- >> you look a little shiny, yes. >> what can you do about that? >> i say it's 110 grease out the here i can't do anything about it leave me alone. >> peeling back everything going on with apple today. two apple developers are suing the company. since those iphone apps can only be downloaded through the app store, as ceo tim cook told cbs in an interview last night, quote, we are not a monopoly. >> aha

that's the issue he's right about that. but the app developers who are suing apple are not claiming that they are a monopoly they're claiming that they're a monospony or something like that. >> single buyer? >> exactly monopoly exists when there's only one seller of a product and you can set the price. a monopsony, i think, is when there's only one buyer and these app developers say -- there you are. app developers are saying apple won't allow them to sell their apps outside the app store. >> interesting. >> for iphones and so they essentially become the only buyer for iso apps they set how they price these apps and take that 30% commission so it's a monopsony. i learned something. >> everyone in washington is going to now -- >> feels like it. >> reporters realized what was going on then you had the house also cracking down.

>> some reporters have been ringing this bell for a while, that the tech companies are due for a reckoning in washington. that washington, for about a generation, has been almost entirely hands off the last big controversy we saw was with microsoft. >> yes. >> and anti-trust there. it's been about a generation since then so, this is a reckoning that was long -- a long time coming what is interesting, i looked up apple's lobbying spending. they scaled it down in 2018. >> that's the problem. >> just at the wrong time. >> big tax fight, lot of reasons for them to lobby. they may need to ramp that effort up again big time. >> jim has been talking about whether the white house was upset with how they repatriated. we did this huge tax bill and you were supposed to be one of the poster children for this. >> that's the wild card in the trump administration you don't know which ways you may have crossed this president and he's willing to do things out of a spirit of sort of personal antagonism toward

particular business leaders, willing to say things, at least rhetorically -- take jeff bezos as a classic example of that in a way that other presidents haven't been willing to do that's a whole complicating factor here as well. tim cook is trying to navigate all of that. i saw him at the white house next to the president at a big conference that they had there he's clearly making the effort to put the face time in with the president, to be there, not to -- >> face time, no pun intended. >> right he's face timing with the president. but to put the effort to be there and not be seens an antagonist with this president. >> he's antagonizining facebook plenty, calling it out in a newsfeed as well plunging today, game stop. it's not the only retailer abercrombie & fitch was down after earnings last week, gap was down 17% after same-store sales plunged. it almost is as if the market is calling into question which of these retailers will survive at

this point. >> game stop is a special situation, right blockbuster 2.0. >> selling the consoles, more people moving to online and streaming. mall traffic is not what it used to be. lot of promotions they're offering are not resonating. if you look at walmarts and targets of the world, they're expanding what they offer in a really big way we had an article on cnbc.com about them investing in the clothing lines they sell on store because it's a one-stop shop if anybody sees my receipts from target, i go in there and buy all kinds of things i never thought i needed and that's working, whereas the deep discounting you're seeing in abercrombie, ann taylor, whatever it may be, may not be working anymore. >> they're separating even american eagle did fine. its comps were twice what it expected this morning. how old are your kids, eamon >> my oldest son is 15, 15, 12, 8 and 5 months.

>> maybe not the 5-month-old but everyone else is game playing age. >> my son is antiquing. >> what? >> fifa 2007 soccer video game. >> antiquing. >> antiquing went to the game stop to find the vintage game. >> so funny. >> i see. >> old players from that year, on those teams because that was cool to him. he has fifa 19 he wanted '07. >> that's antiquing? >> yeah. >> okay. i'm getting old. enou not enough for game stop, by the way. >> wait until you learns about pogs. >> pogs? >>y thi i don't think he's goino like pogs so much. >> you never know. >> chewy.com is expected to price in the 17 to $19 range that would value the company around $7.5 billion, twice what parent company petsmart paid to acquire it in 2017. >> that's true. >> i am a chewy.com customer.

>> customers love this. >> my dog is on a prescription diet we had a very close call mom and dad if you're watching, i don't blame you, but i blame you. so he's now on prescription food and i order it from chewy.com. they have this auto ship thing that, to me is the most genius part amazon prime subscribe button. i don't have to remember to order his prescription food. if i run out of it, we're in big trouble. >> and nothing amazon offers that competes with this? >> i have to get a prescription from my vet and chewy communicates with my vet. >> takes you out of the loop all together. >> this company is still not profitable. >> oh, that. >> details, bill. >> and let's remember that petsmart was taken private in 2015 so, this is a private equity group that sees an opportunity. >> absolutely. >> to take a profit when they can and they're going to shove this out the door to the ipo market and take that profit. >> are you a chewy guy >> i have a dog. i'm not a dog person. >> you have a dog but you're not a dog person >> what's wrong with you >> a lot of things are wrong

with me. but so we are chewy people chewy boxes are showing up at the house all the time i will say this business is unique the customer is not really the dog, right the customer is the dog's owner. the dog doesn't care about this stuff. the dog will eat all my kids' baseball caps and perfectly happy chewing on those. >> that's what got us into the prescription diet to begin with. so watch out. >> chewing of the baseball caps? >> he had steak that didn't work. >> baseballcaps.com to send all the baseball caps to my house to replace the ones my dog ate. >> your dog can go antiquing for them. >> exactly right. >> does early to rise also mean likely to succeed? a new piece out -- bill is already shaking his head. >> no. >> apple ceo tim cook, actress jennifer aniston they all say they wake up and start their day around 4:00 a.m. some, like sam zell have truly made their whole careers on very little sleep. >> good for them. >> jim cramer, i am sure would say i'm one of them.

>> woke up early in japan. >> and show no signs of fatigue the next day. >> this is a genetic issue. >> yes. >> when you're able to operate on few hours of sleep. lyndon johnson famously was able to do that let's not forget about all the sleep deprivation that we experience in this country right now, which makes us less productive you need -- for people who don't have that issue, you need your sleep. >> i need my sleep. >> i'm a huge proponent of that. it's a great immunity booster. how is your sleeping >> i went on a quest a few years ago -- months ago rather i have a whole system now. it's working for me. i try to get seven hours a night. cnbc that's live starts at 5:00 a.m. with the highly energetic brian sullivan. >> who also doesn't sleep.

>> i'm not a morning person by natur nature. >> eamon, that is not funny. >> anchored by you. >> amazon's latest delivery system let's get to john forte. what's going on? >> amazon has just unveiled the prime air drone. latest design. we knew they've been working on drones i didn't know they were this far along and this close they say it will be operational within months. ai powered has a range of 15 miles. the goal, using this drone, is to deliver packages within 30 minutes. they say it can carry five pounds worth of a package. that actually fits 75 to 90% of the packages that amazon delivers today though they're not saying they're going to deliver 75 to 90 prs of packa

90% of packages by drone consumer ceo jeff wilke got on stage and ran through some of the technicals behind this vertical take-off, like a helicopter, but then has aerodynamics like a plane and shielded protections around it to protect the propellers, can recognize both stationary objects and moving objects and uses ai to sort of deal with those safety issues. amazon is saying this will be more environmentally friendly than the way they're actually delivering things now. part of shipment zero. this goal they have of having zero environmental impact on the way that they ship big news here. >> regulatory blessing are we all going to see drones in our neighborhoods >> somebody has already gotten it, though, right? >> i think that might vary somewhat from location to location that's more of the detail that we need. but they're making a big pitch on the safety work that they've done with ai technology, exactly what's needed to safely land

this thing. >> clearly the future of the economy, will be as disruptive as the internet was in its era but count me in as a little bit of a skeptic here, given that i have a roomba that still gets caught every time it hits one of my iphone ear pieces on the floor. these things are great but they're not there yet. >> not necessarily ready >> amazon may have gone way beyond what's -- >> you might want to answer that. >> we'll let eamon go. it's the white house calling thank you all very, very much today. coming up, white house officials saying the administration is dead serious about imposing tariffs if trade talks fall apart we'll bring you the very latest on those meetings and speak with former ambassador to the u.s. on neallikelihood of getting a de do ♪ ♪♪ ♪♪

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dow up trump administration's 5% on mexican goods set to begin in five days. both sides sitting down to hash out a deal will they or won't they in kayla tausche is live at the white house. kayla? >> reporter: the starting line of talks toward a potential deal, certainly not the end stages this official tells me that the situation is still fluid with no decision made either way when i asked about usmca and the expectation that not only would the white house delegation be interested in making sure that is not jeopardized, he told me that they are still working under the assumption that the usmca and immigration are in completely separate tracks that being said, the representatives from the trump administration represent some free traders who have an interest in this free trade deal with mexico going through, led by the vice president, mike pence, accompanied by the secretary of state and acting department of homeland security secretary as well, accompanied by the vice president's chief of

staff. we'll see exactly what comes out of that meeting if anything later today when it starts at 3:30 here is how the afternoon will go president trump will touch down momentarily. mexico will have a press conference at 6:00 it's their assumption tariffs will go into effect. there are questions about how technically they could be implemented by monday. >> what is mexico willing to do and what is the u.s. prepared to accept in order to avoid the tariffs? miguel basaenez and eamon javers is here with me as well. mr. ambassador, what do you think mexico can and should offer? >> well, as you know, we have, with president trump, been kind of a roller coaster. so sometimes it's gone up, sometimes it's coming down so, i'm not that sure that whatever mexico is offering would change trump's mood, as he

seems to not that lean to problems linking trade to migration, as if mexico were to start linking the guns trade or money laundering to problem. so, why don't things separate? that's kind of what he's talking right now. >> eamon there's been pushback how serious is that for the gop and could it override a veto >> i think it is serious ted cruz from text saying it's a big problem, emphasizing meetings that there's no votes right now for republicans. the question is whether it will stand up to the president and ultimately override that veto. republicans haven't shown a lot of willingness he has a 90% approval rating and all republican senators know that the trump strategy of tariffs is pretty untested and unproven at this point he's saying he's going to get

results. we don't know if he will one area where the president has succeeded dramatically, i think, and a question for the ambassador on this ambassador, the president has put these tariff threats out there and brought mexico to the table. he is succeeding in getting china to the table, succeeding now in getting mexico to the table. the question is why? why did mexico send the delegation to washington to respond to it instead of simply ignoring it? the president views this as a big win to at least get these conversations happening in washington on his terms right now. >> it is true, as you say. but i'm glad that you mentioned china. what i think president trump is doing with his president putin, he's weakening the economic zone of the americas and he's weakening the economic area of europe and then what he's doing is strengthening china in a way, mexico is very much concerned on the impact, as you saw, the

currency already jump up and then that's the reason why the delegation of mexicans is up rather than just ignoring, but what president trump is doing is pushing mexico to start talking to china cause, i mean, if he really goes on with his threat, mexico will have no much options. >> eamon, your point is interesting, that mexico is here, having these talks today that look like an urgent response to what the president has done. >> right. >> he's already succeeded in that sense just want to mention this reuters headline they've seen a proposed list of mexican retaliatory tariffs on goods, but it excludes corn. ted cruz a moment ago, texas is seen as one of the states hardest hit, maybe some of the auto making states as well and if it's the house where they need that support to override a

veto, for example, could you see something like the texas delegation with one voice coming out against the president who, as you said, is still very, very popular with the party >> lot of republicans in the house delegation it's a big delegation. it's powerful. there's democrats there as well. think about all of the business that happens across the border every day between texas and mexico it is a huge bottom line issue for those districts. i'm not sure you get them to do anything with one voice necessarily. could you fracture enough republicans to make it competitive there in terms of the veto override? that might be a possibility. you have to watch ted cruz and the other leaders in texas. >> thanks, guys. we'll leave it there former ambassador miguel basanez, appreciate it very much. coming up on "the exchange," the ceo vinnie viola joins us, talking volatility to tariff tensions we're back in two. excuse me, where is gate 87? you should be mad at non-seasoned travelers. and they took my toothpaste away. and you should be mad at people who take unnecessary risks.

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welcome back the annual sandler o'neal global exchange conference is undernee in new york city it brings the heads of global exchanges and online trading

companies together bob bobby sawny is there one of the great legends in the trading world here vinnie viola, chairman and founder, and owner of the florida panthers winner of the 2017 kentucky derby. former chair of the new york mercantile exchange. your resume is beautiful and eclectic i have to ask about the markets. tough may down 6%. you were one of the biggest market makers in the world what do you see happening in the markets right now? >> well, the markets are reacting to the conditions with which they operate and they operate defined by the lowest denomination of risk willing to be accepted by the lowest denomination of investor and the idea that markets have to operate around a sort of stable understood rules-based

environment and plolitical certain is in flux >> political certainty, i'm surprised how pessimistic people are about the short-term they seem to think something is changing with tariffs and trade. it's a permanent part of the landscape. do you believe that and do you believe that it might have a negative effect on the markets >> well, i think tariffs have always been part of our landscape. i mean, we've always had tariffs. but the president i think is saying that the tariff structure right now may not be completely fair to the united states. i'm not giving an opinion if i agree or disagree. i think tariffs as a fundamental impact on the markets, i think is a temporary condition i believe that markets are defined by the real economy, the real economy is bursting with creativity and productivity why? because capital and labor are being redefined by digitizing.

>> you are the chairman of the new york mercantile exchange one of the most common questions i get is can you explain how this happened? can you explain how the dow dropped 800 points on a fundamental. today oil dropped 4% on the oil inventory report that seems crazy people write a note and say explains how this happens. you're the biggest market maker out there. explain how this happens >> i'm not active anymore, but i do look at today. stockpiles increase inventories by one-half of one day, maybe -- >> that's my point it's a minor issue >> the great thing about market access is that people get to instantly engage price the vulnerability around that is always going to be that markets are defined by the lowest level of risk determined by the most -- the least rational

participants >> which means what? >> all the sudden you have extreme movements on what seems like minor pieces of information. that frustrates people. >> in that context, here's what i would say to people. the markets are now protected by very specific circuit breakers and stoppage levels. that's the markets the markets are not going to determine your return on investment you have to take a longer political economic view of -- >> we have to go you've been a fault leader on the war on terrorism ten seconds, are we okay in the war on terrorism >> we're absolutely okay on the war on terrorism, and i think the president has done a fantastic job of defining the goals and accomplishing them around the conduct of the war, but more broadly, the conduct of the peace. i really am very excited about that >> vinnie viola, it was a wonderful afternoon. an hour with you talking about his life

we're goung to talk about the thought leaders in the space involving trading globally >> thank you, bob. that does it for exchange. i'll join tyler for "power lunch" next. welcome. we begin with breaking news this hour and for it we go to washington >> the federal reserve said that economic activity was modest in the spring and that's a little bit better than the preceding period almost all 12 fed districts experienced at least some growth with a few districts reporting moderate gains only one district, st. louis, said that economic activity was unchanged. nationally employment was about the same as last time. most districts reporting modest to moderate job growth the tight labor market was a constraint wage pressure and improved benefits improved across a range of occupations the fed said prices rose at a modest pacd