risk i think it's also a good thing. >> liz >> industrials that's because if the market is watching the fed, fed cuts they go up. fed doesn't cut, they're still okay >> constellation brands. >> blackstone. >> walmart >> all right great stuff. great weekend. "the exchange" starts now. hi, everybody. here's what's ahead of pups busc blockbuster ipos police a $2 billion hit. shares of broadcom are reeling today after the company says that's how much business it will lose this year because of the huawei ban what's it all mean for the economy? we'll ask kevin hassett. that's coming up and 1,000 too many at a time when colleges are losing students all over the count country, virginia tech has too many the president tells us about their plans to deal with the overflow we begin with today's markets.

dom chu is down at the u.s. markets today. >> we are red across the board, but not by much. as you can see, we're just about hovering at these levels and have been for most of the morning. the dow industrials down by only about 37 points off 0.1% and the nasdaq helping to pace the declines on chip weakness due to those broadcom stories. so off 0.5% there. as we take a look at one industry group to keep an eye on, it would be the utilities from a sector perspective. because there you are seeing this move higher by about 0.75% from one of the big etfs that tracks it. and of course here we are right near -- i'll put a star here -- historic highs for the sector. as interest rates move lower, these stocks become more attractive for their yields and will end on, of course, it has to be the stock of the day not far away from me, shares of chewy only up 60% right now because at the highs today, over

here, we are talking about $41.34 80%-plus higher. we've given back some of that. but the stock of the day at the new york stock exchange chwy i will send things back to you >> i'm kelly evans and our top story today is the red hot ipo world. chewy surging on its first day of trading and this just days after we saw the same thing from crowd strike and fiver. joining me for more on this now ask are barrett daniels, duncan davidson, and our own leslie picker who's been following this story all day as well. duncan, your thoughts? what does this tell us about the state of public and private markets? >> the market is healing the ipos are red hot i would say uber and lyft are anomalies.

they are one off deals that were kept off the market too long and have issues. whereas what we just saw this week, this is a time to go public >> these markets are forgiving but one more point before i move on, you're saying uber and lyft were kept off the market too long you think that's the takeaway from all of this year's ipos so far? >> i would hope so back in the '90s, i had two ipos we got out much quicker. these companies should be public zuckerberg said he wished he'd gone public earlier. look at uber it's a massive huge cap company when it goes public. that's not a god thing it should have gone out two or three years earlier. >> at a certain point you say wait a minute. what's the business model? are we going to get to that point of reckoning they get a honeymoon period but you got to put up some numbers >> yeah. i think that's fair. i mean, but also what i'm seeing in my own personal experience is

there's a ton of excitement around the ipo market. and there's -- i've had dozens of meetings in recent weeks about companies looking to get out. i had a day last week where i literally had five meetings in the same day about companies gauging their ipo prospects. so i expect this parade of ipos to continue, to be strong, and consistent, and robust and a really exciting thing is it's not 2019. we're getting kind of late innings there. we're talking 2020, 2021, 2022 as long as the markets hold up and the economy holds up, that's a big if but if they do, i expect this parade to continue >> yeah. that's exactly what i was going to ask you are companies in a rush to get out this year because they have some worry about what's coming it sounds like you're saying no. they just look at the numbers and say we can raise a lot of capital right now. >> there is. i heard a lot earlier this year of companies saying we need to get out in 2019 because the devil you know is better than

the devil you don't. and right now it's clearly a really exciting ipo market there's no time like the present. but there are others that just weren't ready for 2019 for whatever reason that are starting to map out the future plans. and it feels like we're going to be pretty consistent here for awhile >> we could talk a lot about the pet space and how hot it is or whether it's -- you know, but this doesn't seem to be about that right? again, look at fiver yesterday up 90% on the close taking back some of that today crowd strike earlier in the week and that space hadn't even been that hot this year the only thing is that -- >> you look at things that would have traditionally been a head wind or required companies to take down their valuation a bit. lack of profitability. a lot of these ipos, fiver being the exception, has dual class structure. investors don't seem to care

it's largely momentum driven it largely feeds upon itself they're more apt to invest in the next ipo advisers to these companies say it's becoming increasingly better to increase for them. then priced above that and you see it's up 60% today. so it's just really, really difficult to gauge how much an investor excitement there is out there. the only thing we can say for certain is it's continuing >> the good news so far is this has been organic and all of the names this week or zoom and the enterprise space, will the quality get worse from here? is the risk not so much what we've seen so far but the risk going forward as the expectations and the broader public really starts to say, hey, wait a minute i got to get in on this? >> this is not 1999/2000 these companies are much further along. i don't think we're going to

have anything like we saw back then this market is healing itself. we've had a dearth of stocks we've had company buybacks we've had few ipos it's more normal to have a lot of ipos. think of somebody loving faang stocks it would be better if money didn't pile just into faangs more options >> thank you all very much again, a big day here for these public offerings barrett daniels, duncan davidson, and leslie picker. the other top stock is broadcom they will be $2 billion less than previously thought and that's because of the ban on chinese equipment maker huawei this is taking the whole sector down today josh lipton is in san francisco with more. >> broadcom now slashing annual sales forecast and getting hammered in today's trade.

the ceo saying trade tensions with china including that export ban on huawei increasing economic uncertainty and decreasing visibility for customers. last year huawei generated $900 million of broadcom sales. broadcom, though, not alone. micron ceo just said the huawei brand brings turbulence to the semi industry. semis now down from their high in april rbc's mitch steves says to stick with amd which will take pieces from intel he also likes synopsys however, given the commentary we just heard from him and the softer commentary about the auto and industrial stocks, he'd steer clear from texas instruments. >> for now, josh, thanks telling us what the stock is

doing. here's what else is coming up today. >> coming up, kevin hassett. chairman of the council of economic advisers joins us live. his take on where we are in the cycle and the future of tariffs as more companies start to blame them for a weaker outlook. plus, will the fed take a cue from the market? hinted interest rate cuts next week we'll debate and, the ceo of bluebird bio on its new million-dollar drug and why he says his industry is doing pricing all wrong.

welcome back the u.s. military releasing new video evidence that they say proves iranian involvement in asf attacks on two oil tankers in the gulf of oman on thursday hadley >> reporter: hey, good afternoon, kelly what we know today after i have to tell you an intense 24 hours of backwards and forwards not just from the united states but also from the folks here in the gulf arab states as well as tehran a major blame game that we've seen playing out over the last day or two we know right now is the central demand has released this video they say is an iranian

revolutionary guard boat and crew who are fiddling with the side of a ship and there's a lot of speculation at the moment about what they're doing there. there's a lot of speculation about whether or not they're seeming to take off a mine from the ship the fact it's above the waterline and not below the waterline seems to indicate to those back in washington was that this was not an attempt really to completely disable this ship. just a shot across the bow, if you will like the attacks we saw a month ago off the coast of where i am standing where you saw four attacks on vessels those ships, of course, as you know were not sunk but they were in some way disabled i want to mention of course something else we've been hearing over the last 24 hours or so. a lot of speculation about oil prices, why the oil price hasn't been hitting the highs we'd seen or consistently hitting those highs. one of the things i heard essentially was not just about the oversupply but also about the fact that opec is really, really trying to remain as cautious as possible in terms of

what they're willing to do you know, of course, this opec meeting. they are still hesitating to set a date they were saying it was going to be the end of june expected to travel to iran to speak with his iranian counterpart about moving that meeting. but we're still waiting and watching to see if that meeting is going to be moved as well a lot of speculation in the oil markets on that sense. certainly here, a lot of closed lips we were anticipating at least a statement today. >> that is interesting and you've been concern about demand for oil driving that lower a little bit as well hadley, thanks hadley gamble for us today turning now to the broader markets. the dow was down today just to stay above 26,000. this as investors prepare for another fed meeting on wednesday. joining me now the chief investor officer at -- welcome to you both. and steve, listen. i mean, i don't know if there's

anything to say with regards to the situation in the middle east union, t you know, the markets are always trying to price these in ironically seems to be an outcome for the u.s. and china trade talks. >> everyone's so focused on that it's really overwhelming everything else. if you look at what's bothering oil right now, it's less supply than it is demand. people are concerned about global demand because of the trade. everyone's focused on g20. >> but are they overly concerned? >> on g20? >> about demand in general i know you look at the back half which is where all of the concern is can the consumer hold snup we've had all of these tariffs what are your thoughts >> our thought is the economy is treading water pretty well and the parade to us is a matter of when not if >> when a deal gets done, you mean yeah. >> they've really toned things down the last couple weeks in china. i think he's getting ready to at least shake hands with trump, i

hope and the president needs a deal too. the market is very sensitive to this trade issue we saw how quickly he reversed course on mexico last week that didn't go over real well. so i think they'll at least shake hands at the g20, get negotiations restarted and we're big believers that sooner or later a deal gets done >> is everybody on the wrong side here? >> way too cautious. you can see all the cyclical names pulled back. we were talking about that before the break the tech stocks, the industrial stocks, anything that's going to respond to a demand pickup which is not the consensus but is our call these stocks are going to move i think it's hard to be too negative on the market here particularly with the fed put in place which powell, you know, really kind of reemphasized last week >> kim, when we look at your portfolio, we talked about intel a lot last time. we have broadcom down big today.

are you buyers of weakness there? where do you see opportunities >> well, the chip complex hasn't really sold off all that much. and partly because it's been pushed down by trade news. so there was some -- you know, other than broadcom, that's down rightly today. but i think investors are looking at a longer time period knowing that these chips are going to come back at some point that sectors certainly will when growth returns i agree we the other guests that it's imminent with china/u.s. trade deal and i think that could drive this sector high per. >> what gives you that confidence, kim? you hear what everybody says i look at this situation and say, why would china agree to anything that would force them to open up a little bit their economy? look at what's happening in hong kong and how they're dealing with that situation. this is in a liberal regime.

>> right but, you know, they don't have enough guns to hold it to all individuals' heads in china. so what do they have to do maintain peace with prosperity and prosperity for them is trade. it's just that simple. that equation right there. so they have to come to the table. we want to come to the table and i think that a deal will be done >> all right steve, we'll give you the last word then. you mentioned tech, the industrials. so even the weakness in broadcom against same question, that's something you would look at today not as a sign of doom for the markets but maybe a buying opportunity, right >> these markets really haven't sold off that hard i think that -- i don't know if the trade deal is imminent, but some time in the back half, we're going to get one and people will look through and these cyclical names are going to have a run. we're a little cautious here we're still overweight equities. we think the year end we're going to end at 3100 on the s&p.

that's a good distance from where we are now >> so you got to take him seriously. guys, thank you both very much good to see you. we've got anews alert we will head to kayla tausche for >> president trump earlier today hosting a meeting with blue chip ceos to talk about trade these ceos are members of the business round table who are in town this week for the brt's quarterly meeting. we caught up with jamie dimon as he was leaving the white house earlier today. here's what he had to say. >> hello, everybody. yeah, we had a productive meeting. >> what was your message on trade? >> we'll keep that private we're looking to get a deal done it's very important for the united states. it's very important for the economy. >> diamond w >> dimon was coy there

but he said earlier this week he believes trade going south would be the biggest self-inflicted risk to growth in this country another brt chief says they believe the tariffs are not effective. that they have had the opportunity to share that with the white house on multiple occasions but the white house hasn't listened to that. >> we also heard that tim cook was at the white house yesterday. we glean anything about what that meeting was about >> well, tim cook is also a member of the business round table and he has taken to traveling to washington at the very least quarterly for these meetings and he usually stops by the white house when in town for these meetings cook frequently speaks to president trump and frequently stops by the white house to give him an update on apple's business and its own views on where we are in this trade war >> to be a fly on the wall kayla, thanks very much. kayla tausche. this after some data today showing that manufacturing is on the rebound. u.s. industrial output rose in may for the first monthly gain

of the year. and retail sales also up climbing half a percent last month. consumer sentiment is down a bit due to tariff concerns ceo sentiments are worse let's talk more about all of this now with kevin hassett. he's share of the council of economic advisers. welcome, sir do you have any intel on these ceo meetings >> oh, sure. yes but no >> not that you're going to share. >> that's right. >> okay. but you know the concern the ceos have. in fact, if you look at the panoply, you can say they're the most concerned in the country right now. >> more important big news than the usually see. we were coming off of a soft patch. industrial production had a bad two o three months and the consumer wasn't keeping up with their income we thought consumption would come back eventually the fact we have these two strong reports today takes a lot of the risk off the market if you look at second quarter

our model is now around two. usually the data like what we saw today tend to build momentum in a quarter i think we're still looking at a 3% year. i think there was some uncertainty about that >> there certainly was i actually wrote about this a short while ago. especially the retail sales data was very strong. the revisions even stronger. but the response i got to that was, well, kelly, just wait. we have not seen the impact of all of them on the consumer. do we have to wait and see if this is really sustain snbl. >> right well, i think it is sustainable. i also think that the discussion about trade, you need to remember that the president is seeking trade reform he's trying to open up u.s. markets without forced technology forever and so he's put tariffs in place to gain leverage with folks that

had asymmetric policy toward us. he's got the korean trade, free trade deal he's got usmca i think the tariffs helped us get some really, really strong support from the mexicans on the immigration problem. so i think if you focus only on the things that could go wrong when thinking about the tariffs, then you're missing the whole picture. the whole picture is the trade situation could be made better by trade reform. and president trump's getting results in part by shoeg he's willing to put tariffs on to make it as unfriendly an economy for imports as china sfr our exporters. he's willing to go to that spot if they're not willing to reform i think that second part, that backdrop of what he's really doing in the day-to-day conversation is lost >> i've seen the numbers on how much the treasury has selected or whichever agency it is from the tariffs so far i think in the tens of billions of dollars are there any other ways you guys can look at the impact this is having on the economy i mean, how do you tally up how much of a help or a hindrance or

a net change it has been >> well, we have an extremely sophisticated model that looks at everything that happens because of the tariffs when we're thinking about what happens to consumers which is a primary concern for all of us, then what we do is we watch the consumer price indices and we watch consumption and retail sales. we've got really strong retail sales. and we've got inflation that's decelerating there's not any sign that the tariffs have fed through to consumers. now, at the firm level, there are some firms that tim cook stopped by the white house today that have a lot of activity in china and the u.s. that have seen some disruptions. but i think the hope is that at the g20 meeting they can get together and start to get us closer to where we were a few months ago >> so you think that investors should be looking to that meeting for some progress? >> the thing to remember is it seems like the deal is so far off. but we were close to the finish line last time and then the talks broke down to get close to the finish line

doesn't take months of talks it can happen overnight. >> one more kind of wonky question you would have thought with all the strong data that interest rates would be going up and we'd be talking about cuts and so forth. the opposite has hopd in the confidence survey. consumers think that number is not going up each year is that something you think is a some kind of a problem for the u. u.s. economy >> the thing that jumps out at me is that the weak european economy and the weakness in china is having all sorts of effects on global prices and no matter how hot the u.s. economy s, it's really hard to get inflation to get going anywhere and i think that's the thing that people are responding to in the surveys. that's a sophisticated consumer.

>> they go shopping and see what's happening to prices and then they expect that's going to continue and right now prices are kind of decelerating and i think that if you go shopping, you know, as i do every weekend, you know, a that for sure you can see prices aren't taking off. >> right we'll see if tariffs negate some of that. finally i want to go back to ceo confidence this group was elated after president trump's election the market responded now both have been on the skids. what would you say >> again, remembering that the mexico situation is now resolved and that the china situation is hopefully moving forward, i understand that ceos like certainty. what's happened is that the trade negotiations have introduced so much it's better to be in a world where things might get better if

we can come up with a deal than just accept the bad situation we inherited. you could focus and think about the upside if you do, i think there's lots of cause for ceos to look ahead to a blockbuster half of the year >> well, we'll let the landscapers do their thing there. chasing yo out of there. >> bye-bye >> kevin hassett stick around here's what's ahead on "the exchange" -- >> ahead, facebook decides not to lay low despite all of the negative attention it's been getting. it turns out americans don't care if their products are made in china biden picks a battle with amazon and the retailer fights back and the battle of the bank djs it's all ahead in rapid fire the nature of a virus is to change. move. mutate.

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the faster we can get to stopping them. the most personal technology, is technology with the power to change your life. life. to the fullest. welcome back let's catch you up on a couple stories that should be on your radar today. it is time for rapid fire. here to break down the headlines are morgan brennan and robert frank. first, facebook is being booted from the esg index

facebook had a high environmental score but its social and governance were much lower. overall scores has dropped from 71 in 2015 to 21 last year in kicking out facebook, the index also dropped wells fargo, oracle, and ibm. >> i bet that has them quaking in their boots >> i bet they're ashamed come on. they paint themselves as the most virtuous on the planet. >> trying to define a socially responsible company is very much art. it's very much in the eye of the beholder, right? it depends on how you define socially responsible so whatever. >> i agree the devil's in the details however, facebook did in terms of the governance ranking out of 100 get a score of 6 right? i think that also speaks to in general this trend we've been seeing around this dual class share structure. what happens when your ceo has controlling stake and things are

not going well at the company? >> yeah. it makes you wonder how they in a way got in in the first play it is an annual rebalance, to so to speak they could be in and out all the time there could be a lot of churn. they were kicked out because of the data scandals. i'm guessing that falls under the social bucket. >> bill's point is so important. this is entirely subjective, number one number two, it is important in silicon valley they're certainly interested because esg is exploding especially amongst wealthy investors. esg growing 40% last year. $32 billion going into those funds. and so the people that make these -- now, ibm is not on the list why did they not get on the list >> that surprised me a little bit. >> microsoft is on berkshire hathaway was out >> it makes more sense to me the dow jones version of this is more about picking the companies that really are great. like, banner companies it's a small basket. it makes less sense to me to start taking the entire universe

and weeding things out they should even break up the esg designation. social is really political >> i think one reason beyond meat has done so well is all of the pure esg money going into that because that is truly a sustainable business >> well, they'll have to make sure they don't do one of these dual class structures then, get them kicked out. anyway, rand over. up next, does made in china really matter? that's the question we asked in our all america economic survey. about a third of people said they were less likely to buy a product made in china. more than half said it made no difference that's almost the opposite from back in 2007 when it matters more to people in this survey if something was made in china. this surprises me. >> i actually think it depends on the product right? i'm much more likely if i'm raiding the dollar bins, i don't care what the label says

it's a toy my daughter is putting in her mouth, it is more important. i wonder if maybe the better question right now is made in america and whether that label matters. because i think there are consumers out there, i think there's an appetite and consumers willing to spend more if they know there's quality control tied to u.s. standards and to their fellow americans getting employed in the process. zblifs more interested in the question they asked about is china's trade -- are china's trade practices unfair or fair >> yeah. me too >> how is the public going to know that? we only -- the public for the most part only knows what they're told in the media. you know >> the question is are they responding to the message from trump which is they're the enemy, they're unfair. and the question is, is that message getting through to people my view of these people is not really it doesn't appear as if america is holding up china as the enemy and trading in unfair practices. >> but i think that's the tail wagging the dog. i know we have to move on.

but his message also resonates with the community but feels something has been robbed from them they're saying it's jobs different way of looking at the same question. >> that's how it should be framed >> exactly >> not just whether we buy this but whether we lost jobs >> exactly topic three. it is apple's world and we're just live in it. apple has compelled comcast and rt chaer to sell a large number of devices to carry the iphone comcast has to see a certain number of ipads at a subsidized cost with comcast paying the difference >> thii think this is crazy. i went on the comcast website this morning and clicked on the xfinity portion of the website and there it is. there's an ipad for sale who's going to go to comcast website to buy an ipad you have to go to an xfinity store. >> maybe they'll give them to employees and we'll all get ipads. my question is, they have to

sell thousands, right? that's what it implied with wha if they don't do they eat those? are they actually buying them or is it apple, we didn't sell that many so tough luck. >> what is interesting is when this deal was made at that time because ipads were suffering in sales, iphones were not. now iphones are suffering in sales. so i would think apple has less leverage in trying to make a deal like this i think maybe charter and -- >> also pre-antitrust. >> to me this is the first time i've read an apple story and thought that's anti-competitive. >> yeah. but i think the anti-trust scrutiny has to do with the app store. right? which is actually what i think makes this interesting because "a," it's going to be great for consumers if you're getting a lower priced device. and "b," for apple this means you have more potential consumers that are going to be looking to plug in and drum up those services revenues. >> so now charter has become the bigger seller of the apple tv

hardware box >> and in the u.s., if you're looking to launch a wireless service like comcast and charter, you absolutely do that's more competition for consumers too. it seems like a win/win for consumers. >> they're going to change the standards so we crack down differently. finally today, noah kerner is challenging david solomon to a d.j. battle. kerner is telling axios -- no, we all -- kerner tells actixios >> i want morgan to be the judge to this. >> okay. kerner says solomon is not even a real deejay because he doesn't use vinyl and doesn't scratch. here's my point. the crisis is clearly over when you have first of all goldman's ceo and this -- he's being called -- i'm not saying -- but this is a very different time we're living through than your father or grandfather's banks. >> really? >> deejay battle that we're joking about involving two financial ceos

>> i don't know. ask the millennial in the group here >> are you a deejay if you don't scratch? that's the whole question. >> i'm old school. i go with no >> i thought if you were old school, tough scratch. >> that's what i'm saying. there's nothing but upside for the acorn ceo in this. it gives them more attention if you were to see a battle like this and "b," apparently he has been doing this for 14 years old and was a professional deejay for j. lo i feel like he is going to win that battle. >> i can't believe we're even talking about this >> that would make two of us >> but for those -- >> let me go on the record for responding whatever. >> i want bill in the third spot that would be good >> yeah. >> spinning his favorites. >> d.j. griffo >> morgan, we'll give you the last word. >> for the folks not involved in finance on a day-to-day basis, there's a lot of crossover between music and business and

finance. there is including in this building. >> in this seat, at this table. >> yeah. maybe it's like the pythagorean theorem. >> i didn't know you've ban deejay. >> no, no, no. i was in the music business as a singer a long time ago. >> now i really want some clips. bill, thanks morgan, robert could the choice big three become the big two a bold plan to revitalize the u.s. auto industry is ahead. blue bluebird bio ceo will jn oi us every day, visionaries are creating the future. ♪ 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. ♪ because the future only happens with people

who really know how to deliver it.

your daily dashboard from fidelity. a visual snapshot of your investments. key portfolio events. all in one place. because when it's decision time... you need decision tech. only from fidelity. welcome back to "the exchange." my next guest suggests making the big three automakers into the big two in a tieup that he says would dominate the business john stahl, a business columnist at "the wall street journal," joining us

you're well versed in this so how serious do you think this speculation is right now in detroit? >> well, i think there's a lot of -- hi, kelly, by the way. >> hi. >> i think there is a lot of momentum around what's going to happen it's been several years since the bailouts and bankruptcies of the general motors and chrysler. they had talked about a tieup before the financial crisis -- we were in the teeth of the financial crisis it didn't work out but this isn't a new idea really to consolidate two of the big three. rick wagner had approached different parties. there was talk about this when they were stronger the deck has changed a little bit. a lot of talk about the technology investments that are needed and that you're going to need partnerships. you're going to need a lot more capital and need less money developing the things that are kind of today's industry and the future it would sure help if you had a strong lock on the pickup truck and suv market in the u.s. which

isn't going anywhere any time soon >> who would emerge as the two players? >> i'm going to channel my inner sergio marchionne, here. he of course died last year. i had a lot of conversations with him over the time he was running chrysler his dream target -- he talked to everybody, right he was hot on consolidation. he wanted a partner. and clearly the successors at fiat chrysler want a partner general motors is the company he would have liked to have partnered with i still think as much as i can think that this is an idea partner. they would have a very sweet position in the pickup truck market there's a lot of synergies there. gm pulled out of europe and could use a bit more balance in the global lineup. and fiat chrysler believe it or not makes money here gm brings china to fiat chrysler which they don't have. and autonomous, gm is making a lot of moves there and fiat chrysler needs a partner in that area. >> what would it take for a deal like this to go there?

there is have been a lot of merger talk. is there resistance from the u.s. buying public or simply resistance from general motors >> i think it's resistance from general motors i don't think anybody in the buying public really thinks about who makes the jeep, who make this silverado. it's general motors or fiat chrysler or both the brand loyalty is big we've answered all the questions about what consumers care about when both of those companies went bankrupt. they're still selling a lot of automobiles in america and elsewhere. whether or not federal regulators would have a problem with this, i think is an old school issue because these two companies combined today have less market share than general motors had when i started covering them 20 years ago. they aren't huge players maybe there would have to be some moves made in the pickup truck lineup to get rid of one of the brands like gmc to assuage regulators

but there really isn't as much overlap in the two product lines. and they would still have a very formidable competitor in forth motor company right now which does dominate the pickup truck market and others are coming in with products that are competitive. >> when i saw you write this, i definitely took note we'll see if it's a little glimpse into the future. john, thanks for joining me. >> thanks. for most high school seniors, their worries are over. the acceptance letters are in and they're planning hoe u t decorate their freshman year dorms in the fall. but for virginia tech, now it's the college's turn to worry. they simply let in too many students we're going to tk alto the president of virginia tech on how to deal with being too popular. straight ahead

welcome back to "the exchange." while college enrollment is down across the country, virginia tech is paying some students to take the year off. that's because it admitted about 1,000 more incoming freshman for the fall than anticipated. raising concerns about overcrowding on campus for more on how they're dealing with what could be their largest freshman class in history, i bring in the president of

virginia tech. thanks for joining me. >> thanks for having me. >> i'm familiar with what you've been doing and all the engineering and technology, for example, over the years. so i have to ask how did you accidentally let in a thousand more students than you meant to >> as you know, we admit students based on who we think will succeed at virginia tech. we try to get the number about right. but you never know how many are going to accept their offers of admission. and in this case, we ended up with record what we call yield which is a ratio of those who accept the offer to those who are admitted both for in-state students and for international students record yields going back at least a decade if not before and so we didn't expect this, but we're doing everything we can to ensure the experience our students have is what they expect from virginia tech as hokies >> and you came up with clever options to try to address the overcrowding this fall you are offering incoming students the option to take a gap year with a $1,000

scholarship. enroll in community college or take courses over the sturm instead. how many students have taken you up on this >> fewer than 10%. we offered 1500 opportunity andy small number took it but we felt it was important to extend the offer. all of these offers are designed to either reduce the amount that the student will spend on their education or give them some opportunity to do some expar experimee traveling abroad. >> you dropped the requirement for first year students to live on campus. freezing tuition for this year and also, our audience interested to know, a big project involving hq2 in arlington.

we wanted that in this neck of the woods. you guys are getting this instead. a big campus coming where you'll basically have graduate students almost as a direct funnel into amazon how, i mean, do you think that's one of the reasons why you're seeing such an increase in interest >> we did poll the students to understand better why they accepted and what we saw is the raising the national profiles a result of amazon coming to northern virginia and our role in what we call the tech pipeline and new innovation campus that we announced in alexandria national landing near amazon's hq2 all factors in raising the profile for virginia tech. the other factor was a revamped admissions process which was very much a high touch process, more opportunities to visit campus, lower barriers for applying and all of that together, those seem to be the two big factors for us in attracting this record class. >> have you been gloating over

at uva >> no, university of virginia also saw a surge the two campuses, uva and virginia tech saw the biggest impact and we both had high profiles maybe for different reasons this year, but it was certainly not something to gloat about i wish we had come in a little lower, but it does show that the interest in virginia tech is growing. >> yeah, and at a time, again, a lot of smaller colleges would love to be in your position. thank you for joining me good to talk to you and learn more about it. tim sands is the president of virginia tech. >> thank you. raising eyebrows with the new price for gene therapy $1.8 million we'll talk to the ceo about the drug pricing battle in the u.s. and why he believes we're on board a runaway train when it comes to modern medicine stay with us the lexus es...

♪ ...every curve, every innovation, every feeling... ...a product of mastery. lease the 2019 es 350 for $379/month for 36 months. experience amazing at your lexus dealer. welcome back the drug pricing debate rages on as pharmaceutical companies keep filling drugs at astronomical prices next guest said the way we pay for medicine is like being trapped on a runaway train and he's proposing a plan. because they announced the pricing for its new drug

$1.8 million here to talk about what they're doing differently. ceo. and meg tirrell. this will be the second most expensive drug in the world right now, basically. >> that's right. it follows a drug priced at $2.1 million. that being the most expensive drug nick, thanks for joining us. tell us, how is the drug now the second most expensive drug in the world not a runaway train in terms of drug pricing? >> first, thanks for having me it's fun to share the blueberg story and the story of the medicine i want to at least put out there that neither novartis' drug nor ours is nowhere near the most expensive in the world it's thinking about it differently is what people have to consider because one thing is price and another thing is to think about how medicines are delivered. we have the potential for a one time potential cure treatment against a lifelong benefit for patients who have a very tough time with their disease.

so now you have to really look at the challenge of how do you take a medicine that has lifelong value but you give it right up front one time? how do you consider that value, how do you pay for that and do it in such a way to fund innovation like bluebird and what novartis did and how do you make sure that the system can digest it? the challenge we have, most medicines which can go into the millions, this is the runaway train part, the annual price adds up year over year with the life of those patients in many cases. that turns into a very big number and this actually helps that we have a one-time treatment, but we're actually going to plan to charge over five years, cap it so we define it up front as five years. spread it equally over the five years and willing to say, 80% of them, meaning payments 2, 3, 4 and 5 only get paid if the drug works. so we're trying to find a balance in here saying this is an important innovation to fund. at the same time, it has to make sense and sensible for the system. >> nick, one of the, i guess you

could call it criticisms or as i understand it, people say, well, wait a minute, this is just a way for you guys to have a free option on does this work instead of having to prove, really, it really does work over this longer period of time and worth that up front cost what would you say about that? >> yeah, i think it's right. everyone's kind of pick their candy they want to put in the tag line and so forth. and i respect that but i think people have to dig a little sort of deeper into this and say, this is a good thing. that one time treatment and we need to learn how to sort of assess this value and pay for this value over time, but also hold ourselves accountable for it what i would say is we're looking at this over five years and really saying, within a short period of time, at least in the data today for these patients, very quickly after they've received the medicine, they're completely transformed and if that continues in the order of 2, 3, 4, 5 years, there's a very good chance that continues for the duration of their lifetime over the course of time, we can treat more patients.

if it turns out not to be true and reevaluate it. we have to learn to trust each other a little bit more and that's why we introduce the willingness to put a lot of skin in the game. this makes sense and i can get into it if you want. the way we assess the value of the drug is very sensible, very patient-driven and one that is actually, i'd say, quite progressive and different than respectfully, many members of my industry. >> you've criticized a lot of other members of your industry for pricing drugs basically slightly under or around the drugs they're replacing or the health care administration they're replacing. why is that the wrong thing to do >> what i criticized, i want to be specific, i've criticized innovation there's a tremendous amount of fapharmaceutical industry. what i have criticized is silly behaviors. things where you price because you can and no real innovation or simply sort of get in and you do these incessant price increases, which are not grounded in innovation but

short-term thinking in earnings per share. that's what i've criticized. it's easy for me to criticize, but the public deserves that and the payer and private deserve it. >> it's been great to hear about this thank you. i want to know if you end up charging $10 million in the u.s. that tells you what the current pricing set-up is like nick >> we're not planning on doing that thank you for having me. >> meg, thank you very much as well that does it for "the exchange." "power lunch" begins right now >> kelly, see you in just a moment thank you very much. i'm tyler mathisen welcome, everybody, to "power lunch. along with melissa lee new at 2:00 today, chips taking a dip. a new and clear sign that trump's trade war is inflicting pain on these stocks a bad sign for the sector. is it also a bad sign for the market overall we'll look at that demand for oil set to drop lowest level in years and growing tensions with iran