momentum in, well, you say in gold and momentum in bonds momentum in stocks it's a beautiful thing >> people don't want to be correlated as part of the reason correlate assets >> good stuff. thanks, all. thanks for watching. "the exchange" with kelly evans begins right now >> thank you, scott. hi, everybody. here is what is ahead for today. the major indexes are having their best june in decades but it is built on these crazy low interest rates bernie sanders would forgive the entire $1.6 trillion of student death and pay for it by taxing stocks and bonds does his plan have any chance? we'll find out bitcoin comeback delivery backlash and the airplane seat that is being called a saddle. that's all ahead in rapid fire we begin with the markets and seema here

>> today we're building on those gains with the dow up 41 and s&p 500 higher basically on the flat line and the nasdaq turning lower. let's dig into some of the big names on the move. techna technology a big part of the story. microsoft shares trading at an all-time high. speaking of some big moves, bitcoin now trading at its highest levels of the year breaking above 11,000 in the last hour. now, at 1099 let's look at one of the stocks moving to the downside and shares of carnival down another 2% wells fargo cutting price target down to $59 and it will take time for the cruise operator to overcome a lot of its challenges >> welcome to "the exchange. i'm kelly evans. this time from dallas, the manufacturing in texas expanding moderately in june but demand growth, they say, is slowing meantime gold prices have hit a high not seen since late august

of 2013. now trading over $1,400 an ounce. and president trump taking aim at fed chair jay powell again today tweeting, the fed doesn't know what it's doing and raised rates too far too fast bob pisani and the president reiterated if the fed did differently, the dow would be a couple thousand points higher. >> that is subject to some debate record high-rise not bad even with the fed doing what it is doing right now. most traders are now expecting a little bit of a flatter week ahead of friday's g20 summit weak today on lower oil and on a very interesting call from morgan stanley they lowered price target for energy stocks particularly production stocks saying that despite geopolitical risks deflationary head winds are continuing to build with oil and natural gas prices likely to remain lower for longer. you see some of the small cap names here

trade related sectors like metals and mining and metal, they're all weaker here. look at retail shares. pier 1 imports down 30% in morning trading and extended their losses from what happened last week. an announcement of 120 reverse stock split and other big names like jcpenney and kohls are also weak today >> that is wild with pier 1, in particular, bob. thanks president trump putting new sanctions on iran in the last hour targeting the country's supreme leader this just days after calling off air strikes on the country the president saying he would love to make a deal with iran and isn't seeking conflict joining me for more on this move is charles senior fellow at the council on foreign relation and eamon javers is here, as well. what does it target? >> they are going after eight specifically named leader of the

irgc and what they're doing is designating them those individuals will have difficulty accessing global financial markets because banks around the world tend to follow treasury lead in terms of not allowing any transactions involving those designated individuals. what is not clear here, though, is exactly what impact that is going to have on the day-to-day lives of these eight officials i asked treasury secretary mnuchin here at the white house whether they will know whether they have any assets and any assets in the united states or europe they do have intelligence on them, but he didn't answer the question about whether any of these folks actually used the global financial system or based entirely in iran so, day to day, this might not affect their lives if they try to do anything outside of iran, this could really cramp their style financially. >> charles, what do you othithi the implication of this will be and how do you think iran will respond? >> the president trying to

thread the needle and get iran to back down on the other hand, he has told his base that we're bringing the troops home. he wants out of syria and afghanistan and doesn't want a new war in the middle east so, this is an effort to kind of increase the heat to get the iranian leadership to change their view and to go back to the negotiating table or possibly to get regime change. in general, i'm pretty skeptical this will make a lot of difference if you look at the russia sanctions that the u.s. has imposed since the invasion of ukraine in 2014. they've generally targeted key players including the people around putin they haven't had much impact on changing russian behavior. so, yeah, this does turn up the heat do i expect big change no it will simply kind of escalate the situation. one would hope that behind the scenes there is a conversation taking place between washington and terrain. >> charles, i'm curious what you

make of the sequence of events going back to april when the u.s. tightened sanctions in the first place and a lot of the activity we've seen has been in response not u.s. ships they're targeting near the strait of hormuz but a lot of international assets. are they going to continue that kind of behavior if so, what response is appropriate? >> yeah, i think this is going to be a kind of cat and mouse situation where neither side really wants to get into a shooting war on the other hand, the iranian leadership is under pressure to do something, which is my understanding as to why they try to go after a couple of ships. maybe deliberately shot down the drone. although reports it was a mistake and not a clear decision from the leadership. right now i think you have a situation in which washington and tehran feel pressure to up the ante and, therefore, i don't think we're going to see we're not at some kind of equal

librium. and we will see iranian response and the key question is, are we going to see a channel of communication open that tries to push the pressure back down rather than up >> finally, eamon, what is the goal and what are the rest of the tactics that we might use? if we have run out on sanctions, will we expect more cyber attacks or things like that? >> sure. the united states has done that already. the president said the goal is to get the iranians to stop engaging in acts and funding terrorism around the world you get the sense there is an ad hoc vibe to all of this. this morning i asked the white house press office when are we going to get an announcement and what are the specifics and they said, it's not coming from the white house. it's coming from treasury. no announcement from here at the white house today. maybe three minutes later they

called the reporters into the oval office for an announcement from the president himself a lot of this is being done on the fly in the moment and the president trying to reach for all the tools in his arsenal to put pressure on the iranian regime as best he can. >> although this was already in the works somewhat guys, thanks appreciate it very much. turning back to the markets, stocks soaring despite geopolitical risk. on pace for the best performance. the s&p 500 meantime is having its best first-half performance since 1997 for more on this sharp rally, let me bring in morgan stanley investment management and neal hennessey chief investment officer at hennessey funds welcome to you both. neil, are you wearing an air pod? >> yes, because our camera broke out here and i'm trying to figure out how to use this thing because, you know, kelly me and technology, they're not real

close relatives. >> i don't know. you look so comfortable. i was like, wow, you are the first of our guests to make that leap so, let me start with you. one of the stocks we talked about with you is restoration hardware and maybe that is a good example for this whole market a company that is said to be heavily affected by tariffs came out with a plan for investors and saw stock rally sharply. would you say that is embolmati of the market that we're in? >> trying to remind people that this is a bull market. we will have rallies and we already had 15 downturns since 2010 that were 5% to 10% and the market snapped back very quickly. when i look at what restoration hardware is doing, they're just playing outside the box because the brick and mortar stores weren't going to work. what they succeeded in doing so far is developing a business

plan outside of the box in the norm >> all right. so, jim, while we try to weigh the impact of tariffs. low interest rate to consider. i know they're related but is there a sense that if bond yields are ridiculously low globally that the flip side of the corn is that stocks are ridiculously higher, or are you comfortable with what we're seeing here. >> i think it's a question of valuation. low interest rates increases valuations the cash flow of all the companies and the bonds and bonds in general, you end up discounting those cash flows at a lower interest rates which increases the value. that's why prices are up so high because rates are so low the issue is that these are insurance rate cuts that the fed are talking about, which means these rate cuts could stave off a recession. not only are rates low, but also reduce the probability of a recession going forward which

means default risk in corporate bonds goes down. >> shouldn't rates go back up? i mean, at some point, it doesn't make sense >> sorry so, we're in this sweet period right now in the sense that rates are coming down and recession risk is coming down, as well. that's boosting asset prices up higher whether it's equity equity prices are high, but are earnings also going up, as well maybe not. >> what do you think valuations here overall >> i think we have to put it into context 2% ten year note goes higher and drifts lower, than valuations might seem about right >> where are we on the multiples? >> probably around the 17 mark and in order to get a lot higher than that, then rates have to go down further, but for good reasons. if they start going down for the wrong reasons, that's when we start having to worry about default risk and asset prices coming down.

>> neil, the other interesting quirk about this and a question relevant but may be when we previously had the dow at all-time highs we could all-time highs at 3.25 and at 2%. if rates start going back up, does that worry you about the market >> absolutely not. in fact, i'd rather see the feds raise rates than lower it and give us more room for in the future should something go wrong. if we continue to lower, say, where they are now, 2.25, down to 1.5, 2, it will not do anything in my opinion for the economy. not going to do anything for the economy if they raise it 50 or 100 basis points or 25 to 50 basis points and not going to hurt companies and the growth and cash flows or earnings per share. so, i would rather see the feds have more room to work with, should we have a problem in the

future >> all right guys, thanks we'll leave it there today neil hennessey and jim caron joining me love the air pod here is what else is still ahead on "the exchange." coming up, taxing wall street to clear student debt that's the latest proposal from bernie sanders what would the impact be for inei investors? and descents have colleges from doing tuition reform. we may be focused on china, but another trade war that could be ready to open up. and putting a price tag on your data. is where people first gathered to form the stock exchangeee, which brought people together to invest in all the things that move us forward. every day, invesco combines ideas with technology,

data with inspiration, investors with solutions. because the possibilities of life and investing are greater when we come together. ♪

announcing new legislation that would cancel $1.6 trillion in outstanding student loan debt paid for with the tax and financial transactions sanders tweeting, we bailed out wall street in 2008 and time to tax wall street greed to help the american people. here to discuss fellow at the american enterprise institute and cnbc contributor welcome to you both. i mean, jimmy, my first thought on this is, is it taxing wall street or just taxing anybody who buys or sells a stock or a bond >> i think there is the

assumption that this would stop all kind of very reckless trading and people jumping in and out of stocks and that there's no reason for someone to buy or sell a stock on any short-term basis the studies that i've seen suggest it would raise the cost of capital and we don't want that and the weird thing is that traditionally when this has been mentioned, it is to deal with financial volatility some studies suggest make things more volatile but then to use this money for like, i think, an unrelated purpose, to me, at that point, looks like a cash grab >> if you do a gas tax, use it for infrastructure >> my first thought on this was, whoa, wait a minute, wipe out $1.6 trillion in student debt what about the people who organized their 401(k) investments and home purchasing to just wake up the next day and say, hey, never mind, everybody.

it's gone. it's wiped out >> i think most people would want to see that wiped out in spite of all that planning the reality is that many americans, most americans can actually pay for their student loans, but those who cannot are really struggling, particularly black americans who take on 85% more student debt and those in rural america is hard for them to stay afloat many of them are in default. so for many folks are looking for relief i agree that i don't necessarily see the connection with taxing wall street with the exception of playing to his base, essentially saying tax the rich. they're trying to find -- >> andre, they also need the money. >> absolutely. th >> that's a large sum and very few places to get it to jimmy's point, whether they use it for this purchase or

another purchase, they see it as a pot of gold. isn't it true, no one can afford the ticket price of a college education, isn't it because we had all these loans in the first place that drove the cost way out of reach for everybody now you're going to say, actually, we'll throw more money at the problem as if that will solve it >> this program, without question, did not address the deeper problem the rising cost of tuition and that's out of control. so, i do want tax relief i mean, i do want debt relief, but i also want to see a plan to control costs at the college level. >> sure. jimmy, what might a realistic plan look like >> well, i would put colleges on the hook that if they have kids taking huge amounts of loans and they're not completely college, well, put the colleges on the hook the colleges need to focus on kids completing college. that's the problem the problem is you don't take out a lot.

you take out a lot of loans and graduate and then get a job. those people are fine. those people who take out loans and don't complete college there should be a college completion agenda, that is what it should be. >> the completion rates are terrible, jimmy. the other thing i worry about, why are the loan rates so high we're at 2% on the ten year and a lot of people are paying 7%, 6% on student federal loans. it makes no sense to me. >> i don't think i want to subsus csubs subsidize plans, we need things to help people on the lower end. i love the idea of, again, giving colleges some skin in the game >> andre, what would you do? >> the problem with that is we know from state aid programs across the country if you don't include everyone, the middle class will push back and thwart the entire

initiative so, this proposal actually has a better chance of passing if they're inclusive of folks of the upper income brackets and middle income brackets >> i guess it's fascinating, guys, thanks we'll hear more about it if debate is this week. the investors are buying more of the housing market than ever before and that's bad news for first-time home buyers is private equity giving the market a much-needed boost we'll get into that. if you're a lover of prove lawn, sparkling water and chocolate? your favorite items could get more expensive we'll check in live with some of the industry's biggest players, coming up.

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welcome back to "the exchange." here are some of the movers. shares of beyond meat are down almost 8% and falling for the fifth consecutive trading session now. the stock, of course, is up more than 450% since its ipo, but these losses have continued. shares of fedex falling 2% following a misdelivery of a package to the u.s. and could end up on china's unreliable entity list. and amazon sending shares of sally beauty and ulta beauty lower on news it is launching a

professional beauty store selling to stylers and ulta down nearly 4%. to tyler mathisen for a cnbc news update. >> here is what is happening at the this hour, folks the pilot of the other jet was able to eject and was found alive in a forest. a fire engulfed a sprawling ammunition depot in kazakhstan that forced the evacuation of tens of thousands. about 1,000 police and army troops were sent to the area to maintain order the cause of the fire not clear. the supreme court has struck down a section of federal law that prevents officials from registering trademarks seen as scandalous or immoral. it ruled the century old provision is a constitutional

restriction on speech. and italy will host the 2026 winter olympics in milan taking the games to the country for the second time in 20 years. the ioc chose italy over sweden despite a debt-hit economy that faces increasing european scrutiny italy last hosted in 2006. that is a cnbc news update at this hour. >> they seem pretty pleased. that was a huge celebration. >> yes, indeed, it was >> you can say esthetician that's a hard word >> i'll see you in a half hour >> thanks, tyler. here is what is still coming up on "the exchange. ahead, the crypt ocomeback putting a price on your data what it could mean for your social media experience. delivery could get more costly and the flying saddle.

it's all ahead on rapid fire that are unnecessarily complicated. but you're not mad, because you're trading with e*trade, which isn't complicated. their app makes trading quick and simple so you can strike when the time is right. don't get mad, get e*trade and start trading today.

welcome back let's catch you up on a couple headlines on your radar today. it is time for rapid fire. courtney reagan and morgan

welcome. bitcoin cracked 11,000 earlier today after first doing so this weekend. kind of depends on which price reference. shows it is at 11,023. the future-- you guys know how it works more than a 15-month high and after we went from over 19,000, that was the actual high december of 2017 into the low 3,000s in the back half of last year so, it is back >> and one of the explanations is libra the currency that facebook is launching and the consortium in swit switzerland. it is completely different >> i don't buy that explanation. >> it is truly a currency. and it's not really a crypto where bitcoin is, you know, the value of bitcoin is determined by a few billionaires that own a lot of bitcoin and decide to sell or buy. i don't trust this as a step

change in the credibility or the value of bitcoin >> if you look at something like gold, which is also trading at six-year highs right now a lot of the same fundamentals and macro topics also drive the price of bitcoin >> you're totally right. so, we look at what would that be super low interest rates and u.s. and europe has come out and talked about more easing >> geopolitical risks. >> solidify position as digital gold effectively, right. >> and it would certainly seem in addition to the facebook news some investors hedging their bets and seeing it as such >> that makes more sense in a way, i wanted libra to be the catalyst because it makes me find comfort in fundamental reason for going up and i understand it's not tied to that so i can't find comfort there. makes me nervous when we see the big surges in the currency that many of us don't really understand and so few people likely control >> i think we haven't reached,

we're we're no where near the levels and i remember thanksgiving dinner being all the talk and, so, my cousins are coming back at the end of august and if they're talking bitcoin, again, you're going to know >> beyond meat >> exactly you're going to know meantime, senators mark warner introducing a bipartisan bill and expose the type of data they collect. i have to mention this, it's called a dashboard act and designing, accounting safeguards to help broader oversight and regulations on data. >> how many staff hours were devoted by our taxpayer money to come up with that? >> a lot >> i mean, that is so complicated. not like a three-word acronm >> if you want to call it the dashboard act, call it the dashboard act. forget what it stands for. that's the name of it.

the name of it aside, this would look to actually make companies have to, i guess, publish the value of this information. >> assign value to user's data and then publish that data i think the sec would be the one potentially gathering and going through that data. we were having this debate, part of what makes data valuable, not just that that belongs to a single individual but how it fits on a broader network and how it could be read and understood and used. this seems complicated and tricky >> that's an interesting point your data is worth x if we have 10,000 users y if we have 100,000 and z if we have a million what is it going to tell us? >> i think it's very inest thering when you talk about consumer behavior when we're giving away something for free consumers are actually okay sharing data if they get something they find valuable in return >> absolutely. >> i think consumers are quite smart. they understand on some level that facebook and twitter,

they're using my data to make some money, but i'm okay with that because they're providing me a service for free and i find value in that. >> how do you determine that your data may be worth more than my data because maybe you spend more online and engage more with friends online and therefore how do you tease out over the number of users what your data is worth versus mine. therefore, if my data is not worth much, i am getting a great value out of that service where the other person might say, why aren't i getting paid for this >> it's true >> also, i want, courtney, going back to your point there is a value that i'm providing just by simply signing up for these platforms maybe ten years ago that wasn't the case but certainly today. >> i think so. i really do. >> let's talk about your interview this morning with home depot ceo and here's what he had to say about tariffs and how he wants to conceal his consumers

>> the first step that we'll do is try to protect the customer and the project. we'll do everything we can to try to take other costs out of the business working with our suppliers. whether that's opportunities and supply chain, other elements of the business and then we'll try to protect the customer on the project. >> and home depot has a ton of scale. they can probably do that better than the smaller players >> they do they valued it recently and in 2018 tariffs did give us a billion dollar hit but they made $108 billion so it's less than 1% of sales. just because one product gets tariffed it does not mean we'll raise the price of that product equivalent to that tariff. demand elastic product, that is not the product to make up the margin on, maybe it's something else then they looked at what happened in washing machines and, yes, a negative impact at first. but overtime it's evened out and appliances are still quite strong in that category despite the price increase >> if they are handling this way

relatively well, who cannot? who does not have that luxury? >> i think we keep going back to size if you have scale and you operate a company on a portfolio level, you can look at different categories costs went up here but maybe i can move them over to this area. if you're a small player or low margin, you're going to be in trouble. even the smaller hardware players will have a hard time. the ace hardware and true value and they will have a harder time figuring this out. when you go back to a church that ordered, i have this example where they ordered a bunch of faucets and they were one faucet short and when they went up to order one it went up $100 it couldn't make up the price difference >> you don't want the local players who are the ones that are losing >> they don't have leverage against their suppliers. when you look at the polls and

surveys, that's when it used to be finding employees and now tariffs are the top issue. >> small business owners are definitely disproportionately getting hit by the tariffs and added cost versus the bigger players. they can go back and renegotiate it within their supply chain but another key point in all of this and that is we continuously hear over and over again that tariffs equal attacks on the consumer and you know what, it's just not that simple. adds costs and it doesn't always trickle to the consumer. >> a portion of it does. just not entirely the consumer >> or the tax on business. fall somewhere down the trachai. >> not always turning into higher prices for consumers. >> the most fascinating part to watch, where exactly does that squeeze happen, if anywhere. grub hub and door dash and some of the biggest restaurant operators mcdonald's and

applebees are pushing the emto lower fees this feels like the maturing of this market much like uber and lyft their business model isn't always that great. what happens now >> i think the revenue you generate has to be so much bigger than the cost of these services and even if it's this add on which when i look at retail and for a long time i realize why don't one of them buy instacart because their model is not that great. you figure it out. this is a big issue. i don't know what the answer is. >> it's a bad business you order a $10 sandwich from panera $5 bringing you the sandwich and they charge you a $3 flat fee. they are losing $2 on that order. when is that sustainable so, i think the challenge is to generate high revenues from each order and figure out how you're going to make money. >> a minimum threshold or what i'm worried about, morgan, i already pay the $5 for the $10

sandwich what is my breaking point? am i going to pay $20. maybe in some cases. >> the surveys show $5 is the breaking point >> for any delivery. >> i'm not paying $5 you guys are generous. >> you're in manhattan where they pay you to deliver. >> totally >> 5 bucks, are you kidding. >> finally airlines are always looking for ways to get more passengers into their planes and this may be taking it too far. what you're looking at is a photo from a company that makes airline seats and they brought this sky rider to the paris air show the sky rider is a bit like a saddle and bicycle seat. so you kind of half sit and half lean forward in the chairs >> giddy up. >> i saw that in one of the reports and that got my attention. they first proposed this in 2010 and since then they have been rolling out iterations of it and apparently interest, but no orders yet i can't imagine why. i think it has to do with the fact that these seats are not up

to regulation, current aviation regulation code. they're too small. >> are you leaning on them are your feet on the ground? we're all different heights. >> some of them have a little foot rest if you're shorter or for kids they have a little foot rest on the bottom >> me. i need a foot rest >> i think it looks like a theme park ride. >> yeah. >> it's a roller coaster i think kids would love it and the biggest advantage to this, the reason that they have been trying to sell it. if you can squeeze a lot of people in the back, that means you can put in more first class and business class seats to get the minimum capacity for the aircraft and make a lot of revenue from selling more of those first class and business seats because -- >> do you know what a bad look that is. >> if your plane ticket is cheaper and it's like a short flight and maybe you're totally open to it >> i'm surprised it hasn't happened yet ryan air offered standing room only tickets you're going from new york to

florida and you want to take the family on a theme park trip and save a lot of money on that ticket i'm surprised people haven't done it. >> as far as safety, if you need to get out of your seat, it's easier if you're already standing up. >> you know, my unpopular suggestion, what if you put all the kids together in those seats altogether but i thought maybe i shouldn't mention that >> you'll get a lot of tweets and e-mails about that >> as long as they're up front about it and here is the seat you're going to get for this price. are you okay with that if i know what i'm getting, maybe i'll play this game. >> i'm not surprised no one has been the first mover on this just twitter alone would implode. courtney reagan, morgan brennan. thanks a fire ripping through a refinery in philadelphia on friday while the east coast gasoline market is spared the worst, we'll talk more about that with brian sullivan who is on site for us brian? >> kelly, we are trying to get answers. not completely shut down that's

how one insider described the situation behind us to cnbc a couple hours ago what happens and what is going to happen to the gasoline market and has the rather bizarre ownership structure contributed to not just one, but two fires in the last two weeks behind us? wel ve y'lgiou more on this live from philadelphia when "the exchange" returns right after this short break

welcome back a fire ripping through a major refinery in philadelphia on friday the refinery represents more than 25% of regional gas supplies and it's not even owned by an energy company brian sullivan is there for us with a look at this bizarre ownership and some new quements on the story >> yeah, it has to be one of the most bizarre ownership the biggest on the east coast. as you just said about a quarter of the mid-atlantic gasoline and jet fuel and diesel production is here and over this shoulder

here you can see that is the burned out hulk of the refinery. that is actually what exploded and by all of our sources that we have talked to inside and outside the plant today, they have suggested that it could be more than a year and cost more than $100 million to possibly get this facility up and running. now, this is actually not one complex. it's two refineries in 19 95 that were merged together. here's why that's relevant it's owned by four separate entities credit suisse and barden hill investment management, a credit strategy focused hedge fund. they're the primary owners carlisle group owns 10% and energy transfer partners the only company in the energy business owns about 8% they bought it out of bankruptcy the creditors took control two weeks ago a smaller fire at the other facilities that shut that down for two weeks and, indeed, kelly, it may still be shut down. the longer term question is

this, the gasoline markets are pretty well supplied right now that's why we didn't see a huge spike. however, the longer this facility stays offline and if the other facilities when they go down for maintenance, like they do, can't meet all that summer driving demand, we could get a residual effect on gasoline prices. kelly, what i'm trying to say is the problem from a fire perspective is over, although we have photographs the fire department is still inside, by the way the fire is out. but maybe the bigger problem of financing and refunding and having enough gasoline has just begun. >> so, how long, brian, do they think the supplies will be offline now? >> well, you had a similar situation at a husky energy plant in wisconsin and, of course, the exxon fire in torrance in 2015 both of those it took over a year for the alkaluization unit. that is what exploded over there. it is completely destroyed,

according to our sources took over a year to build those back up. if they had the same amount of damage, you're looking at effectively a year the plant is still operating on a very reduced capacity. we have tried very hard, i assure you, to try to get them to tell us exactly what that is. they have been closed lip. maybe they don't know. either way, it could be a year kelly, here is the other scenario they came out of bankruptcy and already facing all these things i don't want to get in to about crude spread differentials and the cost of rail this has been a not much money making plant for a long time some people i talk to suggest that perhaps it may not have a future because of the cost of rebuilding and the dire financial condition already, plus environmental opposition, et cetera. so, we'll see what happens it's 1,100 workers, by the way the biggest refinery in a urban area in the united states. >> if it has a bigger impact,

there will be a lot of fingerpointing, i'm sure, to go around brian, thank you very much brian sullivan in philly for us. coming up, investors focus on the current trade tensions with china, but there could be another trade battle on the horizon. this time with the eu. we have the details and which goods could be tariffed, next. companies are racing to find new places like vietnam to produce their goods. carl quintanilla has a live look tomorrow live from hanoi tomorrow live from hanoi don't miss it. years ago. and also be able to use apps to book super-personalized trips on shiny new phones from the future. plus, i need freedom to move my workloads wherever, whenever - but manage it all from right here. and that's the cloud i want. simple, right? expect more from your cloud. ibm cloud.

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welcome back the world trade organization is set to settle a 14-year battle between the european union and the u.s. over the eu subsidies to airbus. if the wto rules in favor of the eu, the trump station could respond by putting a new round of tariffs on european goods that includes cheese and chocolate. we're at a specialty food conference in new york where she has spoken with the industry's biggest players about this potential impact right? >> yeah, you're right. a lot of people here, this could be coming to an end that the people here don't want to see. this has been more than a decade in the making. the wgo at one point did side

with the u.s., and a few years later found the eu wasn't complying with the order fast forward to april, robert lighthizer said enough is enough this has been years in the making time for action, and issued a list of products that could be subject to retaliatory tariffs imported into the country. i spoke to a major food importer in the u.s., and they said it could ripple across the food industry >> not just our industry we have a company, we have 600 employees across the country but we also deal with other companies, warehouses, custom brokers. trucking companies our retail customers this is a ripple effect throughout the industry on many levels >> this is nearly a $150 billion industry ironically, i am standing at the fancy food show, but the people here say it's not just fancy foods. it's also foods in pretty reasonable grocery stores like aldi and trader joe's. >> what happens, if we do that and the eu responds, is that a

double whammy? >> it is, right? we have seen that before with countries that we had issues with in the past it could be a tit for tat with tariffs. is this good for american farmers. people say you might think so initially, but what happens when the eu imposes their own tariffs? we get back into that tit for tat, and a lot of american companies and farmers rely on exporting, so people here think it's gnot a good situation for anybody. >> i didn't know there was a specialty food event i could go to i'm not sure i would like to try a lot of it, but the olives look all right. >> surprisingly prate good >> thanks very much. meantime, real estate investors are snapping up properties in record low numbers what this means for the first-time home buyers is next stick around for power lunch andre iguodala of the golden state warriors will join tyler okd me to talk about his new bo, his tech investments, the

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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. watch out, new home buyers there's major competition in the housing market real estate investors are buying up more homes than ever before

private equity firms and other big real estate speculators accounted for more than 11% of home purposes last year, and that's an all-time high. laura is a housing reporter at the "wall street journal." the fascinating thing about this because it's been going on for a decade, is a, it's not lessen g lessening. it's becoming a bigger part, and it's crowding out first-time buyers is that true >> i was surprised because i would see by now you would see investors trail off. i would think this was a 2012-2013 phenomenon when first-time buyers weren't able to buy they didn't have credit. people were decimated by the housing crash. now you're seeing a lot of millennials wanting to buy, and they're competing with investors who haven't gone anywhere. >> why do investors still see such good returns? does it tell us something about the rental market or the strength of the rental market because people can't get ahold of the housing territory

>> the rental market has been surprisingly resilient, but there's a chicken and egg question the rental market is strong because people are struggling to buy. some of that is because it's hard to get mortgages. student loans, hard to save for a down payment, and they're competing with investors who have cash to buy things. >> some of the big private equity firms have been doing this for years but there's always surprising participants, like overseas buyers on all-cash websites >> that's what we're seeing change the blackstones of the world are pulling back, and we're seeing technology making it easier and easier you know, i interviewed a couple who was sitting in san francisco and were buying homes in tennessee they have never been to tennessee so that's a really big change, too. >> are theybuying all cash as well >> yeah, exactly because they're like, well, we sold our condo in san diego, and now i can buy multiple homes for cash in the midwest and in the south. >> if you're a seller, you would rather sell to someone immediately for all cash than dealing with a first-time buyer

going through the normal mortgage process >> i spoke to a man, heartbreaking. he was looking for a home in detroit. he said if a guy in a truck pulls up, you know you're done because that guy is probably actually doesn't look that fancy but is probably going to pay cash >> wow what changes this, if anything is this going to keep going? are we going to keep talking about new highs and new highs in terms of investor participation? >> yeah, i wonder if we may be just in a new era in terms of investors being a bigger player in the u.s. housing market we're near the peak of the housing cycle. that's usually when you see investors pull back. now we see they're buying 1 in 5 starter homes in this country. >> starter homes, too. if you're looking for a value, you could argue some of the major mansions selling for millions less than they were previously paid for, but why starter homes? >> so i think part of this has to do with the aging housing stock in this country. what's happening is that a lot of these, the older homes are cheaper homes.

they need a ton of work. and if you look at, you know, a young household just starting out, they don't have the cash to do that gut renovation >> fascinating thanks for joining me. that does it for the exchange today. i'll go join tyler for "power lunch," which begins right now kelly, come on over. don't leave me alone we'll see you in a moment. i'm tyler mathisen new at 2:00, president trump targeting iran with what he calls hard-hitting sanctions the fallout straight ahead plus, stocks headed for their best june in decades could you keep riding this rally or is the time to get defensive? and tech investing, the state of the nba, golden state warriors andre igwauodala will join us in the studio he's got a new book out. you should get it. "power lunch" starts right now stocks are strugglat