unusual activity >> i own united airlines i also own in stock and i also own southwest airlines, but i'm soon to add american airlines. >> good stuff, and i'll see you tonight. fast money, 5:00 p.m i'll see you on "power lunch." joe kernen and the exchange begins right now you got that right, brian. thank you. welcome, everybody i'm joe kernen in for kelly evans. president trump firing away at china. the fed and europe once again taking some of the steam out of the market rally his comments and what they could mean for jay powell's next move. >> and the devil's in the details. big banks may be beating estimates, but some are saying that the beats are not quality the quality is strained. that's why we're not seeing a big time rally we will take a look. plus, putting its best foot forward. why saks is betting big that man will want to spend money on their next pair of shoes however, we begin with breaking news from fed chair jay powell

steve liesman has the headlines. steve. >> thanks, joe fed chairman jay powell speaking in paris at this hour, says uncertainties around trade and global growth have increased he said the u.s. debt ceiling and the problem with the resolution of brexit remain unresolved he used a word he has used quite a bit. the fed will act as appropriate to sustain the u.s. economic expansion. he points out many participants at the june meeting judge the case easier for strong monetary policy he sees q2 growth as having moderated. the consumer bounce back, but business spending has slowed notably. labor markets he says are strong he expects pretty solid gdp growth sounds like in the 2% area, and job opening are plentiful. but he says a low neutral rate, says that rate has come down for the economy, meanish the fed is in danger of hitting a low more

often. these are similar to comments he made recently. if you're wondering, i am personally at work here at the cnbc events at work conference, where in about an hour and a half, we'll bring you live discussion i'm going to have with chicago fed president charlie evans. there will be some news in there to go along with the news we learned which is that you actually own sport jackets we didn't know a suit jacket. >> if i could have worn a sports jacket with lululemon pants, i would have, but this is a full suit at first blush, i couldn't help but think this sounded even more dovish to me, like he even had more cover to do something no i didn't read that >> it might have been. it might have been way it was presented, because the good stuff i put down below, and the bad stuff was up high, just because i think the market was more sensitive to is he repeating some of the negatives. i think it sends us along the track towards a july rate cut,

joe. and it's interesting that he's kind of ignoring the strength this morning in that retail sales number that to me is a very important message from his comments here >> although i think i would have more of these meetings if i knew they were going to be in paris from now on, i would require them to be in paris if i were him, right, steve? >> the more important question is why isn't the senior economics reporter there covering it live don't you think it's an important question >> maybe an oversight, but next time, definitely >> we'll have to talk to management >> we have to work on that you're welcome a strong thumbs up from me anyway, thanks, steve. let's look at stocks right now after what we heard from jay powell maybe offsetting a little about what we heard from the president which knocks us from up a little to down 40 or so the china news that, i don't know, we're going to talk to an analyst in a second about just how much pain is necessary before we get something with china. we did start the day at record highs but lost those gains after those comments on trade in the

fed. eamon javers has the headlines looking -- i have a monitor so big, eamon, that it almost -- you almost look so good that it's almost overwhelming >> terrifying. >> it is almost terrifying >> i don't want to intimidate anyone >> too late. what do you got? >> here's what's going on right now at the white house the president is holding a cabinet meeting. he invited reporters and cameras into the cabinet meeting unexpectedly they have been in there for about an hour and 20 minutes we don't have the video yet of the cabinet meeting, but we do have reports from reporters who are inside who are telling us what the president's been saying he's just starting taking q&a. one answer to a question that we should probably get to, the president saying that he would recommend that the attorney general and various agencies take a look at google's involvement in china to see if there's truth to allegations against google so the president here not saying that he has done that yet, but saying that he would recommend that the attorney general look

into google and china. so there's maybe a little bit more kindling on that fire, that story today. also, the president talking in general terms, positively about the economy, pising perforofmae he dow and on iran, saying that the united states is not seeking regime change. so the president continues to suggest here that what he wants really from iran is a negotiation. he hasn't been able to get that yet. he's been ramping up the economic pressure on that country and we'll see where this goes but the president saying today that he does not want regime change in iran as well as soon as we get this tape out, if there are any more news making comments, we'll bring them to you. >> what prompted the china stuff? here we go again i thought we were in a truce with the new tariffs here we go again you know, make up your mind. what prompted it, do you know? >> we don't know what the president is doing in the room is going around adviser to adviser throughout the entire cabinet, so he's talking to everybody in the room. and this is a president who sees this as a very long-term struggle with china.

there's really open question of whether the president wants to take any of the tariffs off that he's put in place so far, because ultimately, if you're going to reshape the entire economic relationship between the united states and china, that's not a short-term prospect that's something you have to do over the long haul, years, not months >> all right, eamon, i like the whole combo there, the -- i thought about one of those but i didn't have one. but it looks good. >> we'll get you dressed up. >> i'm doing okay. i'm wearing a jacket i'm holding my own trying let's talk more about the president's comments and the markets with dan clifton, head of policy research at struteeths. the first thing that jumps out at me is you said more pain is going to be necessary on both sides. this is before the president made those comments. more pain in china and here before we get anything done. and next thing you know, the president is saying we're not anywhere close to being done you were right >> well, thank you for having me on, joe. you know, the gdp is slowing down in china, but it's only

about 6.2% i think most analysts believe we would have to get closer to 5% gdp growth on china before they're not creating enough jobs that's going to be the real danger sign. you would have to see a bigger slowdown in china before you start seeing the chinese act something happened, joe, in mid-april where the hard liners began to take over in china. and it's really xi trying to make a bet on u.s. political decay. they see the mueller report, the fighting going on over the last couple weeks between the house and the president, and they basically think they can wait trump out, and trump is not playing that game with them, so we have a very strong retail sales number the u.s. economy is still very good the president saying i'm going to press my bet here and the meeting probably didn't go as well as it was initially advertised at the g-20 i think we're moving into a period where you're going to see positions harden as both sides go back to the corner to inflict more pain. that's why steve liesman's report is so important of what

jay powell is saying in paris today. he's signaling there is external events like the debt ceiling, like trade uncertainty, that have to be factored into the equation good employment, good retail sales, but these external factors could slow the u.s. economy down, and jay powell wants to stay in front of that monetary policy as a cushion for this elevated and escalating trade situation. >> we forget that trump can get thrown out in two years, in 2020. by the american people president xi doesn't have that worry, does he open a few more internment camps. he's got no issues with staying in power, i don't think. >> that's right. so he's constitutionally protected. but serious reformers are really pushing for change here. so if the economy slows considerably, i still think he's come under pressure. and for the president, he clearly wants to use getting tough on china in the presidential election. but he's got to be worried because manufacturing is slowing, construction is slowing. those are key trump voters in key trump states

at some point, joe, we're going to need a deal it's probably not going to happen anytime soon, and in the intermediate time, we're probably going to see the fed cut at least 50 basis points if not 75 if i was jay powell, i would just do one and done in july cut 50 basis points and then say, okay, now go solve your problems i don't think that's going to happen so i anticipate a 25 basis point cut at the end of the month and another one in september. >> that will put us where we need to be you think we're 50 too high, which is amazing with everything else, with unemployment and gdp and the stock market dedoesn't sound like a new yorkt thing to do with new highs and the other metrics that are so positive, but it makes sense based on where global rates are and where they should be, but it's just counterintuitive, right? >> that's right. at the end of the day, these are the lagging indicators employment, retail those are benefitting from the tax cut. we need to get cap-x back, and the only way we'll get it back is if we start lowers hurdling

to new capitol investment through a china deal the fed is going to do whatever it takes to protect this recovery and i give jay powell a lot of credit with that speech today. >> you handle washington how does that work >> he's the smart guy at the firm i just try to figure out what's going on here in washington. >> smart guys have to hire people that are smart. all right. dan, thanks for being here >> appreciate it >> two big tech hearings on capitol hill today the senate banking committee holding a hearing on facebook's libra. while a house subcommittee is set to hold an anti-trust hearing at 3:00 p.m. you have long days, like a third of the way through on the hill with the latest. i saw you earlier today. >> yeah, we're getting there, joe. the senate banking committee has wrapped up its hearing it lasts just about two and a half hours lawmakers had a lot of questions about how libra would work, how the cryptocurrency would be implemented, but the big theme of the morning was about all

trust. >> trust is something you earn and facebook certainly hasn't earned it. >> what kind of faith do we have in libra >> can we agree that a banker should be trustworthy? >> i don't want to get into the technical stuff. i'm talking about the trust issue. >> i wish we could trust facebook it's pretty clear there's almost nobody on this committee that does >> questions about trust, facebook will turn to questions about anti-trust it will appear before the house judiciary committee later on this afternoon and the company will be joined by apple, amazon, and google as well that hearing will now start at 3:00 p.m., joe i will still be awake and watching that hearing as well with lots of coffee. back over to you >> might check a bitcoin quote occasionally today, too. kevin mccarthy decides it's a viable option on "squawk box" and it's down 1227, below 10,000 again at 9622. unbelievable let me ask you, what was facebook's response to all of

this that you just talked about? >> yeah, well, facebook said that it will have to earn customers' trust and it will do so by competing and showing that it does care about privacy, keeping consumers' privacy who use its calibra product separate from the information that is stored in the blockchain through the libra association. but i think that the feeling from lawmakers is that this is all a bunch of promises and facebook has broken promises before >> all right, thank you. and we'll see you again, no doubt. here's what else is coming up on "the exchange. >> coming up, what today's results from the banks could be telling us about the state of the consumer plus, one economist says the president has a new tactic in his war on the fed dreadful nominees. and ikea is saying good-bye to its only u.s. plant we'll tell you why

exan."s is "the chge on cnbc. rmalcy is restored. we'd been working for days on a site in a storm devastated area. a family pulled up. it was a mom and her kids. everything they had had been washed away. the only thing that brought any kind of solace was the ability to hand her a device so she could call her family and let them know that she was okay. (vo) there for you when it matters most. join us and get up to $650 when you switch. that's verizon.

here, hello! starts with -hi!mple... how can i help? a data plan for everyone. everyone? everyone. let's send to everyone! [ camera clicking ] wifi up there? -ahhh. sure, why not? how'd he get out?! a camera might figure it out. that was easy! glad i could help. at xfinity, we're here to make life simple. easy. awesome. so come ask, shop, discover at your xfinity store today. a lot of people, lot of people need a fix. dom chu fix. we're going to get one right now. a market flash on oil. dom. >> that's right. it feels like we're back on squawk all over again this morning. anyway, we're watching oil prices moving to the session

lows right now wti crude currently $58.43 down 2%. a lot of that having to do with what's happening with headlines coming out of the cabinet meeting in washington, d.c., where secretary of state mike pompeo says that iran has said it is prepared to negotiate about its missile program. now, that takes a little bit of the geopolitical weight and specter off that oil trade that has been pushing prices higher that's one of the reasons traders are saying it is moving down to session lows, off by about 2% we'll keep an eye on that oil trade. back over to you >> with who? with us? >> with us >> no way. >> i mean, listen, i'll believe it when i believe it obviously, with iran, you never really know exactly what's going to happen, but that's why oil prices are down. >> thought i was reading that wrong. that's unbelievable. thanks for that, dom appreciate it. >> big bang, the s&p bank etf is down nearly 10% since last year. earnings from jpmorgan, wells

fargo, goldman sachs, and citi should have been a welcome sight to investors but there's little fanfare on the streets joining us, anton, of menden capital advisers and banking reporter hugh sun. anton, rates are going down. isn't it that simple these things are depressed, right? >> well, are they going down i mean - >> is that what you attribute the underperformance to? i mean, there are some cheap valuations relative to tangible book, are there not? >> there are last year, banks, everybody is supposed to own banks. rates were rising. a rate hike in december. they performed horribly. part of it was fear of the yield curve and the negative rates around the world, and here it is it's come to fruition. the fed looks like it's going to cut rates. we have a curb that's not very steep, and you know, nim has been affected for all the banks reporting. >> for years, hugh, going all

the way back to when we first started doing this in the early '90s, analysts would talk about the quality of earnings. we're like, what the hell, just tell us how is the company doing, but it matters how you get to a number, and some of these banks, whether it's jpmorgan with a tax benefit, right? >> $768 million. directly to the bottom line. directly to profit >> you have to look at the nuance of these reports. >> i think you do, yeah. so all of them beat. and to your point, i wouldn't call them high quality beats so yeah, you had citi, which beat, but they had a trade web ipo something like $350 million extra for them jp, we talk about three quarters of a billion flung directly at their bottom line they wouldn't have had if this tax thing didn't happen. with the exception of perhaps goldman sachs, goldman sachs beat estimates on its actual businesses they had about $200 million in equity trading results than people figured i would call that the lone exception. >> the old days, goldman would

beat by $2, $3 every time. you miss those days? >> absolutely. >> those are the prop trading days >> goldman the outstanding report today >> i think they definitely showed some better moxie in that equities line. and it was just enough of a beat it was a cleaner number than i guess the rest of them and look, i think the rest of it comes down to guidance and forward and estimates. how many times are we going to get a cut. what's the ultimate number, and what's growth going to look like >> tell me again, you think loan growth near term can offset declining rates that aren't going in bank's favor. tell me about it, because of the s.a.l.t. thing >> on the big banks, i think you have seen some of that enough long growth the nims come down, but earnings estimates haven't been impacted dramatically if you go to states where people are migrating to, tennessee, florida, texas, zero state

taxes. growth is better and you know, housing has a chance to be better there. you know, developers need to build more housing stock there's not enough growth is better >> just you touch on wells fargo. turn around, its reputational issues what inning is this? i don't mean little league is this like nine? >> they're still in the fourth inning the ceo search, they don't have a permanent ceo. so it's possible that their interim ceo becomes the permanent ceo. from the onset, they said they wanted an external candidate. it's proven harder to get that external candidate you'll have that cloud of uncertainty until there's a ceo. net interest income, they seem to be underperforming there, and rates haven't even been cut yet. they're already underperforming on this key business line. what happens when the fed actually does cut rates. >> what do you think of wells? >> i think you're spot on. you need a new ceo, you need to

take the fed and have them relax the cap. because how do you grow loans when you can't grow? you're not allowed to grow that's really important. let's play nice. let's right size the business. let's get the expenses down to the bottom line. they have been cutting expenses but they're not making to the bottom line. that's important for future earnings >> anton, thank you. hugh, thank you. we should tell you that wells fargo in fact is the only bank that was trading lower despite the earnings beat, but john shrews berry, the wells fargo cfo, is going to be first on cnbc soon i think in a couple hours, to talk about the bank's earnings with the closing bell team tune in at 3:00 p.m. eastern for that meanwhile, coming up here, the comak is hot unemployment is low, so why are younger millennials not optimistic about leaving their parents' homes because they don't want to work. where else are they going to go? that's in today's rapid fire that was not in the teleprompter i added that, and don't think i'm really allowed

i take that back >> plus, newidaty showing homeowners are optimistic, but there could be pain ahead. >> hugh, are you a millennial? >> my wife is. >> we'll tell you why straight ahead on "the exchange."

get to seema moda for a market flash on bitcoin. seema, what did you do >> facebook's libra facing pushback on capitol hill, and

bitcoin is selling off it's following strongly worded comments from treasury secretary steven mnuchin yesterday who effectively bashed cryptocurrencies and also said libra could be misused by money launderings and terrorist financiers the concern is they'll face further regulation as you can see, bitcoin breaking below 10,000 now down over 25% over the past one week after a huge run up this year >> figures we had kevin mccarthy talking it up today once a politician thinks it's a good thing, it's over. now to contessa brewer for a news update. contessa, what do you got? >> here's what's happening right now. the house republicans are reacting to the president's tweets from over the weekend when he was tweeting about four democratic congresswomen and kevin mccarthy, the house minority leader was asked if he thought the tweets were racist >> no. and i do not believe the speaker of the house was racist last week either when those individuals on her side of the

aisle who are claiming the president is racist, when they claimed she was racist either. i do not believe that. i believe this is about ideology this is about socialism versus freedom. >> contract negotiations are under way between general motors and the united autoworkers union. two sides took part in a ceremonial hand shake at the marriott this morning. a new four-year contract is being negotiated >> the chicago alligator, yes, you heard me right, is now in captivity. the little guy caught in humboldt park lagoon after being spotted a week ago five feet three inches in fact, a florida gator expert had to be brought in to capture the animal you know how he did it, joe? get this, a rod and reel a fishing rod and a hook to capture a gator. >> wow >> in chicago. >> is he cute or not he's kind of cute there. >> adorable. >> i initially was thinking about what a nice belt, but no >> no. no, that's not where i was going with that. shoes. shoes, joe

>> yeah, shoes we're talking about men's shoes later. with saks. have you heard of something called a rapid fire? >> yes, i have heard of it >> did you know you're invited today? >> right now can i come over? >> now if you want i'm lonely i'm not used to this anyway, thank you, contessa. and here's what is coming up on "the exchange. >> ahead, workers are leaving large metropolitan areas for smaller cities and you'll never guess where they're going. plus, the dominos are falling for dominos pizza. costs are forcing ikea to make a big move and men's shoes are becoming very important for retailers that's ahead in rapid fire

let's catch you up on a few stories that should be on your radar. time for rapid fire. means it has to be fast. here we are with conitousa brewer, dominic chu, and kate rogers the first story is dominos but i'm going to kate. dominos is on pace for its worst

day since february after missing revenue. is your twitter feed at domino it's not me. the street had been expecting comp growth sales of 5%, but the chain only grew by 3%, as it continues its so-called strategy you have been following it all day long a pretty good stock after they redid it a couple years ago. >> that's right. >> done pretty well, but this is a little bit of a hiccup, no >> that's right. the ceo will be on "mad money" tonight. they're in the midst of this fortressing strategy they're opening more locations closer to their existing locations. analysts say that could be a drag on same-store sales because you may go to the newer dominos instead of the older one even though this is a drag on comps for now, it will be a strategy that pays off in the long term. another thing that came up a lot today as it did last quarter, the third party delivery aggregators. they're under a lot of pressure because in the past, the only thing you could get delivered

was pizza. now you can get chipotle, taco bell, other places that have teamed up. they do their delivery in-house. that's essential to the dominos formula, so to speak, and it has proven successful in the past. these third parties are being heavily subsidized he questions the sustainability of that, but it's impacting the company right now. >> we should talk about fortressing because it's a concept by which you're going to put a dominos as close to everybody you possibly can what that's going to do is in essence take away from same-store sales because if you're that closer to a dominos, you go for there this is an investment a lot of investors had been willing to make because they knew that comp store sales were going to decline the more stores you opened up. it does compete more effectively with third party sellers because everyone then can get a pizza within five minutes. >> and delivery is cheaper >> you're right. >> so i mean, that's the reason why. that's why the stock has gone up it sells off today because of a sell the news type of situation.

i'm not sure if it's a long term bad thing. >> 8,000 locations in the u.s. in the next decade this is a huge part of that strategy >> if you're hungry, aren't you ordering based on taste and price? there's pizza places are ubiquitous if dominos can't combeat on taste and price for pizza, i'm willing to say, okay, maybe they're not competing with chipotle, maybe they're not competing with the local greek restaurant, but they are competing with pizza places, and wouldn't their money be better invested competing on taste and price? >> you're forgetting one variable if you're that hungry, isn't it about time as well right? >> seamless is delivering the food in a timely fashion you know, the alternate strategy would be like, what, to throw in the towel on their delivery fortress and just say if we can't beat them, join them >> they did quickly do a big taste overhaul under the former ceo. he went on tv and said the pizza didn't taste good. they overhauled the recipe >> it would taste better if it's

only five minutes to get there >> hot and fresh >> gps tracking too coming by the end of this year so you can see where the pizza is >> not a product endorsement, but idid order last night because there's a promo for 50% off. >> sometimes we pick it up because, you know, you think they're all the sime we go to the one that makes better dominos they don't deliver to where we are. it does matter >> also cheaper when you pick it up yourself. >> much cheaper. $8.52. >> i'm going to shut up now. >> exactly $8.52 i'm not kidding. tune in to "mad money" tonight at 6:00 p.m. eastern time for jim cramer's exclusive interview with domino's ceo. contessa, i invited you over for this are you ready? >> i was born ready. >> ikea is closing its only manufacturing site in the u.s., citing the high cost of raw materials. wood, are they not it's going to shift operations from danville, virginia, to its existing facilities in poland, in portugal, because it's more affordable to manufacture. >> ikea's grand american

experiment is much like its furniture, disposable. ooh. you can't compete with raw materials. we're hearing this not just from ikea we're hearing it across industries that as input costs are rising, that companies are seeing their margins shrinking if ikea knows, and it should know because it has existing facilities and manufacturing centers in europe, that they can do things cheaper in europe, then why wouldn't they they gave it a shot, it didn't work >> my thing is about if input costs are rising, those input costs are sourced locally, right? so it's not like, there's no arb traurj that can be made, or one should be made about lumber prices or wood prices happening elsewhere in europe versus the united states and canada if it's just input costs, those would eventually flow through. >> look, they said they were going to cut 7500 jobs in this big restructuring deal that would result globally in a gain of 11,500 jobs, and we have seen

this coming for danville danville says they lived up to their bargain, invested what they were going to invest. they think it was a net benefit to the center itself they weren't willing to give them whatever tax incentives would have been needed to offset what ikea thought. >> i would say incompany is going to help them find jobs that's the big thing about the whole process as well. >> next topic is one of my favorites. not td ameritrade, but millennials, out with its 2019 young money survey i like the topic because i like to make fun of them, but it's not fair because i'm surrounded by three of them these are people 22 to 28. >> i'm not a millennial. >> i'm definitely not 22 to 28 >> we have one bona fide millennial here. 19% of young millennials at 22 to 28 expect to be financially reliant -- and they admit it -- on their parents into their 30s. hey, what do you want from me? that's almost double the number of the following generation, gen z, most of whom expect to be

financially independent by the age of 25. do you have anything nondisparaging to say about this story, something that can maybe motivate this group of people? >> i would say this. i think that i was more financially independent by the time i was 23 to 25. i'm a gen zer. it was about trying to find a job out of college i will say this. i unlike many of millions of americans did graduate with no college debt that was the one thing my parents did for me that a lot of folks don't have the benefit of. >> right >> the lesson i learned from that is the moment my daughter was born, and she got a tax i.d. number, what was the first thing i did? open up a 529 plan because that's the biggest gift i can give my kid, to pay for their college. >> you're saying college debt is equal to a down payment on a house. >> massive, no doubt >> you have a kid in high school and a kid in college will you welcome them home and open your doors post college >> where wouldn't just welcome them home. i would bribe them to come home.

>> this is the other part of it, that parents are saying their kids are their best friends. the kids are saying my parents are my best friends. the culture is changing and expectations are changing. the survey also said most young americans would buy a car before other financial investments like paying for insurance and health insurance. >> they don't buy houses, don't buy cars >> can i chime in here >> you're an anti-millennial i don't rely on my parents i graduated with a lot of college dent that i worked hard to pay off also, my parents are on my netflix account. i'm not mooching off you you can use my netflix account any time they would probably welcome me home if i had to move home >> i think my parents would welcome me home. >> hopefully the audio guy has theapplause button finally, saks fifth avenue is opening a massive luxury men's shoe department.

it's becommits fastest growing business, and saks is looking to cash in on male foot wear. for more, let's bring in courtney reagan. we don't need -- >> first walk on rapid fire. >> i think it might be for me. >> do you have $895 sneakers >> i have seen some crazy ones they showed me these shoes >> he's such a fashion trend setter >> that's me with the lululemon. >> saks are opening up this new men's department, so they're going through this multiyear renovation the women's department for shoes has its own zip code 30,000 square feet this one isn't going to be that big, but 60% bigger than it was. 60 brands. tons of exclusives 2,000 different pairs of shoes you could buy a $65 pair of pumas or an $895 pair of bule s balenciagas or a pair of

alligator loafers and this is a big growth segment >> poor guy in chicago >> charlie the rapper. >> don't look at me for this because i was wearing a crappy pair of shoes for 12 years that i kept getting resoled >> which tells me they're not crappy >> i had them redone a bunch of times but it's not a big deal for me >> for a lot of men, it is it turns out luxury shoes and right now it's these luxury sneakers, are sort of their gateway drug into other luxury categories first they get this really high-end sneaker, and achb times it's the street wear fad then they move into a designer t-shirts, diseasesigner jeans. said their men's luxury shoe business up 50%. >> do you own a pair of minolos. >> do you? >> i have hand-me-downs. >> we're frugal. i bought things second hand. >> this is why they're living with their parents they're spending $800 on shoes

>> what is the other jimmy choo >> she might have that or stuart weitzman >> beautiful shoes, but -- >> i want to buy one at a time half the time, but that doesn't go over. a half birthday and a real birthday >> all right we don't have three hours on this show. we should, though. >> too bad >> this would be a great segment, just on this segment. anyway, so they're telling me i have to go thank you, courtney. thank you, courtney, and then it says thank you, reagan courtney reagan, i got it. and contessa brewer. these are first name people. dominic chu, stocks opening at record highs, but turning negative after president trump warned there's a long way to go on trade with china. but that's not the only international risk out there we'll tell you what it is and how to position your money or suggest how to position were we'll be right back.

markets taking a leg lower an president trump said we have a long way to go on china trade. but that's thought the only risk overseas bob pisani has been in my monitor and bob, do you think you can get through a report without moving your hands at all? because i have been watching you. i'm surprised someone doesn't get hurt standing near you >> wi have been doing this so long, we get excited about this stuff. there are some signs the global industrial economy is slowing down right now today, arrow electronics, they make electronic components and semi-conductors, preannounced lower earnings they cited lowering demands and an inventory correction. last week, another chip name preannounced weaker june sales they also noted an inventory correction and pricing pressures. also, last week, fastenall

reported lower revenues and lower gross margins on higher costs largely related to tariffs. and basf cut guidance citing ongoing slow down in the auto industry jay powell acknowledges weakness in the manufacturing sector. in his speech today in paris, he said this in part. the manufacturing sector has been weak since the beginning of the year, in part weighed down by the softer business spending, weaker global growth in the -- weaker growth in the global economy and concerns about trade tension. i know we're all obsessed with the bank earnings and we should be, but the smaller industrial and siemi-conductor companies ar saying things are slower in the economy. we're going to get on taiwan semi-conductor on thursday that will be a big tell. >> the ones you mentioned, we had them last week now that we're in the middle of earnings season, we had

fastenall and basf, so we don't have any new data points yet i'm sure they're coming. a week from now, we'll talk about different companies that may have disappointed, but not yet, right >> today, i added arrow electronics. >> i heard that. we'll see, so far, i don't know. we don't know. jury's still out cramer thinks it might be okay for earnings it's the outlook that matters too, as it always does >> right caterpillar, july 24th that will be another one >> i knew we would go way back, don't we, bob. you had jet black hair anyway, it's been a while. >> i dye it gray now, joe. >> you dye your roots. you dye your roots black i see that in addition to trade, president trump also continued to attack the fed for not lowering rates let's bring in joe, chief economist at natixis and also fast money trader steve grasso look at you, grasso. always fun to see you. we'll see you on squawk soon

i thought he was more dovish, but steve said that's the way he might have gone over some of the points that jay powell made. he seemed like 25 is done and then maybe another 25, no? >> yeah, maybe 50, joe why not get ahead of it? the curve is so inverted, get ahead, do 50, then sit and wait. go back to be patient. i would do more not less if you're really worried. what are you waiting for >> and but joe, why can't we just stop quantitative tightening isn't that the logical place to start? >> it is, steve, and they said they're going to stop it in september, but yes, you're correct. >> they should have stopped immediately when he pivoted. they should have stopped immediately. and then that leads you to the rate cutting cycle but to have that going on now is the equivalent of tightening at every meeting. even when you don't raise. >> that's true, and you see it in the money markets if you look at the fed effective rate versus the interest pays on reserves, it does suggest that there is a dollar shortage, that

liquidity is at a premium. that's why if the fed does cut the dollar will soften, emerging markets should catch a bid commodity prices will stabilize. but again, i would say, guys, it really comes back to the curve and sort of the wisdom of crowds the market generally has been a lot more right than the fed has been over the decades. and the yield curve is inverted and it's telling you the fed needs to cut more than 25, and soon, for that spread to rewiden out to positive territory. >> nothing else makes sense other than that, joe, with where the unemployment rate is, where gdp was, maybe it's not anymore, but new highs every day in the stock market, and consumer confidence this is such a crazy time for anyone that's been doing this a while, steve, to think about a rate cut instead of a rate hike. that only the yield curve explains that. inflation, i guess >> right, and it's true. but joe, if you go back, everything that chair powell had said, he could have said back in december he could have said there was trade uncertainty. he could have said there was

lack of inflation. before he was even put into that position, he said i don't know where inflation is the philips curve is dead. >> he did. >> now you have it months later. he pivots. he could have said it in december he's saying it now the market was confused. now the market is betting he has his ducks in a row and we're going to start this dovish stance but i do believe, i don't think -- i don't agree with joe. i do believe they should save their ammunition they have, very limited ammunition, and to fight inflation, you usually cut 5%. 5% to 6%, let's say. >> steve, i want to one up you first of all, the chair said back april 30th or may one about inflation being transitory, and then they got much more dovish on the trade concern >> i like that name tag, grasso. just to keep all you fast money traders straight, it would be good if you would just wear that i get confused sometimes >> took me a long time to get this tag 26 years

26 years in the making >> i got it. >> sometimes i'm bob pisani. today i'm steve grasso >> how could anyone confuse you for anyone else, is that a suit? anyway -- >> you like it >> i do. >> we have to go i'm getting in trouble thank you. home builders are gnaw cheering too loud lay for lower mortgage rates and diecent demands for homes. what it means for the economy is next, and catch former federal reserve vice chair alan blinder in a cnbc exclusive coming up on "power lunch" at 2:30 p.m. he's in a really bad mood about trump's fed picks. we'll be back. this is also mia's pulse. that her doctor keeps in check, so she can find balance. this is mia's pulse, and now it's more stable than ever. this is what medicare from blue cross blue shield does for mia.

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home builder confidence climbing slightly in july, but still lower year over year diana olick joins me to break down the numbers hi, diana. >> just a one-point gain for builder confidence in july to 65 that's below the july 2018 reading of 68. now, anything above 50 is considered positive, but you would think confidence would be gaining more given the increasing shortage of existing homes for sale and of course lower mortgage rates the average on the 30-year fixed

fell sharply at the end of may, continued lower in june, and held steady in the first weeks of july, right around 3.8% now of the nahb index's three components, current sales conditions and expectations, each rose to 72 and 71 respectively buyer traffic was also up one point to 48, but still in negative territory and a note from the chief economist at nahb, the current low mortgage rate interest environment should get more buyers off the sideline, but they remain hesitant due to affordability concerns builders continue to blame high prices on their high costs for land, labor, and materials joe. >> okay, diana thank you. we have no time together i gotta go, but thank you. >> young workers are leaving the big cities, according to new data from linkedin, but where are they heading it's kind of surprising. and why? that's next. we're carvana, the company who invented

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[ sniffing ] come on. this summer, add a new member to the family. hurry into the mercedes-benz summer event today for exceptional offers. lease the glc 300 suv for just $419 a month at the mercedes-benz summer event. going on now. over the past four years, linkedin has been tracking a steady trend of workers leaving major metropolitanareas for smaller cities, but they're not moving there to retire, which would make sense, especially with where they're moving. turns out they're relocating for better jobs.

i think to take care of the retired people that are there. i'm giving everything away here to break down what is lowering people away is caroline fairchild. did i give away too much >> you didn't give away. >> where are they going? >> they're going to florida. the headline here really is that people are moving to florida, and they are not doing it just to retire. we're seeing a lot of younger workers move there when we dug into the data, we were thinking workers from bigger cities were going to hot places like nashville, portland, charlotte, but they're going to places like ft. myers, florida, naples, florida, and they're doing it because there are great jobs there, jobs in retail and predominantly in health care >> predominantly in health care, and a lot of boomers are down there. the health care needs of boomers are probably higher than other places it is indirectly related to demographics, right? >> we're seeing two things we're seeing health care jobs are growing, and of course, a lot of them are in some of these states where older generations are. there's also a big trend with

nurses a ton of nurses aging out of the workforce, so younger nurses are going to florida for these jobs to take care of older generations. >> i was kind of shocked at some of the other stuff you found out. the further you drive to work, the more money you make. did you know that? >> there is this trend we're seeing on linkedin of extreme commuters where people are living in major cities like boston but commuting perhaps to florida for jobs that are higher paying or vice versa this tells employers there is opportunity to get talent in places you perhaps otherwise wouldn't >> and you actually do know for a fact it is the younger workers. there are older people or, you know, late middle aged people, i'm very careful now when i talk about, but late middle aged people that are moving to florida as well. and the sun belt >> of course, we're seeing people closer to retirement moving to florida, but a majority of them are in this 25 to 44-year-old bucket. they have a lot of career ahead of them, and also they're moving

there because there's a skills gap there. >> we appreciate it very much. thank you, and say hi to that dan guy. i think he's over there, isn't he he's on squawk all the time. >> i will. thanks >> that does it for "the exchange." "power lunch" with brian sullivan and courtney, one name, begins right now >> that is right joe, thank you very much i'm brian. courtney reagan is over there. here's what's new at 2:00. the president sounding off on the fed and china again. and a scathing new op-ed out on the president's war with the fed head chicago fed president charlie evans will weigh in on all of it big tech under fire. top brass from apple, amazon, google, facebook, all grilled on the hill we examine the real risks facing the companies and their shareholders >> and solid demand and low interest rates home builders should be ecstatic, right? maybe not. we'll show you what's worrying them about the american housing market as "power lunch" begins right now.