what's your final trade? >> be careful. >> smh smash. >> we learned our lesson from that >> quick >> trimble >> thanks for watching "the exchange" starts now. thank you, scott really, really great stuff there with carl icahn. here is what is on deck. transport tremors. a look inside the up in bers an area that could be signaling a recession is coming down the tracks what is wrong with oil stocks? investors can't seem to sell them fast enough but when everybody is selling, is that when you should be buying and lyft making a bold and rather unexpected move when it comes to its own stock we'll explain and look at what it might mean. and all that is ahead. as always, let us begin with today's markets. we're dom chu, solidly in the green but -- >> the volatility continues. >> it's crazy.

rally mode look at what happened monday with the price action. today it's a pretty big move higher 1.5%, almost to the up side. 338 points we're just about at session highs for the dow jones industrial average so the markets very much trying to claw back to where it was towards record highs the nasdaq, again, the s&p 500 still below that 3,000 mark. however, the nasdaq composite up nearly 2%. today's trade, massive moves higher we've been focussing on interest rates. the creep higher in interest rates is helping to add to that bullish narrative. interest rates are stabilizing at one point yesterday, down here, we were at 1.595% in terms of yield on the ten-year u.s. treasury we're all the way back to 7%, 8% we'll keep an eye on that as well and the stock of the day, everything is green except maybe for some of these names, kraft heinz included 11% to the down side that's all session lows but still at one point we hit the worst levels ever since the formation of kraft heinz back in

2015 they gave an indication that the results are delayed again but they will not be what some analysts had expected, and they're writing down the businesses the value by another $1.2 billion. craft heinz shares not participating in that broad rising tide for all those boats in today's market. >> dom, you may not believe this the folks far better at math than i am told me with today's gains, even with monday's massive drop we're now positive for the week on the s&p 500. wow. thank you, dom by the way, welcome to world wide exchange. i'm in for kelly evans stocks have regained their footing today. so what are investors, what should you be watching to determine whether we go up or down from here let's get some answers and head downtown to bob pisani at the new york stock exchange. bob? >> good to see you there, brian. we've had quite a rally since the monday bottom. here's a better stat than the one you have we have closed the gap with the friday close

friday s&p close, 2932 we're there. that's a 5% range down 5% back up bond yields have risen off their lows china's currency has stabilized. that's why we're moving up, folks. so have stocks led by cyclicals and technology, industrials. they're all both now positive for the week so two big themes are emerging is there a chance for a second truce on china some say no. some say yes no determination yet and will this brief period of stability in bonds and china's currency last? we've been seeing the last two days a lot seems to rest on where everybody stands on the question of a recession in 2020 so, for example, jpmorgan out with a note today. sort of in the middle saying, the economic data highlighted elevated recession risk. the likelihood of a downtown in the coming 12 months still below 50%. but wait a minute. moody's mark zandi says the risk of recession is more than 50% due to the latest round of tariffs. see the confusion here

the bottom line. the two biggest determinants will be the success or lack of there of central banks to continue to stimulate the global economy. brian, back to you a lot of debate and bk an forth. we'll continue it right now. let us bring in matt maley, chief market strategist at miller taback and our own steve liesman. we're going to start with steve and new economic data that you believe may foipoint to some troubling signs in the economy >> we don't know how definitive. hats off to john kemp from reuters who did a whole chart on this picked out a couple of things he was talking about. first, what's happening to u.s. rail year over year you're a big transport guy if you look at the first chart, we're negative now on the year-over-year basis it's not as bad as it was in the recession of 2008. it's about as bad or getting as bad as it was in the slowdown of

2015 i added to that chart the port of long beach freight loadings there, down 10% year over year move on real quick what is this a symptom of? look at jpmorgan global pmi. new export orders. now negative about actually than it was in the slowdown. this is global, not the u.s. john kemp from reuters says almost all the main economic indicate aors confirm the global economy has already slowed severely now how does this knock on to the u.s. take a look at the export contribution to gdp in the u.s those two negatives of the first quarter and the last quarter that we're talking about right there, sorry, that would be the second quarter, those are the worst two negatives that we've had since the financial crisis exports are not helping u.s. growth oxford writes today, although we still think a global recession is far from inevitable, we expect 2019 to be the weakest

year for global gdp growth since the global financial crisis. and, brian, the transport data, air freight, shipping, tonnage at different ports all pointing to this big slowdown >> and it's great stuff and john is a smart guy the only thing i'll push back on is because they widened the panama canal three years ago and deepened charleston and savannah, i wonder if some of the rail and freight and shipping data will shift because more ships are coming east, not west and you don't need to rail it across -- i don't know -- >> that would be possible and i can't -- this is not definitive data it wouldn't explain what's happened to air freight which has plunged. >> or global >> or the global pmi and the export orders. it could be we're not picking it up because it's coming in through another place. that's possible. like i said, not definitive. it's something to watch. and it's really what's spooked a lot of central banks >> and stick around. let's wrap that macro great ecoconversation into a markets

and economic conversation with matt do you believe -- bottom line, is the u.s. going into a recession in the next 12 to 18 months >> well, the u.s. is definitely going into a recession i don't know if it's going to be -- >> in our lifetime, yes. >> in the next 12 to 18 months >> i think the global economy is slowing. the u.s. economy is slowing. i do expect to see slower growth whether we have a recession in the next 12 to 18 months, i'm betting against it i think we'll still see growth in the next 12 to 18 months. but there's no doubt we're slowing. we will eventually have a recession as we always do. >> to steve's point, the transports appear to be setting up a big, red flag i know you're nervous about equities how much does that the dow theory, the transport theory play into that >> i definitely agree with what steve is saying. this is something we have seen not just something that we see in the last week as steve is talking about. this has been happening for a while now. and that tells us that it's not

just because president trump just announced another round of tariffs against china. so as we move towards this, two things on the stock market, whenever the stock market goes down to -- because of new news, new negative news like it did just two weeks ago, the initial low is really the first low. it's really the ultimate low usually see some sort of short covering rally to work over the oversold condition and sell off to a new low what steve is talking about here, what does that mean for earnings the second half? july earnings, okay, guidance after the july earnings reports went down slightly keeping the capital expenditures down, that's going to be tough to see a big improvement in earnings a double whammy there. >> about the eighth straight month of negative year over year you said red flag. i think it's flashing yellow and the reason it's flashing yellow and could still go green,

it's a weird juxtaposition but it's the u.s. consumer against the trucks which is the consumer part of the economy which has held up relatively well against the industrial side of the economy which is going to slow down because as matt suggested, global coming is made worse by the -- >> i want you to listen to something and then respond in the previous hour and a half, carl icahn, you might have heard about him. great long-ranging interview with scott they talked about interest rates. now the president has said he wants the fed to cut aggressively carl icahn says this i don't think just lowering rates is the answer. the end all answer if it was, that easy, you would not have these cycles. do you believe that we need to cut interest rates now >> no. in fact, i believe the last interest rate cut was not necessary. the fed reversed itself after only seven months which is a bit

unusual. >> a midcycle adjustmentf i'm right, steve >> it's a reversal as far as i'm concerned. but i think these -- the interest rate cut sends some troubling signals. it makes it look like the fed is unsure of itself that it's not sure it's doing the right thing. and it also makes it look like it's capitulating to the demands of the president it sent a bad signal to the market i know that interest rate cut was already priced in. everybody was expecting it some people were hoping for more but i think it was a mistake to give the market this interest rate cut it signals that either the fed doesn't know what it's doing or it knows things are much worse than it's saying >> if you're jerome powell and maybe you're thinking you want to cut rates in september or december but you have this political pressure from the president, it looks like you can't do it because it will look

like you caved do you think the market needs an interest rate cut? >> it gives a whole new meaning to the term, between a rock and a hard place if what trump -- president trump is doing on -- for political reasons in terms of the trade war slows the economy down, whether it's political or not, the fed needs to respond they need to respond even though it shouldn't look like they're responding to that but my real concern is what we're seeing is that -- a situation where the stock market is ahead of the fundamentals and it's going to go a little lower and i think we'll go into a full-blown 10% to 15% correction before this is over. but that will provide a great opportunity to buy so people have their ideas set up in advance. instead of selling at the worst time they'll be buying at the best time. >> i feel like the president is putting the federal reserve in a position where it cannot act preemptively if it chooses to do

so so that the next moves have to be backed up by weakness in economic data. that would provide the kind of credibility to the cut that the federal reires for its reputation >> that would put them behind the curve. >> that could put them behind the curve. i think floosthere's a -- what' word an opposite reaction to what the president wants. >> they may cause a slowdown by having to wait too long because they have to say, here's why we did it this is the reason >> the next time people are going to say, show me the data they got away with a risk management one the last time around the next one has to show weakness >> september is -- >> that's a great point. >> and matt maley says 10% to 15% drop could be coming thank you guys good discussion. here's what else is ahead on "the exchange. >> coming up -- it's a question making its way around wall street what's wrong with energy stocks.

with shares of nearly every oil and gas company collapsing lately, is there any bold case to be made plus, buybacks are drying up just as lockup expirations are approaching. could it be the catalyst for a leg lower? and there seems to be one big winner from all the cord cutting. this is "the exchange" on bccn from the couldn't be prouders

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welcome back to "the exchange." it's been a decent run-up for oil, up 16% year to date that's not helped oil and gas stocks at all. they've been decimated get this half of all oil and gas stocks have lost half or more of their value in the last year what's more interesting and maybe more troublesome is that the stocks have pulled a paltrow and martin they've consciously uncoupled. this is the etf. normally they trade together lately the stocks, measured by the orange line, have tanked while oil has remained steady. the xop is now lower than it was when the price of oil was at $30 per barrel let's bring in roberto freelander, global head of energy trading it's a very simple question. why have oil stocks fallen so

much when oil has held up reasonably well? >> there's two factors one is to look why crude had a bit under it there were a lot of geopolitical risk premiums being put in with the strait of form hormuz and i. the markets proved efficient there and forward looking. there was a big problem building that started a year and a half ago with the amount of ducts being built up which have gotten to about 8,000 and peaked out in february to 8300 a look at where these emps will be in a year, year and a half. have crude proiss dropping permian pipelines coming on into the year end you have these emps that are going to be brought back and reining in cap ex spending that's going to affect the entire oil and gas chain from

midstream companies to pressure pumpers to oil service companies. >> but it's not an exaggeration to say that the market and investors who have grown sick of ten years of really no positive return on investment capital, they are trying to trade these as if half the industry is going to go out of business. >> correct yeah and certainly that kind of fear panic which set in yesterday i would say and i predicate that, that a lot of that is based on a buyer's strike that went into this space a month and a half back. i like to say capitulation we saw yesterday, that type of selling, throwing in the towel a lot more than long sellers punting that there that lack of buyer strike. markets are looking forward. if you look at the wti and even the brent forward curve. they have crude sliding until fall of '21 where it gets to 50 or below really only a couple areas in the country where a lot of these

guys make money and break even the reality is we still have to have a couple small cap emps go away where do they consolidate from >> given some of the debt loads, they might, but i can point to certain stocks where the valuati valuations are below where they were when oil was under $20 a barrel the selling has been indiscriminate are you seeing any value has the selling been overdone? are there opportunities in this wreckage, roberto? >> two points there. is the selling overdone? yes. as of yesterday, we hit that capitulation zone. i look at energy names and say look at the sector and we had yesterday over 25% of the sector make new 52-week lows that's washout in addition to that, we had almost half the sector break below their lower trading bans

last time we saw these movements was may 31st this year and december 24th, the panic selling of last year a severe move of over 25% to the up side. the second point to that is that looking forward down the line, are there values here? and the problem is that as these emp companies draw down on their ducts to make production guidance they cut back their cap ex or they'll be punished by the street at the same time, they're drawing down to make numbers crude prices will come down significantly in the next year, year and a half as the permian pipes come online. if you are an analyst at a money management firm and you are answering to your pm, how do you value these things where these emp companies going to be drilling in a year, year and a half with crude low ecap ex lower and they've drawn down their duct inventory it's a hard time if you are kind of an analyst that's at a money management firm, you have a hard time justifying any valuation here. so if you'll be wrong, you'll

have a hard time it's going to be a hard conversation with your pm. >> and a lot of people have been wrong and stocks down 60% and 70% in 12 months roberto, sea park global, thank you. on deck, netflix may be losing the office and friends. but it just landed two tv heavyweights for $200 million. who they got and how it may help, ahead. plus, the rising risks to real estate and the companies that have made it their business to see these risks coming. "the exchange" back in two minutes.

all right. welcome back to "the exchange. let's hit some of the stocks you need to know about right now shares of amd are soaring today. this after the company said it won google and twitter as customers for its newest chip. that stock having a nice day for investors. call this unreal estate. zillow on pace for its worst day of the year after reporting its earnings stock down 17% company lost more money in the second quarter than it lost last year after spending heavily to boost its home segments business stock, though, not too bad still up about 30% on the year and symantec the cyber security company is nearing a deal to sell its enterprise unit to broadcom. now to sue herera for a cnbc news update. sue? >> thanks, brian

here's what's happening at this hour president trump says that he is very strongly considering commuting the sentence of former illinois governor rod blagojevich who is now serving a 14-year prison term on multiple federal corruption convictions he told reporters he thought the democrat had been treated unbelievably unfairly. a small plane crashed in a pennsylvania neighborhood north of philadelphia killing all three people on board. it crashed shortly after takeoff. no one on the ground was injured. israeli troops raided a palestinian village hours after the body of a 19-year-old soldier was with stab wounds was found near a jewish settlement benjamin netanyahu vowed the killers would be brought to justice. and thousands gathered at abbey road to mark the 50th anniversary of the day the beatles were photographed on it. they sang songs as they celebrated the historic moment

it's hard to believe it's been 50 years that's the news update this hour back to you. >> arguably one of the most famous if not the most famous album covers of all time >> absolutely. >> and as somebody on twitter said, if you know what an album is, you're already old >> no, they're back in vogue vinyl is back. >> liner notes sue herera, thank you. here's what's coming up on "the exchange. >> ahead, could an incoming wave of lockup expirations lead to a leg lower in the market? barclays sees though recovery ahead for the iphone business. and a risk in political donations this year for big business like we've never seen before that's ahead in "rapid fire.

as the snazzy graphic and animation says, it's time for "rapid fire. we run you through some of the most important, most interesting and maybe the most insane stories of the day here now to compete for the hottest of hot takes are dom chu, leslie picker and robert frank. welcome, everybody shares of lyft getting a lift today. this after reporting solid results they raised their fu full-year guidance

management said peak losses for the company are likely in the rear-view mirror last year. but that's not all lyft's ipo lockup period expiring august 19th that's more than a month ahead of schedule. company insiders will be able to sell off more than 250 million shares pushing up the timing of lockups, not done that often >> not done that often at all. this was something that was disclosed as a possibility in their prospectus when they went public buried on apage 202 if they had the potential to move it up. that often happens that those two dates and periods would coincide the norm is to push it back, however, just because it aest t aesthetically -- >> they want to get paid now >> they want to cash out now >> give me some money. >> dollar today is worth, you know, more than a dollar tomorrow, right? >> i guess >> invest it well. >> what's interesting about this

is -- >> if the -- >> by the way, have you seen "secret lives of the super rich" because it's got some lyft people in it now >> what's troubling is all the founders it's all the founders now who are taking money off the table. even before they go public taking $400 million off the table before they go public. the beyond meat founder taking $7 million or $8 million off the table right before they go public in the secondary offering. so founders are smart about where their stock should be. and this is a sign to me that, you know, you are either all in or you see -- my stock is overvalued and that's what -- >> beyond meat is a separate thing but, dom, i wonder if there's a fearful trend where because these companies are private longer, they are extracting all the value before the stock goes public and mom and pop, cnbc view eer buys the stock and gets left holding --

i'm not saying layft is that bu we're seeing that. >> they didn't sell a lot of that stock to begin with in the ipos that was what arguably could inflate some of the ipo valuations and get some of that trading higher now it comes to whether or not people feel as though with more stock available there could be something else there >> topic two there is a new apple analyst on wall treet and he doesn't love the stock. veteran analyst tim long at barclays initiating apple with an equal weight and $192 price target that's below today's price long sees no recovery in the iphone business and tells investors to expect growth to slow in the service business dom chu, you don't see a lot of analysts who are neutral or negative on apple. what do you make of this call? >> the call is perhaps not going out on a limb at all because apple shares have seen a roller coaster ride for all over the place over the course of the past -- remember it was the first trading day of the year is when the revenue guidance came

down that stock took a hammering. it set it up for a massive gain through the next few months only to see it sell off again we're back to floating where neutral would be the right rating iphone will be the thing every one of these analysts talk about. the services business, which has been the bright spot is now something that long is saying is not going to be growing quite as fast where everybody else who has a bullish thesis on apple says it's services that will take this company into the future >> the iphone side of the business, at 1100 bucks, everyone is using the monthly payment now. >> they are. >> and they're not upgrading suddenly your phone is paid off and run down and buy another one like you used to it's like you're leasing a car versus buying it >> even though i think i have to go back and check. i'm really irresponsible with this kind of thing i think that i was leasing it for a year and could upgrade after a year it's been almost two years >> but it worked, and you were fine >> it worked the battery still works. i did go into the store and figure -- transferring all your data

the upgrade situation is just not easy so i'm just going to hold on to it for now >> leslie is going to keep her iphone 3 >> shares of roku. this is a huge story they are surging 20% today this is, by the way, the stock of the day the company reporting a narrower than expected loss in the quarter. revenue, active users, average revenue per user, arpu accelerating faster than analysts expected. the stock has quadrupled in value since the beginning of the year and, get this today the 20% gain is only good for the fourth best day of the year robert frank, this is the beyond meat of streaming. >> look, hats off to jim cramer. i didn't understand roku and then last fall he started talking about it this is the way cord cutters will watch tv. and, you know, i have a smart tv i go on my smart tv. even if i didn't have cable i could go directly to netflix, amazon >> that's it

so is it -- won't the smart tv kill -- that's what people say the case is i've got a smart tv that does all the stuff that that dongle does >> but the point jim made is this puts everything together and gives you other stuff that replaces the platform of cable >> i'd say this. it all depends on whether roku can sign and unc those deals that bring all of those platforms on to the smart thing you plug into the tv it's a dongle. why is it better than the amazon fire stick or the apple tv >> apple tv is more expensive. >> and has more stuff. some people would say that's overkill you don't need that much stuff that apple tv would put throughout maybe this is the happy medium right now. >> but do you get -- >> listen. you're a former money manager. do you feel like this roku, i referenced beyond meat is it too hot? the business is good, it's great. but you wonder the activity that the trading activity, the frenzy around it feels like you're just

trading it you don't care about the business >> a story stock >> the bulls on this kind of stock will always address total addressable market there's so much more runway left beyond meat -- >> topic four. equinox and soul cycle facing backlash over the chairman of their company holding a fund-raiser for president trump. even celebrities like chrissy teigen and billy eichner are calling on people to cancel their memberships because the billionaire steven ross that owns related companies, a private equity firm which owns these companies. >> look, steven ross has owned these companies -- >> owns the miami dolphins >> for years and he's also been a trump supporter and business colleague of donald trump's for decades. the fact that people are just waking up this week and realizing that the owner of equinox and soulcycle is a trump supporter is a little rich for my taste however, when you are a company like soulcycle and equinox which really sort of tout their values as progressive companies, we believe in all these issues that

some see as contrary to donald trump's platform, that, i think, is disinjen wis. for them to say that steven ross is just a passive investor is false. and, b, to say we have nothing to dwoith tho with this and dise themselves is also disingenuous. >> a lot of areas that he's involved in in hudson yards. >> related >> understatement. >> over $200 a month to join equinox. a lot of people on twitter saying if this is how much it costs, i'm glad i never belong because it's just really expensive to belong to equinox and also to end your memberships is difficult, too. >> i have to wonder if that fuels the fire even more if people are saying, i pay so much for this gym membership and i disagree with what the chairman believes in. i'm cutting. if that kind of -- if it were cheaper, like a $40 a month -- >> there are people that work at these companies. remember the vegas thing blowback

don't go to vegas because aig was there. and the bellhop, he doesn't have anything to do with politics because he is there trying to feed his family. netflix signing the creators of "game of thrones" to an overall deal worth up to $200 million. what are we doing wrong? the news comes after disney announced its new streaming platform whichincludes disney plus, espn plus and hulu will cost the same of standard play they'll still be writing, producing a new "star wars" trilogy for disney dom chu, you're happy. good for these guys. but they've done "game of thrones" which was amazing but $200 million >> i have yet to see -- >> the resume is not that long >> i have yet to see anything on netflix yet from one of these high-profile production people, shonda rimes or anyone else that has yet shown me that these guys can create that kind of content for the 200, 300, $500 million

whatever they are making in terms of overall deal. this is the investment that netflix is making. taking out doubt, investing in content. yet to be a payoff for it. to be fair, netflix investors have given these folks a long runway to be able to show they can do this kind of thing. and d.w. weiss and benioff, could be what they need to get that certain genre back on netflix viewers. >> dom chu, leslie picker and robert frank leslie, you won. china suspending purchases of american farm products. in response to president trump's latest round of tariffs. up next, we're going to speak with an ohio farmer who voted for the president but now says umis destroying the farming industry "the exchange" will be right back

it's now been one week since president trump announced he would impose additional 10% tariffs on all $300 billion worth of remaining goods imported from china beginning in

september. china responded by suspending purchases of u.s. agricultural products the latest escalation in the trade war. that hurts the american farmer who is already struggle with this summer's record flooding and record heat. joining us from ohio is christopher gibbs. he and his family own and operate about 560 acres of farmland they raise soybeans, corn, hay and cattle the last of his 2018 soybean crop was sold last week at about the same cost of production. 9 bucks a bushel put that into perspective. if there was no war, no tariffs, china was open for business, what would you sell your crop for on a normal year >> good afternoon. thanks for having me i'll tell you what $9 right -- is right at cost of production certainly we'd like 11 we'd always like to have more. but with what we have on the ground now with all of the prevented planning acres across the united states, particularly in the eastern corn belt, if we

had that kind of product loss that we're going to be showing in soybeans, we would have been way higher than $9 but certainly we've lost our biggest export market, and that was china. and that's weighing on prices. so prices are made up of a three-legged stool the technicals the fundamentals and then now we've added on market confidence. and certainly the geopolitical problems we have with the trump tariffs have weighed on market confidence and the market justice can't move >> where do you think the market would go in the tariffs, say, were wiped out tomorrow? trump tweets, it's over. we've made up. no more tariffs. what happens to your family business and the soybean market? >> well, again, i'd hesitate to speculate on the market, but we need to get rid of this political turmoil that we have, the uncertainty. and that's what's holding the

markets down now and continues to hold them down. >> does it frustrate you as a trump voter? >> oh, it certainly frustrates me i was a trump voter. i voted for the president, certainly, but he certainly hasn't come through. he's lost on trade he's lost on trade and certainly three different ways first thing he did out of the bag was get out of the trans-pacific partnership which would have partnered with 11 other countries to move product into the pacific rim that would have excluded china it would have set us up as a partner together with those other 11 countries to take on china and take on some of their rough trading practices. he's lost on nafta he'll continue to say it's a win, but he's lost on nafta because he lost 40 seats in the house, and nafta, the new nafta, is ratification certainly is uncertain. maybe a 30% rate that i can put

on that it's going to get r ratified at all. and he's lost on china as well >> sorry to interrupt. i know you might say it depends on who his opponent might be because there's 20 of them, but would you vote for president trump again right now in the re-election? >> no. no, i couldn't vote for him. i've got to protect my business. there's other things as republicans that maybe we appreciate, we can appreciate the supreme court. we can appreciate the down stream judges. all that is fine but we would have got the supreme court out of another republican president so i won't be voting for the president again. >> it's interesting the purdue center for agriculture had an interesting study which confused me a little bit. it suggests that 79% of farmers surveyed believe the trade war would ultimately benefit u.s. agriculture. i'm trying to understand that. do you -- there's no way you would agree with that. >> no, certainly i wouldn't agree with it.

and i'm on the books a year ago this month or, a year ago last month in july of calling this out that it was a white flag it was -- or a red flag, if you will, when the president came up with the initial market facilitation program payments which i call hush money payments that he surrendered but had lost the original battle from china so we're in quite a shape. >> christopher gibbs, maplewood, ohio a pleasure to have you on cnbc and "the exchange. good luck to you and your family we appreciate it we're rooting for you. >> thank you take care. from hurricanes to wildfires, extreme weather is posing a greater risk to real estate and farming than ever before coming up, we'll take a look inside companies that are assessing those risks and what it means for the real estate market let's take a look at the markets. slightly off of our lows but look at that the dow up 316 and with today's gains, the s&p

500 is back to being positive on the week ssazing after monday's massive we are back on "the exchange" right after this

welcome back to "the

exchange," which is also seen worldwide. for any investor, measuring opportunity against risk is critical and for real estate investors in particular, risks are rising due to increasingly extreme weather. that is why why cottage industr companies is stepping up to give investors a look at what the future could hold and cost diana oleic has the latest in her series, rising risks >> when typhoon ravaged hong kong last summer and hurricane florence decimated wilmington, north rolina at the same time, in a tower high above chicago mary was watching. the head of global investment research at heightman, her job to measure risk across the firm's property assets across four continents and climate risk is the new frontier. >> we see it as the unexplored risk that we need to try to

quantify >> she partnered with the urban land institute in a ground breaking study on climate risk and real estate investment decision making. it concluded that overall, the real estate markets are far from understanding climate risks enough to price them in today. but those who are prepared have the potential to outperform. >> we wanted to sharpen our skills and able ility to underwt the risk of sea level rise storm surge wildfires. >> so she turned to a new category of companies. high-tech data analysts who go well beyond current flood maps to forecast future climate risks to real estate >> when you look out at the water around manhattan, what's first thing that comes into your mind. >> it's beautiful and it's incredibly dangerous >> rich sorkin is cofounder and ceo of jupiter intelligence, a barely three-year-old start up that has grown to a staff of 50 backed by $40 million in venture capital. among its clients are the city's of new york and miami.

>> we're seeing a dramatic expansion in large corporations coming to us saying we need to understand the risk to this office complex or the risk to this hotel or the risk to this neighborhood where we have hundreds of millions of dollars of mortgages out >> jupiter analyzes specific properties using thousands of predictive data points then gives its clines a risk score going out ten, 20, 50 years. >> we're essentially physically modeling what's happening with the atmosphere and the water or the fire at a very specific level -- of detail which is now only b possible because computers have gotten so powerful >> and it goes well beyond what insurance companies forecast >> insurance is basically a one-year contract at the end of which the insurer gets to say, oh, we'll keep insuring you, but here's the new cost or sorry,

insurance is no longer available given the wind risk in your location >> when most consider climate risk, they're not considering a gorgeous day like this along the chicago river, they're thinking about hurricanes or wildfires, but cities across the globe are now investing in new ways to protect themselves all the time from rising sea levels and more extreme weather and the cost of that is yet another risk to real estate investors >> what we've added in is what if your insurance quadruples, your insurance does the investment still make sense. >> the united states faces more than $400 billion in costs over the next 20 years to defend coastal communities from sea level rise according to the center for climate integrity and resilient analytics. that includes building 50,000 miles of coastal barriers in 22 states two years ago, residents in miami voted themselves a $400

million bond taxing themselves to protect their city from flooding >> the last two and a half years have really been transformtive in terms of the way the business xunt all oaf the world is thinking about these issues. >> all right diana oleic joining us now good to see you again. this is is a big industry. it's a fast growing industry an important industry. why are there so few play eers? >> because we are right at the cusp of this this is going to be as you say big business, but you could compare it to ten years ago with the business of cyber risk prediction, which exploded into a huge big business. we're going to see more of these companies and interesting last month one of the companies we showed you there, 427, was bought by moody's. that shows you how valuable these start ups are. >> an important series thank you very much. investors pour iing billions in municipal bonds as they hunt for yield anywhere they can. but could they be ignoring important warning signs along

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- when i see obstacles, i create opportunities. - when i see adversity, i find a way. - when i hear never, i say now. - [announcer] southern new hampshire university is education made to fit your goals with over 200 degree programs, flexible class schedules, and some of the lowest online tuition rates in the nation. (cheering) - so when i face barriers, i can break through. - [announcer] breakthrough at snhu.edu. investors pouring more than $50 billion in municipal bond

markets this year as the hunt for yield anywhere continues >> yeah, it's a part of a global bond market we don't focus on a lot, but it's true, the muni bobd market is hot record inflows, $52 billion. even though city and states are issuing fewer bonds for high profile projects coming to market pennsylvania turnpike, hospital common spirits, dallas fort worth airport all expected to price in month and the san francisco transit system just priced this week a six-year bond with a yield of 1% now in addition to lower interest rates, investors in high states are looking for tax free income after last year's tax reform bill slashed deductions, so that's been a big driver in this rally as with any asset class, financial advisers caution not to just focus on the tax free income that you can generate from muni bonds, but look at the quality of the bond, the

investment grade because in the past, defaults were a concern, but i spoke to market analytics and they say that the number of defaults has decreased, so there were 41 last year. that was a record low and so far in 2019, we've seen 33 defaults. so we've been on the decline >> i hear you on the tax thing, but your point on the salt deductions, that's state and local taxes. in blue states that cap on deductions, it mattered a lot so i imagine people are going for that strategy. >> absolutely then finding projects within those states to generate that tax to get that income is is really what investors have been chasing, but as you point out, a cap was a critical component of the tax reform bill that's why you'look for the type of income that generates. >> not like you're getti inting. >> 2 to 2.5%, but as we share the san francisco b.a.r.t. system, the demand has been so strong >> the san francisco subway bond 1%

wow. 1% is the new 5% thank you very much. all right, thank you very much you're watching the exchange "power lunch" begins right now here's what's new at 2:00 power for a thursday despite today's rally, recession fears are on the rise. should wall street be bracing for a global slowdown or is all this glooming and doom overdone? as the dow rises 313 the man who predicted the financial crisis a decade or so ago, he's a big short fang, will be here to tell us what the biggest risk is is to the market and barclays is out with a warning on apple services and iphone sales both slowing. the analysts behind that call will join us "power lunch" begins right now