>> bech. i think this is the stock you want to own. >> shack, jpmorgan, google, guys, thank you very much. good hour. i know we'll have a lot more on smile direct i'll see you on halftime the exchange begins right now. >> thank you, brian. hi, everybody. here's what's ahead. duelling headlines on trade stocks today for now, the white house says there will be no interim deal with china while mnuchin says talks are still on two weeks from now plus, elizabeth warren has a new plan to increase social security benefits and she wants what she calls the richest 2% of americans to pay for it could this be her path to victory and the white house? we'll discuss. and walmart ups is anteon amazon and the grocery grahmes and the trademark one university couldn't get we begin with the markets and dom. >> it's green.

it was waivering for a bit but then we're back up near the highs of the session the dow up by 140. s&p 500 holding above that key 3,000 level. we sit now just about a half a percent or less away from record highs for that large cap index the s&p pacing up about .6 if you're looking for a focal point for many of the traders out there, it is in the fms giffin the interest rate today what's happening with global bonds around the world, those financials up near the highs of the session up three quarters of one percent and by the way, over the past three weeks, this particular etf that tracks those financials, up 9%in just that time span a. so keeping those interest rates in focus there then we'll put one other group of stocks up here they have something in common. home depot sherwin williams vulcan materials they provide building materials. all of these today at one point hit record highs so perhaps the home construction market doing better than some

thought. >> thank you welcome to the exchange, everyone some big headlines on consumer prices today the core cpi climbing 2.4% year on year. that's the biggest gain in 11 years. in washington, nancy pelosi saying she's optimistic about the u.s. mca and speaking of trade, the white house refuting news the it's considering an interim trade deal with china to delay or roll back tear i haves. an official telling cnbc quote absolutely not let's get the latest on these stories. now kayla joins us for that. >> hey, kelly. with such divergent headlines moving the market on trade today, i want to give you my report ong what might be happening behind the scenes. perhaps there isn't a deal per se that the president and the white house is considering, but i'm told by two people close to talks a detente going on that since the g-7, there's been a mutual desire to deescalate

things because of african swine fever in china, they noeed to by u.s. pork and want to be able to do that. also officials like lighthizer, mnuchin and larry ckudlow, they believe they need to find a path to get back to this $250 billion tariff level, that even if there isn't a full deal with china that that is a viable place to remain as these negotiations continue but that levels of tariffs above that may not be sustain bable and they don't want to be responsible for anything that could make the u.s. economy weaker than it may already be so those are some of the forces that are driving talks right now. i'm told there has not been in deal, anything fully formed that's been presented to the president as such. but that the reason why you're seeing optimism from u.s. officials is because there is a mutual desire by both sides try to deescalate, even if that

doesn't mean all tariffs go away >> this also happening with the president cite iing the october communist party anniversary as a reason why he wanted to make a couple of good will gestures, which i thought was quite interesting. >> and kelly, we reported in late august there was a working level talk where china claimed it was making progress in halting shipments of fentanyl to the u.s. and as a result, they asked the u.s. the to delay or potentially cancel all together that tariff hike on october 1st, site krooit iciting that holida. the white house didn't immediately make a decision, but certainly the president feels there's enough progress to make that promise now >> we can see markets now back at session highs as this reporting questions. thanks very much those duelling headlines did spike big swings in the market today. the dow is at session highs pretty much right now. we were down 32 points at the le more from bob b pisani at the new york stock exchange. hi, bob. >> hello, kelly.

a modest pop here. we're at new highs it's up today, it's a different kind of market than the last five days. leshlly momentum is back old school momentum. remember those fin tech stocks, they lagged the last week. they're back again today some consumer staples that were big, kimberly clark lagging bi the upside today. semiconductors back a little bit. this has been a cyclical rally in the ls week or so so if you look here, we've had retail and bank and energy and industrial stocks rallying. this was beaten up on the global slow down. today if you look at things, ths not as strong as it's been in the last week. so retail, banks, energy stocks, fractionally up. industrials more on the flattish side they're not big market leaders how far can you go buying these on a sluggish global economy that's why i think wells fargo had a great call on caterpillar and deere saying we've had a

great run with these stocks. caterpillar is up 10% but wells fargo said bounce on sector rotation and trade optimism, yes, we've had it, but decreasing construction sales, that's an issue for them and i think this was a very good call for wells fargo. so cat's down about 1 is.5%, deere about 2% guys, back to you. >> thanks very much. well the market swings today are emblematic of the tug of war that's been going on all week. will yield bonds keep rising they're back at session highs right now. is the momentum trade broken let me bring in brian. ali is managing director at ubs and steve liesman is here as well just so everybody's on the same page here, the ten-year u.s. treasury yield at 1.794% we were there overnight. came back up steve we had the kind of ecb pulling everything down on the one hand then the cpi report

pushing everything back up these are major swings in the treasury market seeming to happen every other hour. >> the reason is pretty clear. i took off on tuesday. and then 20 evaporated i'm back today not doing much good. i think there are a couple of things at work and we might have mistaken some technical trades for some fundamentals. i think a lot of guys were short swaps or variable rates and all of a sudden, long-term came down to where variable was so everybody went to the other side of the trade and that pushed things down further. i think things backed up a little bit >> the positioning in the treasury market, people said that was at 20-year extremes there was the first time ever this summer it was named the most crowded trade by fund managers in august, such extreme lows an element of -- >> it had to go back the other way and i think it overshot relative to fundamentals out there and your introe

highlighted how. if you look at the end of year, if you analyze the first three months, it's 3.4 >> that's huge >> wages by the way, which kudlow came on and did make the point, three month annualized on wages is a strong 4.2. put those two together and you may not have a case for hiking rates, but it's really hard to make the case for cutting rates. >> does this stuff make you break out in a cold sweat or no? i guess it depends on what you've been recommending >> i think long-term, especially in europe, late raits, there's a lid. probably going to move lower, but i think you know -- >> you think rates in europe are going to move lower? >> i think they're going to stay low. that keeps a lid here in the u.s. i think to steve's point, what makes me t most nervous is the fact we've got a market that wants more fed cuts. right? not just wup they want more the rest of the

year, but the data sunt support it and the feds had really hard time in my opinion stitching together their story from data dependsy to independentsy. >> the only narrative has been to correct the yield curve inversion. basically the only thing to hang your hat on now. >> that and the gap with europe. i think it's another one >> i think it's the gap. the main point for those that would argue for more but i think the fed's going to have a hard time with the message next week. i think the market might be set up for disappointment. >> we've seen them struggle w h message this year. >> the senate did just confirm one of the nominees from the st. louis fed. governor boumen. no, that's little 14-year term he's already on. just sticking around for the full term. she. what were you going to say >> sorry you know i was just going to add that you know i think to your point, we're facing this issue where we're watching what

europe's doing today, people seem to be disappointed with going down just ten basis points opposed to more the question is this going to stimulate enough and now that we sit here and maybe we're going to do the same thing next week, ubs is calling for five basis points >> recession coming? >> so i think and this was alluded to in the last segment i think it's not that we see a recession coming and i think there's pretty widespread agreement. yo you're talking about the wage growth, the power of the consumer we're at market highs. companies can borrow individuals are refinancing homes in record numbers. i think there's a narrative is it the chicken or the egg. is it the fed going to take rates lower in order to present, to prevent recession that's largely being caused by uncertainty around trade rhetoric, around protection, around global imbalances and so all of this is sort of woven

together but we have a really strong consumer >> so the trade issue before we go, people say look, what happens with rates is going to hinge on that. whether this valeroation continues is going to hinge on that who knows the outcome. that's a tough one to have to call >> absolutely and i kind of look at the whole market now. you know people worry b about recession. the conditions are favorable we have an inverted curve. three months of tens even after this back up, but it's still going take a spark what's the spark that's going to start to spiral consumer confidence >> doup ward >> in the other direction. >> maybe it will happen, maybe it won't >> quick question. my reporting was that we had, people had to get to the other side of the trade when rates fell

could we go back to 2% on the ten-year as we try to unwind that trade >> i think the people is there to maybe get as high as 2% but i'd be buying duration at that point because i think it's technical. i think long-term, the trends are more clear >> this is what everyone's debating thank you. appreciate it. brian, ali and steve here's what else is ahead on the exchange >> ahead active growth funds are outperforming their peers. we'll check in with the cio of one of the world's largest hedge funds on his investment strategy plus, new opportunities in beaten down sectors. a look at energy stocks. that could be poised for big returns. and walmart ups the ante on amazon with its grocery delivery subscription what they're doing and whether amazon should be worried

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nearly half of stock pickers are beating theirs over the year let's get more on this and the overall markets from leslie picker she's standing by with an

exclusive interview with jimmy leslie >> hey, kelly. thank you so much and thank you, jimmy, for joining us today. so to kelly's point about this whole idea of active versus passive, your firm has really grown its credit assets as well as liquid assets like real estate now representing about two third of your total aum. how is that a reflection of this whole competitive dynamic with regard to active versus passive? credit's more difficult to replicate in a passive instrument than say equities >> there's a few things going on the growth of passive investing is a good thing. if an investor wants to earn the ups and downs of the s&p 500, it's better to do so with low fees and taxes it's what we do. particularly on the credit side, it's really hard to replicate. within the world of opportunistic credit, not an etf that can work a company through a bankruptcy process or a

liquidation of assets. within credit, we try to focus on things where what we do hopefully will be able to have an edge in for a long time >> where do you see tupt in credit right now >> it's not in generic credit. yield rs low spreads are about average. rates are obviously historically low. and so when we look in credit, we're not find iing a lot of classically cheap bonds. it's not part of the cycle l we're finding opportunity in special situation. so restructurings, liquidation, things like that where the opportunity isn't really driven by the market. it's driven by a specific event. >> you mentioned id owe sin cattic risk. the remaining one-third of your business is in multistrategy of which a large portion is still in equity. saw some big names in there. microsoft. amazon mastercard facebook i know those are outdated names, but still large cap none the less how do you find especially in

this market today opportunities in equities as a hedge fund to really help drive alpha? >> within multistrat, what we're trying to do, we have 100 plus investment professionals operating on three continents focused on five big asset classes, so to look across that and see if we can find a handful of the best ideas that are out there. sometimes they're in big equities there's nothing wrong with making a large cap eck wiisy but i'd say what tends to be more different across the fund are the ideas we're finding within the merger space or the corporate credit or structure credit space >> let's talk about some of the recent market activity over the last few weeks since september, we've seen interesting ovements especially with regard to factors, which for our audience members, they track things like momentum and value and we've seen wild moves in those areas in the last few days can you help explain what is

going on there >> sure. for satarters, there's more fact driven capital than that used to be for the comment you made earlier, investors can invest in a fund targeting a specific factor and the more capital that gets raised in that space, the more exacerbated these moves can become so what's happened this month is a big reversal in the momentum factor it's really just an unwind of what happened in the momentum factor the month before. but what it really means is stocks that would be going up a lot and outperforming the market suddenly became the stocks that were underperforming the market. so as we had this big rate rally over the last several months, a lot of stable yield type of things, things in the utility space and in consumer staples were really outperforming. secular growth was outperforming. some of the big tech names that kind of suddenly unwound itself i think the trigger for that was like ly this reversal in the ten-year that we've had this

month. that kind of got it going. because of how much capital is set up to chase these moves, it really stretches things out to an extreme >> it will be interesting to see what that does to september performance. j jimmy, cio of sculpturer, thanks so much for joining us >> thank you both. by the way, don't miss it. delivering alpha coming up next week here at cnbc. for tickets for registration, you know where to go you can head for september 19th, you can check out much more of our lineup including steven short mans man and mike pence deliveringalpha.com. from increasing rates to outdated fema maps, there's a flood of problems in one key insurance market we'll get a look at company's quest to fix it. but first, investors are frowning on smile direct club as shares sink on its debut today they're down nearly 18% as we continue to follow that trading

'lhaacon wel ve more on that in rapid fire the exchange is back in two. woman: my reputation was trashed online.

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shares of at&t are dropping after the company said weakness in its wireless equipment quould hurt and would fall by $400 million from a year ago. the share is down about is is 1% honey well also falling and in

germany particularly, this was at an investor conference. he said cautious is the word of the day. shares down about 1.3% different story for yelp those stories climbing on a "wall street journal" report that it could be acquired by grew upon. planning an acquisition as shareholders are disappointed. yelp might be one of their targets. those shares rising 3.5% today now to sue for a cnbc news update hi, sue. >> here's what's happening on capitol hill, nancy pelosi holding her weekly briefing. she was emphatic that money shouldn't be funding trump's border wall. >> it's appalling. not only appalling, it's dangerous, it's not right for our children it dishonors the institution it undermines our security it takes investment away from our children and we will be fighting that again and again.

>> walmart expanding its grocery delivery service nationwide. it will deliver grocery orders for $98 pr year or 12.95 per month. it will be available by the end of the year in 200 metro areas it's reaching more than 50% of u.s. population. meghan markle made her first official outing since the birth of her son hundreds turned out to get a glimpse of her she wore two piece of f the late princess diana's jewelry the charity provides women with clothes and training for job interviews she is the patron to that charity. back to you. >> we saw her at the u.s. open last week, but i guess that's not an official duty >> no, this is her official coming out after she had archie on an official basis for the palace >> but the loines are so blurry when you're a royal, so.

>> absolutely. >> what's leisure? >> we'll never know. >> that's for them to debate than thanks. here's what's ahead on the exchange >> coming up, walmart undercuts amazon in the grocery games. kevin plank on csponsoring college athletes and ohio state tt tdesity loses its three leerra marc bid. that's ahead in rapid fire do you have concerns about mild memory loss related to aging? prevagen is the number one pharmacist-recommended memory support brand. you can find it in the vitamin aisle in stores everywhere. prevagen. healthier brain. better life. "have you lost weight?"

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welcome back it is time for rapid fire. here to take on the headlines are courtney reagan, robert frank and seema modi welcome, everybody first up, smile direct club. not a great debut. shares opened below their ipo price. down nearly18% this is on pace to be the worst ewunicorn debut of the year. even worse than uber, because that was down 7.5% we just mean a billion dollars in size or larger. not great. >> not great and it's also interesting how many other competitors are out there. there are two or three that have been rise e raising a lot of pr

equity one told "the wall street journal," everyone has teeth, everyone has noses, too. but we're not going to have nose straightening technology over the internet >> i hate hearing the total addressable market it's everyone with a pair of teeth. is someone going to invent a better mouse trap? candid is a company i've seen all the time >> leslie's interview was terrific where she was raising some medical concerns from doctors and orthodontists about gum disease and all these other issues which are scary >> if you look at align technologies, that stock is down over 50% it's patents expired two years ago in 2017 so that really opened the flood gate to all these new kcompetitors like smal direct club that are trying to take advantage >> and they were forced to sell their stake. i think it hit a loss or something so that's not worked out.

i checked to see if align was up today. it's also down so maybe that speaks to the market dynamics. next up, walmart is expanding its unlimited grocery delivery service to 1400 stores this fall a. $89 a year or 12.95 a month but then shoppers subscribe to receive unlimited grocery deliveries to their homes. it's ahead of amazon, still behind target which is at all time highs >> this is interesting and sounds attractive to a lot of people oh my gosh, yoonline grocery delivery the thing is, the market share is very small in the united states something like under 5%. a little bit further in urope. part of it has to do with the company's side because it's hard to do it and make it profitable with refrenigerated trucks. we're not very densely populated in a lot of these cases, so we don't know the exact economics of this, but we know the grocery is a very big driver for their

business for repeat shopters both in store on online. so far, they've been doing the order online pick up this one is for a fee. we'll see if it catches on this isn't the one where they put it inside the fridge that's still in the pilot stage. you have to be b there to put the groceries in yourself or they could assume leave them outside, but again, that's -- >> they cook it for you. they feed you. >> by the way, everyone eats >> total addressable market. producer and i were talking about how why in the future couldn't you say to alexa, hey, what should i make for dinner tonight, hey, here's three or four options great, i'll order your groceries for you. they'll be here in an hour you can see something like that happening, but to me, the cost is still high.

i do grocery delivery except i look at the cost and not sure if it's worth paying $100 a year. >> what was it, 12.99 a month? normally, it's 9.99 per delivery i would pay $10 for somebody to bring multiple bags. >> every time? >> if you're buying milk and eggs, it's a $30 minimum if you're shopping two or three times a month in a big way, that's a good savings of time. now it doesn't allow dwrou pick your own tomatoes and avocados, which i like to do, but i wonder whether they can actually make money at it. especially if you shop a lot five or six times a month. >> as its whole foods core customer, okay, i get they'll pay a little premium, but walmart's core cust me, i think the jury is still out. >> i think at the end of the day, we have to figure out what it means for the share hoholder well because amazon in its late e earnings report said profits came in below expectations because of one stop shopping and this heightened focus on delivery so walmart rolling up the sleeve program sounds great, but what

does it mean for shareholders and their bottom line. >> and what does it mean for the price over time. >> moving on, court got to sit down with the under armour ceo today. he commented on this bill that would allow college athletes to profit from endorsements >> there's athletes driving incredible assets for these institutions we look for the support and that drives to we back the athlete. we want them to make sure there's an even keel that takes place there. >> we back the leet, he says could they sponsor individual athletes >> i thought that was very telling the way he answered that question right now, they sponsor ucla and berkeley in california and that's how i asked the question. would you look at moving away from an entire athletic program in favor of a superstar athlete? in the beginning, he sort of kind of danced around then finally said look, we back the athlete. not sure if it's an even playing field. i think this argument is far from over. now this california law if it

goes into effect isn't until 2023 then there's some folks that say if you're an ncaa player and you accept outside composition, isags, you're not eligible to play hypothetically, i thought that was a big answer >> interesting but of course the head of under armour is going the say yes, let us pay the ath alitos because a, it's cheaper gives them rights and they're dying to do this >> but theb it rathen it create this horse race where what age are are you going in and picking these kid sns. >> i guess the rules are so tight that if you're a swimmer, you can't teach other swimmers if you're a volleyball player, you can't run a camp in the summer they were so restricttive it was preventing people from earning a living, but i think it's another case where california because of its size an power just like 24e6 with the auto emissions standards can change the game. ncaa is going to have a hard time fighting this because of

their antitrust problem. >> they must be freaking out in indianapolis by the way, the frofsal athletes are excited about this draymond green said extremely excited ability the bill here's lebron's tweet. california can change the game this is only right way overdue. more than an athlete draymond said extremely excited about the bill we're making progress and get ing this thing right kids are going to sleep, they can't afford anything, yet universities are profiting off these kids >> brings up an interesting point. a lot of athletes are arguing they reach their pique this college so why should they wait for sponsorship until they reach the prolevel when it's in cleng they're at their best. >> if you're a writer and you publish a novel in college, it does great, not that that ever happens, but nothing prevents you from that. >> they are uniquely disadvantaged in that. by the way, speaking of draymond green, he's coming on "power lunch" at the top of the hour. he's an investor in smile direct club so we'll talk to him about

this legislation >> wow >> he has a great smile. that's why >> before we go, ohio state university noticed what we left out there. is reviewing its options after its request for the word the was rejected by the u.s. patent and trademark officer. their decision reads registration was refused because as used on the specimen is merely a decorative or orne mental feature and does not function as a trademark to indicate the source and identify and distinguish their clothing from others. >> so obviously you all probably now i'm a very ohio state university fan ohio state university i'm going to say it over and over dpagain. probably aren't any photos of me acting like a complete maniac >> it was the green gold game when we beat alabama they were number one >> can i tell you how annoying it is when the nfl players introduce themselves and they go name and such and such

university and the guys go the ohio state university. >> you say it's annoying i say it makes us very proud my worlds collided because another reason they didn't get this is because marc jacobs also applied to trademark the word the in early may and ohio state didn't do it until august 8th to put on some of their fashion >> to be b clear, do they want to put just the word or they want it to just trademark -- >> to the shorthand to the fact it was such -- hats, shirts. expkting everyone would know, oh, ohio state university. >> i like sports illustrated take on this they said between this and lebron james trying to trademark taco tuesday, it seems like the entire state of ohio needs to relax. >> you should be the courtney reagan now that's been dealt a setback. we had some video of lebron's taco tuesdays.

it's really neither here no there but he was only doing it so he wouldn't get in trouble. >> for putting out the videos that are getting popular >> i've learned a lot today. thank you for joining me for the rapid fire the beaten down energy sector getting a boost over the past month climbing more than 3%. u'ny ways to play that space if yore interested. it's next. 5g experience for america. that's why the nfl chose verizon. because they need the massive capacity of 5g with ultra wideband, so more screaming, streaming, posting fans... can experience 5g all at once. this is happening in 13 stadiums all across the country. now if verizon 5g can do this for the nfl... imagine what it can do for you.

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the s&p energy sector is the top performer this month it's up more than 5% with investors sniffing out opportunities in boaten down sectors like financials and energy, my next guest is here to discuss where the best energy plays are. joining us now is rob, portfolio manager of tor tois capital advisers you need it like patience if you're an energy investor lately tell me where people should go if they're starting to think

about maybe getting into the energy space >> our focus is really how do you have clean energy, reduce carbon emissions and natural gas is a great way to do that. so companies that are reducing emissions using more natural gas is the perfect way to get in right now. so you can invest in companies that have high yields and are producing or generating their cash flow from natural gas companies like williams companies, there's a 6% dividend yield. >> is it safe? >> absolutely. >> they rise sometimes for a reason >> that's a very good observation. have to watch that closely but that dividend is absolutely safe so a company like that, you know investors across the globe are starving for with the ten-year and u.s. 1.5% or so, so 6% yields for investors, that are safe, sustainable, that's very attractive >> ma jelen midstream all have yields around 6% or higher, but people have said the price action has been so poor. we've seen this for years now.

how long, is the long wait over? if you get 6% of that from a cash dividend, you're off to a good start so energy infrastructure really offers that. the thing is, the u.s. has become a net exporter of energy to the rest of the world we just started ed this. we're just at the beginning of this game. substantial amount of low cost, low carbon energy to the rest to have the world >> we have a democratic debate tonight in houston who knows if they'll go after oil and gas as tough as they have does that endanger is energy rush and opportunities you're talking about? >> the way we look at it is this everybody wants to reduce carbon reneed to reduce carbon dioxide

emissions. we have a new plan called the teal energy deal the goal is to reduce carbon e emissions in a rising environment for global energy demand how? >> more natural gas. >> and renewables. >> so this aligns really no matter if you're republican or democrat >> do you have any renewable plays in particular? >> yes, as part of our firm, we have a group that focuses just on renew bable private renewable projects as well as private ly traded stuff, but a majority is on natural gas and the potential that natural gas can do now in terms of reducing carbon emissions. carbon emissions in the u.s. have decline nd the last ten years. >> i mentioned that the other day and you should have seen the, it felt like i had you know said something awful the way people came after it said no, no, no, that's not true but listen, it appears it's really helped reduce or emission, especially relative to other countries. finally, you like shahner.

they're a huge player in liquefied natural gas. a big growth opportunity for the u.s., but is it a wise investment for people? >> globally, we need to reduce carbon emissions use more natural gas. china and india generate too much of their electricity using coal they need to eliminate it and use more natural gas >> doesn't benefit them to go to electric cars if they're all coming off a coal fired grid >> good point. how? >> the best way is to for china, they need to purchase more of u.s. low cost low carbon natural gas. have it exported to china and independeia who's going to be the benefactor shener the lower the price the better because your demand is going to be higher on the other end the cost is even lower >> all right, rob, thanks very

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hurricane dorian caused significant damage to north carolina's outer banks and as storms occur more frequently, insurers are offering flood policies that gauge risks house by house contessa >> kelly, this neighborhood is five miles from the intercoastal waterway in wilmington eight miles from the cape fear river and considered a minimal flood risk by fema and yet a year ago today, hurricane florence flooded this street

causing significant damage to nearby homes and they didn't have flood insurance >> the deed and survey from a mortgage back in the '80s has clearly stamped on it, this property is not in a flood meyes mortgage provider were relying on famously outdated fema flood maps insurers have historically did not include it in the last few years tech start-ups have rushed in and with just an address they're assessing risk that varies not neighborhood by neighborhood by property by property >> we gather all this data and computing power and in one second make a decision on risk >> reporter: in this industry it's called insure tech. the opportunities for growth are enormous take neptune, for instance, on track for 400% year over year growth and just announced a partnership with the world's largest property and casualty insurer axa excel. that ratings agency says this

could be a $42 billion market potential opportunity. kelly. >> contessa, i'm curious if you're looking for a house or looking down one of these streets, the cost of flood insurance if they're now doing it house by house instead of as broad zones could vary widely, right? >> reporter: the ceo of neptune says he actually has a couple of clients who asked for analysis one neighbor, similar houses, one neighbor was assessed at a policy $400 a year, the next store neighbor a policy for $8,000 a year. he says he told that particular potential client you'd probably be better off going to the national flood insurance program. >> wow, again, like i said if i were buying a house, i would certainly want to know what that cost was going to be contessa, thanks very much. >> reporter: absolutely. >> contessa brewer in north carolina the third democratic debate is tonight and it's the first time front-runners joe biden and elizabeth warren will be on stage. warren making headlines with her new pl fanor social security that's next.

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that's a half percent gain the s&p and nasdaq similarly up there. we had been up that much this morning. dueling trade headlines nearly pushed us lower and fighting back to those highs once again meantime, senator elizabeth warren pushing for a major expansion of social security benefits how are joe biden and the rest of the field going to respond? we have john harwood at the debate site in houston john, let's begin with the details of this plan which would increase people's payments by 200 bucks a month. >> everybody current and future socialurity beneficiaries would get 200 bucks more a month and the way elizabeth warren would pay for that is with a new payroll tax on incomes over $250,000, 14.8% split between employer and employee. currently that payroll tax is capped at around $130,000.

she would also introduce a new investment income tax of 14.8% also on incomes above $250,000 and that raises so much money that in addition to paying for this benefit, it would also according to mark zandi extend the solve vencie of social by 19 years. lesser proposals targeted at low income beneficiaries, not everyone as elizabeth warren is proposing. >> james, as john said this would raise a lot of money amount as cording to "the times" to a $4.2 trillion tax hike even though the cost of the program in its first year would be $150 billion, why such a mismatch >> well, the reality is you can raise an awful lot of money with a payroll tax so you need a lot of money to pay for social security we raise so much money from the

social security payroll tax right now that until basically this decade, the social security is offset the size it is massed the size of the deficit. once that payroll tax surplus each year is drawn down to zero, once we're drawing on the social security payroll tax fund we will have to do something immediate to address the revenue outflow. one way is to raise taxes on upper income taxes and raise then substantially and increase benefits for everyone. but the reality is there's going to be a lot of budget competition for those dollars given the federal government's other spending priority. >> james, it seems to me if the moment right now politically is for people who want more benefits, greater security, you know, expansion of social security in general and not cutbacks, that this plan could be quite popular how do you expect the other candidates and president trump himself to respond >> well, it's a bold plan. it's an aggressiveplan that shows that elizabeth warren stands for something i don't expect anything bold or

aggressive from joe biden. he's really a nice guy and are you going to vote for joe biden on that basis? i think some people will, but warren seems to realize that the status quo with respect to social security is simply not sustainable. >> john, when people focus on the issues that exist with social security as it is and have tried for years to say, hey, this needs changes and people shouldn't expect the benefit levels they've been promised, now the political winds feel like they are shifting the other way >> there's no question about it. and the longer we go in an economy that's producing very disparate outcomes for people at the top and everyone else you'll get more of this pressure. you are right, kelly it is very popular, the idea of increasing social security benefits, taxing the rich is also popular in theory, however, when you get into the practicalities in the congress of actually putting down on paper the scale of tax increases

that elizabeth warren is talking about, this tax for social security, the wealth tax to pay for some of her other program, the way she wants to pay for medicare for all is an awful lot and difficult to come down at a minimum, we have moved off of this notion of a mix at which why experienced in the obama administration of a mixed solution that would involve benefit cuts and tax increases and talking about benefit increases and bigger tax increases. >> and for benefit increases james, this would be a problem for business owners who pay both sides of that tax. you're talking about them paying $30,000 more a year if they make 200 grand. >> that's case as i said the payroll tax does raise an awful lot of money but at a lot of cost to middle and upper income earners who pay considerably more on the basis of that payroll tax and the business owners and investors subject to a special investment tax will see a substantial tax increase. >> we're not talking about big business here either we're talking about, you know, the businesses that dot the

country and what auge impact that could he. guys, thanks, james and john, we'll hear more about this tonight at the democratic debate that does it for the exchange. i will join them for "power lunch" which begins now. >> we will see -- welcome, i'm tyler mathisen here's what is new at 2:00 tocks racing toward record high, just inches away, but how long can this rally last? what are the real fundamental foundations? we got a bull/bear debate on that plus, the pot company aurora cannabis getting smoked after missing revenue expectations, the chairman michael singer will be here to tell us what he th k thinks wall street is getting wrong and smile direct club going public today and nba champ d draymond green is an early investor