>> yeah. i think bitcoin can make a new high, yes. >> all right good seeing you again, tom lee. >> we're coming to the end of the quarter. keep in mind that the u.s. dollar is 2.5% higher in this quarter. >> okay. >> i think that will be important for the next quarter. >> we've got to go. >> marathon petroleum mpc. >> thanks, everyone. have a great weekend "the exchange" begins now. hi, everybody. thanks, scott. i'm dominic chu in for kelly evans today. here's what's ahead. one fed president says there's a big risk out there that investors may be avoiding that could contribute to the next big downturn we'll tell you what it is and if he's right big tech is a big target for washington these days, and lawmakers, while they are up in arms, do consumers really feel the same, or is that big tech backlash just contained to the circles in washington, d.c.? and it was a rough week for retail we'll take a look at those who were poised for a comeback and who may be on their way out as well but we begin, as always, with breaking news this time the president just wrapping up a news conference with the prime

minister of australia. the trade war with china front and center thanks to our own eamon javers he's standing by at the white house. eamon, china/u.s. trade, iran, he hit it all. >> dom, that's right, absolutely the prime minister of australia and the president of the united states meeting behind closed doors here the president said that a big topic of their meeting was china trade. he said they didn't really talk about the iran situation quite as much as they talked about some of these other issues i had the opportunity to ask the president a question in that press conference, and i asked him if chinese agriculture purchases, which are rumored to be in the offing here, are enough to get him to a deal here, and here's what the president said >> we're looking for a complete deal i'm not looking for a partial deal china has been starting to buy our agricultural product if you noticed, over the last week, actually some very big purchases. but that's not what i'm looking for. we're looking for the big deal. >> reporter: so, the president there essentially saying, no, he

wants the restructuring of the relationship economically between the united states and china that he's been talking about here since the beginning not clear, necessarily, how he gets there but i also had the opportunity to ask t prime minister of australia a question about his relationship with china. interesting divergence here, because australia being in the neighborhood of china, so to speak, and also being so economically linked to them, the prime minister's answer was very much more about australian national interests, emphasizing that they have to have both an economic and strategic relationship with the chinese. both leaders stressing that they want to get to a deal here, but not a lot of specifics about how they're going to get a deal. i asked the prime minister what he told the president of the united states behind closed doors. he didn't give us an answer to that one, dom. >> thank you, eamon javers, for that update. a lot of ground covered, for sure let's get straight to the market reaction right now bob pisani's over at the new york stock exchange. and we did see a move toward session lows,but we've recovered since then >> that's right, dom we are off the lows but still

modest weakness in several sectors. semiconductors like zille yix, communications services, netflix notably weak today this is one reason, the nasdaq, by the way, turned negative for the week so, the big issue here is what's next now that the fed is finished we're just shy of new highs. everybody knows that the question is whether investors will be willing to push the markets to new high territory now that the fed has essentially moved to the sidelines. investors are optimistic look, the s&p is really not changed this week, despite a string of potentially bad news -- iran, the surge in oil, the spike in the repo rates, the poor china industrial production and retail sales numbers not good news overall. the elephant in the room is trade and tariffs, and that's going to dictate how much up side there is right now. but those cyclical sectors that all rallied on the trade optimistic a couple weeks ago, they're all down this week metals and retail, banks, industrials all lagging. oil stocks are up on the 7% gain in crude this week that's the biggest gain since june dom, back to you. >> and we are still a percent

away from record highs bob pisani, thank you very much for that the markets may be near those all-time highs we just mentioned, but boston fed president eric rosengren is singling out a particular area of the economy that could pose a risk overall and with that, steve liesman joins us with that and i'm surprised. >> maybe a little more particular than an area of the economy. >> real estate sharing come on. >> all right, boston fed president eric rosengren against the rate cut says the concern is financial instability and bubbles created by low rates and he singled out a business model used by wework as a possible source for future losses and instability. he says they can occur with risk-taking, too much leverage and a reach for yield. one example, he said, is the real estate model known as co-working space what did you call it, dom? whatever it is. >> yes. >> rosengren did not specifically name wework, to be clear. he talked about co-working space. under this model, wework or a

co-working spaceperson rents the vast amounts of space and becomes an important leaser in the markets and subleases space to tenants what's wrong with that rosengren says it involves short-term leases to small, less mature firms who are most vulnerable in a downturn landlords and banks are at risk for this in a recession, especially because they do so through special-purpose entities, which are limited in their recourse back to the parent company, i.e., wework or the co-working space company cities with many co-working firms, they could face more defaults because of the concentration of the one company. now, rosengren says specifically, he doesn't see current financial risks causing the downturn and that the economy, he said, is in pretty good shape, which is why the hed didn't think the fed needed to cut, but he is concerned that certain situations we have could make a downturn worse than it otherwise would be. >> interesting co-working that's what he decides to call out in this. >> if you're good in a

co-working space, that's what they call it in the industry, without a hyphen, according to associatedpress.com. >> steve, stick around one of the reasons why boston fed president rosengren might be talking about this, when we talk about this coworking idea, this space, wework is the first to come to mind because of its enormous presence. in fact, it is the largest commercial tenant in new york, in chicago, in washington, d.c., and in london. so -- >> can i just add, dom -- >> yes >> also maybe boston had a big chunk, which is one of the reasons why rosengren, boston fed president, is on this. >> here's another reason why with more on this wework situation and commercial real estate, we have scott crow, chief investment strategist at centersquare investment management and the reason why is because, scott, you were on this program not too long ago talking about exactly some of these risks, so maybe boston fed president eric rosengren is actually watching

"the exchange" on cnbc with kelly evans and seeing some of these topics so, let's talk about this. is eric rosengren correct? does this pronounce some kind of a risk, and if so, would it be systemic, scott? >> look, rosengren is correct in the sense that very aggressive monetary policy has probably birthed some of the issues that we now have at this point in the cycle with respect to firms like wework and wework is a great concept. the problem with rework is it's overvalued and appreciated with respect to the risks of this business model and i think that's what he was talking about. and yes, there are certainly risks to the commercial real estate market as a result, but i think there's a bigger issue here i think the question we need to ask ourselves, is wework just the tip of the iceberg because when you have an 80% gap between where wework is priced in the private market and the public market, does that call into question the valuation of all these other unicorns, all of

these other private technology companies? and does that then have a flow-on effect into the real economy in terms of investment, spending, and growth, that then could lead to some kind of unraveling of this cycle >> all right, so, this is interesting you bring this up, because steve, i mean, this idea is something that rosengren stated specifically, this idea that fed policy, ultra-low interest rates, the hunt for yield -- >> right. >> -- causing an environment where people bid up the price of assets, is what's leading to these bubble-type environments so, is scott correct are there other parts of the economy that be bubbliscious because of this? >> we need to make a distinction with what scott is saying. scott, the fed does not care that much if equity investors in wework lose money. they can pretty much lose all of their money and the fed would not necessarily care, unless there's a macro impact or there's a systemic impact in the banking system the real concern here is this idea that -- and i think it was

up on scott's screen -- that these tenants are marginal, they're start-ups. 80% don't make it. >> by the way, guys, that means the credit risk -- there's credit risk being absorbed by these landlords. >> well, those two words, credit risk, okay so, let's follow the chain through that rosengren has said, without obviously my endorsing him. you have a downturn. the small firms go out of business the landlords are holding the bag for that and through the spe, the special purpose entity, they only have we limited recourse back to wework parent. so, the landlord holds the bag the landlord can't pay the rent, the bank loan goes under the bank loan goes under, all of a sudden you have a systemic problem that causes bank lending to go back that's the cascade of things that rosengren is concerned about in this environment. >> all right, scott, this is interesting, because you may know that cnbc just had a very big investor conference in new york city, delivering alpha. and steve, i know you were there. but one of the things that happened was we polled the

audience of investors at this delivery alpha conference about whether or not -- we talked about wework specifically. we said, is there a situation where you would buy, sell, or hold it? the vast majority of participants in this survey, like three-quarters of them, saidhat they would sell this we company ipo does that speak, then, scott, to this valuation dilemma that we're having overall with these particular types of companies? >> absolutely, it does, and it's why they couldn't get their ipo up even at $12 billion and the bigger problem is they are burning through $2 billion a year in terms of expansion capital, and they've got $2 billion on hand. so, this issue hasn't gone away. and i cotestand that there's ramifications for the real estate market i do not believe they are systemic, however. and let me tell you why. number one, the amount of supply that's being delivered to the market at this point in the cycle is running at about 50% to 60% of historical averages

supply has been muted this cycle, primarily because of the global financial crisis and bank aversion to lending to developers and the second issue pertains to leverage the leverage in the system as it relates to commercial real estate is very, very low, about 30% of debt to assets compared to 50% to 60% prior to the last crisis now, i'm not pretending every real estate investors woke up smiling yesterday and started to structure their balance sheets differently. in fact, what happened was the global financial crisis has installed a discipline on the market which really should stop a systemic issue occurring if a company like wework falls over >> scott -- >> and again, i think the bigger issue is for the broader company, from what's happening from wework -- >> it's an interesting thing to say and i have no reason to doubt what you're saying the question becomes why aren't the landlords enforcing some sort of market discipline here and you get right back to the reach for yield. it's the landlords in this case that are reaching for yield. and by the way, the investors who are fueling the landlords in

the purchase of these properties and so, the idea being that it's the fed that's creating the risk and has to somehow figure out a way -- i will say, other fed officials have noted other industries in the past bio med was one, biopharmaceuticals, mentioned by yellen >> sure. >> gre span's irrational exuberance comment it doesn't necessarily lead to any action. >> right. >> fed thinks, somehow by jawboning this industry, saying, we're watching this, that they can maybe enforce some discipline that way. >> we've got to leave it there, but one thing i will point out -- i'm sorry, scott. one thing i will point out, though, fed interest rate policy means that cap rates, capitalization rates, and equity hurdle rates in the market are extremely low, so you can take on any project you want. >> right. >> because of the valuation concerns are not there, given the fact that you don't need to earn that much money to make the project worthwhile right? i'll leave it to you, scott. last ten seconds to you.

>> look, that is correct, and s ramifications in the market. wework waterloo, the larkest in london, fell over. that was supposed to have been bought by singapore and company in the last 24 hours, so we're starting to see that flow through to the real estate market. >> scott crowe, steve liesman, thank you. we have breaking news on e-cigarettes courtney reagan has that story over to you. >> hi, there, dom. i have obtained a memo that is being sent out to walmart employees. the company is basically discontinuing the sale of e-cigarettes in all of its u.s. walmart and sam's club stores. this memo says that, "given the growing federal, state, and regulatory uncomplexity and uncertainty regarding e-cigarettes, we plan to discontinue the sale of them." they are going to exit through their current inventory, so once that's gone, you will no longer be able to buy e-cigarettes at walmart u.s. and sam's club. this is sort of a continuation

of the tightening of the grip on nicotine-related products that walmart has actually already been going through throughout the year earlier this year, they raised the age to buy any of these nicotine products or cigarettes or e-cigarettes to 21, and they also exited those fruit or dessert-flavored e-cigarettes earlier this year. you can see shares of altria here are up about 1.4% dom? >> all right, courtney reagan. thank you very much for that. turning now to facebook. ceo mark zuckerberg meeting with lawmakers on capitol hill to address the growing number of calls to break up the company. zuckerberg even making it into the oval office with president trump, who later called it a, quote/unquote, nice meeting. while washington seems to be laser focused on tech privacy and regulation right now, the numbers would suggest that users and customers might not be for more, i'm joined by policy analyst at the american enterprise institute, and ylan mui as well. take us through the

play-by-pray what exactly happened with mark zuckerberg, ceo of facebook, and how many lawmakers is he meeting with these days? >> reporter: he's met with a lot of lawmakers, dom. he's now officially left the capitol. he is done with meetings today, but he was also very careful to make sure that he met with lawmakers on both sides of the aisle. so this morning, he met with republicans, minority leader kevin mccarthy as well as doug collins, one of the top republicans on the judiciary committee. and then later on in the morning, he met with adam schiff, democrat chair of the house intel committee, as well as with jerry nadler and david cicilline, who is leading the house's antitrust investigation. so, he is making his case and trying to tell his story on both sides of the aisle one thing that really struck me is the number of committees that have jurisdiction, feeling they have play over facebook. facebook is embroiled in so many different issue areas. there's a lot of scrutiny, whether it's on privacy, data protection, election surt, that zuckerberg really had to make

sure that he covered a lot of ground here on capitol hill. >> all right, ylon, stick around here jim, let's talk about this whole idea that tech is in focus we have called it tech under fire, the tech wreck everybody seems to be targeting big technology companies, but is this a situation where just it's the lawmakers in washington who care because it sure seems like customers at the end of the day are still signing up for facebook, instagram, twitter, snapchat and everybody else. >> yeah, i'll tell you, it's really hard not to be struck by sort of the gap or dissidence between sort of the hysteria in washington, d.c., especially, whether it's on capitol hill or it's with activists, and sort of what's going on in the rest of the country, where people continue to sign up with facebook, continue to use google, continue to shop on amazon they continue to share photos and share on social media. if there were an actually tech lash, beyond what's going on in the 202 area code, i would expect to see some kind of a real-world impact, even if it's

only people, i don't know, adjusting their privacy settings more or using two-factor authentication, if they're really concerned about privacy i just don't see it. >> so, you've brought up, jimmy, this idea of surveillance capitalism the notion here is an interesting one. take us through the arguments about why this particular kind of, i guess economic impact for these companies may not be all it's cracked up to be with regard to the tech lash overall. >> listen, obviously, having business models driven by some people don't like that business model they don't like the idea that your data, when it's aggregated, is being used to sell you ads. they don't like the idea they find it creepy. i'm not sure -- i think a lot of people may find it a little offputting, but they also like those free services. and again, if you really didn't like that, would you -- i mean, would you be buying, you know, ring doorbell services, which there's also a privacy issue would you be looking for other sorts of browsers, you know,

search engines that don't track you at all people just aren't doing it. >> got you. >> i'm really kind of freaking out about it, but we're not doing anything about it. >> jimmy, thank you, ylan mui, thank you. we have a lot of breaking news right now, the montana farm bureau says the china delegation has now canceled its farm visit to montana and that agricultural officials will return to china sooner than expected now, that news sending stocks towards their lows of the session so far ten-year yields also moving to the down side on those headlines. again, the china delegation that was planning to meet some of those particular farmers in montana are now canceling that particular visit again so, we're watching those particular moves to the down side there. so, here is what else is happening on "the exchange" coming up this hour. >> coming up, it's been a very rough week for retail with some marquee names down more than 10% this week. we'll look at who will make a

comeback, who will struggle, and who's already dying. plus, one fed watcher says jay powell has mastered the art of saying nothing, and that's very bad for the markets and why one firm says roku is headed for a massive fall this is "the exchange" on cnbc coach saban we have health insurance. did health insurance pay for everything? no, we still have bills. aflac gives you money directly to help with those. aflac! and your deductibles, knee brace, whatever you choose. aflac sounds like a winner. umhum... umhum... we try. get help with expenses health insurance doesn't cover. get to know us at... duck: aflac! dot com

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welcome back breaking news on trade tensions with china kayla tache has been all over this story so kayla, what happened? >> well, we believe that china earlier today reached out to some folks that they were trying to plan these visits with and said that there had been a change in the schedule of the vice minister of agriculture and that some of these visits could no longer happen the montana farm bureau confirms to cnbc that an expected visit that was in the works for a subset of this chinese delegation to go to montana as part of multiple farm visits in america's heartland, that those are no longer happening. the secretary of agriculture, sonny perdue, just yesterday confirmed that these meetings were in the works. it was believed that this was an effort to build goodwill with america's farm community, which has been hit very hard by china's retaliation, by the state purchases ceasing on agriculture. so, we're trying to figure out exactly what this means for the

state of trade talks, which have been going on for the last two days in washington and whether this represents some breakdown in talks behind the scenes or perhaps some frustration on behalf of china from those comments by president trump's adviser, michael pillsbury yesterday on potential escalation in the trade war if there isn't a deal soon. so, we're trying to figure out what exactly's behind this cancellation, but no doubt, it was supposed to build goodwill and now it is not happening. >> kayla tausche, thank you very much for that. i want to point out right now what's happening because there's been a market movement in certain parts of the overall market, specifically with the ten-year treasury note yield we're at 1.76% that's a pretty precipitous move in yields to the down side, indicating this flight to safety, people buying up the safety of u.s. government bonds. so, there has been a market impact on those headlines. we'll continue to monitor that throughout the course of this hour and beyond. well, it has been a rough week for retail overall, its worst week in a month, in fact the usual suspects are there --

macy's, gap, tiffany, kohl's and nordstrom. they're all entering the most pressure on the sector this week the whole sector getting hit despite consumer strength, many retail stocks have had a rough go of it, of which my next guest has identified -- and this is negative -- the struggling ones, the dying ones, and the dead ones joining us now is jan nipin with j. rogers nipin worldwide enterprises, also a cnbc contributor. it used to be the good, bad, and the ugly now it's just all bad pretty much is what it comes down to. >> we pull out a few of these to talk about, but my list is in 50 either private or public -- >> all right, so 50 names your list let's start with struggling, because that's the most positive one we have so far which retailers are out there struggling right now i can think of a lot of them off the top of my head, but i'm curious what your thoughts are on this one. >> well, we pulled out footlocker and capri to talk about, and -- >> the company formerly known as michael kors. >> yeah, the company formerly known as michael kors.

we've basically always loved those two and it's harder to love them now because they're starting to struggle and they're struggling for reasons that are pretty evident, and it's not the consumer it's in footlocker's case, direct-to-consumer's hurting them it's going to nike it's going to the other big shoe people the mall is struggling, so the traffic is not coming. so, this whole piece of the business -- and i really think, too, they miss ken hicks and the management staff when you look at what's going on, you say this is a great retailer we thought they'd be around to turn the lights out at the mall, and they probably will be, but even they are struggling, and it's being caused by this environment, not something they're doing wrong. >> all right, so, lights are kind of going out at the mall. which ones have they started shutting off for we're calling these the dying retailers. >> i had several on my list, but el brands and abercrombie & fitch are two good ones. they're trapped in the mall. almost all of them are

mall-based abercrombie & fitch was a fabulous name, everybody wore it -- >> when i was a kid, i did teenager into my college years, all abercrombie & fitch. >> but now, there is no real there there, because the cool kids club isn't a cool kids club anymore, and now they're trying to be inclusive and do all of these things and the gross margins have come down, but not enough to drive the business, and neither the abercrombie & fitch brand, nor the hollister brand, are really driving the business the only thing that's working is gillie hicks, and it's so small and it's basically taking share from l brands. >> all right where are the lights off, the dead >> you know, i've got the lights off at both gap and ascena they are mall-based and gap will be a dead business once old navy is separated from it, which is in the process of happening, and we'll be left with what's left of the gap, and i don't see that business being strong enough to draw people into the mall and i don't see it being online enough

to drive the business because it's too generic and too much like everything else if you look at either one of those two, think about it. you know, ann taylor, loft, the people in the mall that are ascena, there's no strength there. >> ten seconds, two winners, who are they >> two amazon, walmart, target, burlington stores. i can't get two, but there's a lot of winners because retailing is fine from the point of view of the consumer. >> all right j. rodgers kniffen, thank you. here's what's happening this hour a bipartisan group of senators reacting to recent vaping-related deaths have sent a letter to the acting fda commissioner, ned sharpless, urging his agency to immediately remove all pod and cartridge-based e-cigarettes from the market until they are proven to be safe. the letter was written by democrats dick durbin, jeff merkley, richard blumenthal and republican lisa murkowski. due to recent mass shootings

in the u.s., canadian prime minister justin trudeau says he promises to ban all military-style weapons in his country, including the ar-15, if he is re-elected this comes as trudeau's campaign is grappling with his blackface controversy. japan taking measures to combat its swine fever epidemic. the country's farm minister says pigs will now be vaccinated. more than 135,000 pigs have been pulled since last year. the ohio state university is morning the death of 1955 heisen trophy winner howard "hop-along" cassidy. the two-time all-american led the buckeyes to the 1954 national championship. cassidy was 85 years old you are up to date that's the news update this hour dom, back to you. >> all right, thanks very much, sue herera. let's check on some of the names making big moves on that china news coming out, that delegation will not visit montana farms.

seema mody has the movers. >> china confirming it's canceling its visit for agricultural-related talks and it's weighing on shares of deere and caterpillar. both companies service and sell their equipment to the agriculture industry and keep in mind, despite these two stocks trading lower today, they've had a pretty strong month on risining optimism that the china delegation visit to the u.s. would yield some type of good result, some positive result between the u.s. and china, but those two stocks with that china exposure moving lower on this latest headline. dom, back to you. >> lots of agricultural farm equipment made by both those companies. seema, thank you. here's what else is coming up on "the exchange. >> ahead, apple's new iphone hits stores today. with the company under pressure to deliver why one analyst says roku could fall 50% starbucks working on an online-only store. and jerome powell has a new skill for his resumé, the art of saying nothing

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welcome back here. let's catch you up on stories that need to be on your radar.

time for the "rapid fire." robert frank, seema mody and jon fortt here with their takes. first topic du jour, apple fans! the latest incarnation of the iphone hit store shelves today analysts are not expecting big sales numbers from the iphone 11 series wall street consensus is for a 1.5% fall in iphone revenues from the 140.5 billion projected for 2019 but could the combination of low expectations and a refresh cycle hand apple a nice surprise win here jon, this seems custom tailored to you for starting. >> no, it's not going to hand apple a win here well, look, first of all, it's been a year since they announced that they're not going to give out unit numbers to the iphone the stock dropped. it's right back at that same $220 level, so apple's doing fine that said, i think for a few months, apple's likely to trade on greater china sales of this new phone, and china is where 5g is rolling out early 5g phones from china's homegrown

manufacturers are rolling out early, and so that apple premium -- hey, look, i've got an iphone -- probably isn't going to mean what it's meant in fast it's going to be, oh, you don't have a 5g phone. and i think they might suffer in that market. we'll see when they report earnings and some investors might freak out. >> this was a big complaint of mine, because i want to upgrade to this phone and i'm due for an upgrade to this phone, but 5g, not existent in this phone, makes me think i should wait until next year, but the china story, seema, is huge, right >> as he points out -- >> there are anecdotes that the china lines may be not as important -- >> it's important for apple and they may not have a 5g phone before some of the chinese competitors on ground, but it is rolling out a pretty aggressive pricing strategy in china in hopes that it will be able to get more customers inside that country to continue buying its phones, and that seems to be working there, and it's a strategy that apple has used in other emerging markets as well where consumers tend to be a bit more price-conscious. >> the stealth weapon here may

be ios 13, where it no longer will work on your iphone 6. >> right. >> and there's a huge universe of iphone 6 -- >> that's my phone. >> they love them. so those people who have to upgrade, it's not going to -- so, that to me is a little heavy-handed on part of apple to do that. and by the way, people should wait until tuesday to upgrade because there are a lot of glitches on iohat will be fixed on tuesday but i thought that was a very sneaky way of trying to force people -- >> of course it is. >> -- into this latest round. >> we'll stick with the tech theme, because topic two, pivotal research group initiating the roku stock with a accelerating and a $60 price target they cited, what else, heightened competition that will drive down the prices of media players overall, the hardware. also pressure on advertising revenues as well that stock falling hard, now on pace for its worst day since november 2018 and having its worst month -- get this, guys -- ever, down 28% but i'm going to bring balance to the force, because this stock is still up 270%-some for the

year overall. >> that's the thing, you look at the chart,orst month, worst week of the year, but year to date, you'll see it's quadrupled its shares competition, that's not a new story. we've known about growing competition against roku from the legacy players and the new ones >> i disagree with this call in that, i'm a comcast customer and employee, and a roku customer, and they don't really compete with each other that much. if you got a roku for your extra tv or for your guest room or whatever, it's not necessarily just because you're a cord-cutter and you want one box. it's about the ease of use, the fact that it's portable. if i go to a friend's house or a relative's house who has a different cable provider, i can still use it i can take it on vacation. and it's the user interface. we'll have to see what comcast and others like it provide at that zero price point -- >> got you. >> and if that's good enough to compete with roku. >> all right, competition up the wazzu there. speaking of, starbucks beginning construction on a new store near penn station here in new york city, but there's a twist --

it's mobile orders only. this is the heating side of the whole fast-food side of the market here. they're calling it starbucks pickup if you want your morning cup of joe, you'll have to use the starbucks app. starbucks already has a version of this concept in china where rapidly growing rival luckin coffee has used the mobile-only system with great success. so, robert frank, would you go to just a starbucks fulfillment center and not -- >> i love this idea! i am so tired of starbucks, of standing behind somebody who friends five minutes, like i want the maciato latte vente with 20% skim, but can you add a little -- no, no, wait, i want to change my order it takes forever to order. i think this is exactly where they need to go. i think these are going to explode. >> so jon, i just want to point this out, because we have some numbers. starbucks loyalty program, which is the linchpin for a lot of their kind of moves here in mobile, contributes 42% of their overall sales, so people are there. also, 17 million active users now use the mobile app on a regular basis, so says kevin

johnson. >> hey, look, that's great, but you know what i think this really is? i think this is a downside hedge for starbucks so they can close some of these stores if the economy starts turning down and say, oh, well, we're closing some of the bigger stores, but we're doing more of these mobile stores because that's what our customers sort of demand they want these faster things. and we're building some bigger roastries, we're doing small, medium, and large, with our stores as well i think that's what they're doing. >> so, seema, so, wait, let's talk about this, because robert brought up a good point. how many folks are going to go to this penn station coffee shop and think to themselves, they can still order from a cashier, and how much is that going to make people mad like robert, who said, no, no, you had to do it on the app. >> yeah, i'm sure there will be a lot of confused people who walk up to that starbucks mobile order only desk and say i want to order here. but at the same time, if you're going to roll it out, might as well go to penn station where there will be a lot of foot traffic. could be just the right place to roll out the new technology -- >> nothing could make penn station worse anyway, so this will be an improvement

>> those people who don't live in new york city don't know what we're talking about. topic four, the market for preowned luxury goods is booming, and that hasn't escaped the attention of luxury goods makers robert, you've been looking into how they're trying to get a piece of those sales certified preowned bmw meets luxury jewelry >> that's exactly it what happens is the whole market for secondhand preowned watches is exploding in fact, it's growing more than twice as much as the new watch market so, the new watch companies like rolex, they've been standing by watching all this value go to other websites a dn udemars said no more they're going to come in, buy your watch, especially if you want to upgrade. they'll refurbish it, they'll repair it, warranty it and certify it, which in this world of fakes, is really important, then they'll resell it they're the first big name to come into this. >> this is a big deal, because if you look at places like

poshmark, they're selling rolexes on there it i am not saying i'm in market for one, but i'm saying i saw them on there and thought to myself, these have to be fake. but this solves that problem, seema. >> well, all these peer-to-peer marketplaces like poshmart, even real-real, if you will, they will say that you are buying a burkin bag we are doing all the work on the back end to ensure we're not going to sell you a fake, so is this really competition? >> the ceo of audemars said it is high time they change it, if we can roll this. >> the brands only took care of their first child and never the second one so, basically, we, the whole watch companies, left the secondary preowned business to outsiders, and i think it's about time that we are bringing these back home. >> and that's all that money on the table, to your point and yes, there are a lot of sites that do authenticate, but no one can authenticate -- if you're spending $70,000 on an

a.p., i'd rather get it from their site where i know it's authentic, even compared to another -- >> so, jon, does this matter >> yeah. >> you deal with brands all the time, high-tech, high-end brands does that brand value and authenticity matter for consumers? >> yeah, it absolutely matters, unless you really want a deal. because what happens when they start certifying preowned, is the price of certified goes way up so, it's right under what you would pay for it new so, yeah, if i'm buying for myself -- i don't know if i'll be buying an a.p. any time soon -- yeah, i'm probably going used if i'm buying for somebody else, maybe it's a little bit different calculation. >> all right, the only guy who's floating in that a.p. world these days is robert frank guys, thank you very much. robert frank, jon fortt, seema mody we'll see you again in just a few minutes here. all right, wednesday's fed meeting didn't just bring a rate cut, it also revealed one of jay powell's top tactics -- saying nothing, according to economist greg ipp he joins us next to discuss.

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well, it took fed chair jerome powell more than a year, but the chairman appears to have figured out how to say nothing to the press so, is tt a good thing or a bad thing for the markets overall? that's the focus of a new column from greg ip, chief economics commentator over at the "wall street journal." greg, thank you so much for joining us here. when i read your column, i thought to myself, of course he doesn't say anything, because when he's said stuff in the past, it's caused all kinds of turmoil, so can you blame him for not wanting to say anything? >> look, i think there's actually one principal reason why he was so unhelpful this week in terms of giving us any guidance on where rates are going, and that's because he doesn't know we are actually at a point where the next decision could go either way, so you can't talk about what you don't know. and there is genuinely a lot of uncertainty. and the fact that we had dissents from his colleagues on both sides, some who didn't want to cut this week and some who canted to cut more underlies that point but i think more broadly

speaking, yes, he's probably learned inhe last year that efforts to try and elaborate and shed light on what he's planning to do, they can come back and haunt him, you know, because if markets don't like what he says. sometimes it's not taken the right way. sometimes it's he has to change his mind because the facts change and honestly, the less of that guidance you give, you know, the less risk you take in that direction. >> i mean, my young wall street days, i remember the greenspan briefcase indicator. i mean, there was a time when people kind of looked towards their own interpretations of the fed, what it might do. and markets seemed to function okay obviously, there were bumps in the road, but is it a situation where the markets are okay with maybe not knowing as much and trying to figure it out on their own? >> well, i think so. there were special circumstances in the last fuv or six years that sort of led to this radical transparency when the federal funds rate was zero, when the fed didn't have many tools to help the economy, talking more explicitly about how they would keep rates at zero for a long time or raise them slowly was one way of keeping long-term rates under control. so in some sense, it was a

necessary, you know, adjunct to their policy toolkit we're not in that situation any longer there's room to cut rates if they need to the other thing is that there's been stuff going on in the background so, they now have, as you know, the notorious dot plot so in the name of transparency, which every central bank seems to believe in, they're telling us what, you know, the path is for how officials think policy's going to move in the next year or two i know there are real mixed feelings within the fed about that, but it is what it is, and it forces the fed or powell, basically, to have some sort of commentary about exactly whether or not he's going to be following that path. >> so, there's a path, and it might be known -- it might not be known here's the thing, over the last maybe two weeks, i have heard two words put together a lot -- lost control -- in the context of the fed has lost control of the interest rate market is this a situation where you believe that the fed has lost control of the interest rate market, and if so, is communication the way to solve

that >> not at all. i think there's two separate issues here going on when people have talked about the fed losing control, they mean over the supply and demand for crash in the money market so that the actual interest rate that dealers and others are paying goes to where the fed is targeting the rate that's a completely separate issue. the broader issue i think you're talking about is, is the fed guiding the overall markets on the appropriate direction for where it wants monetary policy to go? and i think the fed in some sense doesn't necessarily want to tell the market where to go it actually wants to know what the market thinks. if the fed talks too much, it ends up just looking in the mirror it sees what the market thinks the fed wants to do, rather than what the market wants. stepping back a little bit actually turns the market into a bit more of an independent signal about what it's going to do by the way, the fact that we saw bond yields do this gigantic u-turn in the last month with virtually nothing happening in the united states tells you that trying too hard to control where the bond market can go is a fool's game, because you may not fully understand why it's going up or down >> we don't know a lot of

things, greg ip. thank you very much. greg ip, chief economics commentator at the "wall street journal. we appreciate your time. >> all right, thank you. all right, well, president trump expected to travel to houston and appear at indian prime minister modi's rally. the messages this could convey both here and around the wld, or especially in places like india, that's coming up right after the break. ing. you're right sir... everything. no not everything, i mean you're still blatantly sucking up to me gary. brilliantly observed, sir. always three steps ahead. six steps ahead. sixteen. so many steps. you done? a million steps ahead. servicenow. works for you. should always be working harder. that's why your cash automatically goes into a money market fund when you open a new account. just another reminder

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as trade tensions persist between the u.s. and india president trump is planning to attend prime minister modi's rally over the weekend >> no recommendation a country and a stock market we're watching closely we saw overnight in india the biggest upside in over ten years. it comes after the indian government announced a decline in tax cut, tax rate >> they got a tax cut. >> they got a tax cut. it was completely unexpected it was warranted given the slowing economy.

you see another 10% move higher here in the country continues to unveil new measures that help the economy. >> i saw the stock moving. it's ridiculously impressive how much these talks have gone up. does this so lids lidify modi ae prime minister >> maybe it's a step in the right direction but a lot needs to happen on the economic front he's trying to focus a lot on geopolitics. the economy is growing at a six year low personal consumption is on the decline. auto sells fell 40%. there's now this acknowledge of those in the government that a lot needs to happen on the economic front the central bank has cut rates four times this year more measures need to be unveiled >> do you think that president trump will be able to convince prime minister modi to let more american companies do business in india >> i think that will be one

topic of discussion during talks this weekend president trump will be attending modi's rally in houston, texas where about 50,000 indian americans are expected to attend likely talks will take place thai got to dhang something on the ground to make it an easier destination to do business i think this is politically mornt moment for trump to get in front of key minority. >> thank you eight people have died from a mistie mysterious lung disease to vaping. we'll talk about the health scares are having and any furetu federal regulation that's all coming up johnson & johnson is a baby company.

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health care. walmart is now banning the sale of e cigarettes earlier this hour. this as the eighth person died of a lung related illness to vaping our next guest argues his company is part of the vaping solution and regulations might need illicit products on the market this has got to be a concerning time for you and others in the business there's a lot of regulation handed down and getting handed down soon. >> hi. there's a lot of concern not just with the industry of the 14,000 businesses here in the united states or the 140,000 employees that work in this space but the 43 million vapors that have transitioned off of cigarettes >> how much of this -- we heard

a lot of theories about why this is happening is it because of the gray and plaque market, the aftermarket for this people are using their cartridges and filling it up with their own stuff, if you will >> a lot of the evidence points to that. there's been an outbreak recently it came out and said this is most likely current manufacturers like ourselves have changed our ingredients this is some new products in the market >> fst a situation right now where regulations are probably one of the most looming issues that we have facing the vaping industry, what exactly is the industry doing to tell people or reassure lawmakers and regulators this is a safe product if it's done by the retailers out there who are

legitimate, so to speak? >> absolutely. i think it's important to separate the difference between vaping nicotine products and vaping thc cartridges. they are made with different materials and held to different standards. >> these are black market counterfeit cartridges being made in people's garages >> what's the plan of attack for you and your business? >> business as usual we make a phenomenal vaping product that's helped millions of people quit smoking cigarettes that 480,000 people will die this year from combustible tobacco. 95% of the people who smoke and quit do it using flavors business as usual. we'll continue selling products in states that do not have flavor bans. we are hoping the fda can lay out proper guidelines so we can regulate this business once and for all. >> regulation will be huge key brandon stump, ceo, thank you

very much for joining us we appreciate it tune in tonight, also this weekend for the cnbc vaping documentary series coming up that does it for the exchange. power lunch is due up. it begins right now. mpl thank you very much. trade turmoil hitting wall street after the china delegation packs their bags and heads home without stopping in montana. apple ceo, tim cook, in the big apple as the iphone 11 hits the shelves. how long can the iphone euphoria last later a unicorn of a different stripe we have details on the $35 billion start uptaking silicon valley by storm. p "power lunch" starts rite now.