i'm jumped in with that and i think there's still some upside there. >> mr. weiss. >> so the stock will been a little volatile the last month carl's still there ceo's still temporary. i still like the company just oversold. >> thank y'all thanks for watching. the exchange begins right now. thank you, scott hi, everybody. here's what's ahead. china trade agreement are is getting murkier by the day threateninliatn if congress acts on hong kong we'll have the latest from the president on where he thinks things stand also, tech giants are on the hill defending the internet's liability shield and with both sides of the aisle looking to take it away, we look at what's a at stake and how likely we are to see some changes. plus, the affordability issue continues to rear its ugly head in housing. could this eventually turn into a crisis is it already one? we will explore that today but we begin with the markets. at the new york stock exchange

bob. >> they've got -- we're seeing flattish trading today the w is moving at less than 100 point range. the sp is having a tough time staying over -- there's good news and there's bad news here so here's' the good news bank earnings have generally beaten expectations and the consumer appears healthy pnc, they said loan growth had been strong for both commercial and consumer loans u.s. bancorp said it was solid mortgage revenue was robust. home builders elsewhere, they're rallying more good news for the consumer. here's the bad news. september retail sales that was way below expectations-let even the online sales were down. there is a lot of talk about a receion inmber remember tha consumer confidence a little weaker than expected so maybe that influenced it. but for now, let's call this an outlier. it's not affecting retailers, which are mixed today. kelly, back to you. >> bob, appreciate it. you know, you mentioned the retailers. we got that retail sales report

this morning it was the autos that were so kind of the surprising weak spot but that does confirm what we had heard anecdotally in the sales data anything yet the people down there are worried about? >> no. not on the consumer side so remember, everybody's watching this carefully because the consumer, the u.s. consumer, is the lynch pin holding up the global economy if they start going south, that's going to be a problem for the market overall but you're right auto sales were down 1%. internet's a little strange to explain. the only thing i would like at here is year oveyear, retail salers were still up 4.1%. that's still the second best year over year that we have had this year. august was number one. so i don't -- my sense here is that this is a little bit of an outlier with the exception of the autos. we'll see next month if we get a consistently down reading, then i think people will be a little more worried. >> that's a great point. we're still at 4% on the year. bob, thanks. we appreciate it bob pisani at the nyse

i'm kelly evans and the recent trade agreement with china is getting murkier and murkier. both sides battling it out on the front pages with new headlines coming daily the president weighing in early today saying the u.s./china trade deal is being painered but likely won't be signed until the middle of next month there is some misreporting that china won't start agricultural purchases until a deal is signed this back and forthcoming amidst a back drop of tensions in hong kong, which is u.s. now appears to be taking a stance on joining us with more on the debate and the fight with china is jerry he's executive washington editor. >> happy to be back. >> so first of all, the congress yesterday moved this bill that would require an annual review of whether hong kong really deserves special autonomous status and the chinese are angered by that do you have any sense of what kind of retaliatory measures they are threatening here? >> you know, kelly, it's an

interesting question because up until this point, the u.s. government and the chinese government both have tried really hard to keep trade and sanctions on one track and hong kong on a separate track and not to let the two collide i think the actions right now both in china and the u.s. raise a question whether that can continue or not. i think the chinese don't want to get involved in directly retaliating in economic ways for hong kong. missteps, at least what they perceive as missteps i suspect there might be some political or diplomatic back and forth. the question is whether does it slop over into the trade negotiations so far, that hasn't really happened. >> interesting point in fact, we're hearing from the president right now. jerry, stand by. let's see what president trump was saying this as he was meeting with president of italy had something to say about china let's listen >> china and myself are representatives. their representatives have made a deal of $40 to $50 billion in farm products. people said we were hoping for

20 so china's been good and they've already started purchasing by the way. by the w, that's already started. the agreement, we hope to have it signed sometime prior to chili. we're going to chili probably do a signing over there of phase one assuming it all gets finished up, which we think it will. there's been a lot of good will between the united states and china. so we're signing 40 to $50 billion because it was incorrectly reported in the press shockingly that will take place. it's already started takin place. they are already purchasing a lot of farm product. all the banking regulations and all of the financial services, all of the other things that are included and there are many other things in phase one that i won't talk about now but all of that is moving along rapidly bob lighthiser iwith us someplace here and he is in the ess of getting it completed. have a great staff of people working on both sides. >> again, that's president trump speaking with the president of

italy just moments ago so, jerry, he struck a very positive, optimistic tone there and the reports he's referring to including in the journal are that china's now saying we're only going to fully go forward with these agricultural purchases if you also drop the december 15th tariffs. another 150 billion on chinese consumer goods how do you square this >> well, i guess you'll have to pardon me if i'm a little skeptical. i mean, the chinese have promised twice before to pick up agricultur agricultural is this the same batch of agricultural products they previously promised to buy it's also not clear over what period of time this $40 billion is supposed to take place in so i think there is a lot of -- people i've been talking to here, there is a lot of skepticism about whether this will come to pass. and now, of course, there is a condition attached we buy your farm products if the tariffs get lifted so that feels like we're back to square one the underlying problem, obviously, is that even this interim agreement, it fully and

faithfully executed does not really address the systemic issues, the structural issues that the trump administration has said are at the heart of the depu dispute with china. >> there's not the sense, jerry, of panic that the trade deal is falling apart. you know, ever since friday's rally, we've pretty much taken thin things in stride do you think that's because the president's rhetoric sounds positive and we have a month to go still until we find out if this is going to be signed in chili? >> i think so. i think the rhetoric does influence the market's reaction. there's also the reality that -- which is that as long as they're talking, as long as there's progress being made or at least advertised by both sides, even if they don't get to the grand deal that solves the problem, i think the market takes that as an indication well we're not going to lapse backwards into the all-out trade war we've been worried about. so little signs of progress are sufficient i think to ensure dooms day is not upon us. >> finally, jerry, how does 2020 play into all this

we have the democratic debate last night where china just didn't come up that much even though the -- the conventional wisdom is that elizabeth warren, for example, would be maybe even tougher on that country. so what's the window for these talks toontinue for some kind of deal to get done? >> it's a little disappointing there wasn't more trade conversation last night or any of the debates there's also another one, which is the usmca the new nafta. big question about whether democrats will swing behind that or not candidates weren't asked to discuss that last night. but i think on china, one of the reasons it probably hasn't become a bigger issue is the fact is there is actually a fair amount of bipartisan support for the position the president is taking on china. but as you suggested, elizabeth warren, when she talks about trade with china sounds a lot like donald trump and so there's not as much light between the two camps on this issue as there

is on a lot of other issues. >> right perhaps makes it less sexy. >> exactly. >> jerry, again, it's great to see you. thank you so much for joining me. >> thanks. >> jerry of the wall street journal. tomorrow morning, don't miss white house economic director. he will be on squawk box at 8:30 eastern time let's turn now to news in the auto world with gm and the uaw striking a tentative deal. let's get straight out to phil lebeau how significant a break through is this? >> this is a big break through it doesn't mean the strike is over here's where things stand right now. this is this is a proposed tentative agreement. the uaw leadership from around the country that are all meeting in detroit tomorrow, they still need to vote on that agreement and until they vote, this strike continues. so what does this mean in terms of who got what from each side well, from the uaw's perspective, they're getting 9,000 jobs that are going to be

retained or created. that's the commitment from general motors from gm, they maintain flexibility at their u.s. plants in other words, they didn't lock in a specific model that's moving from mexico back here to the united states. take a look at shares of general motors the other important note here, kelly, the healthcare benefits of the uaw members that package remains largely unchanged. it's a very generous package and for the uaw, that's a big win. >> okay. phil, precia it and we'll get more details obviously as this does appear to firm up. but i also wanted to ask you we were just speaking with jerry about china and he said that, you know, hong kong is increasingly problematic issue it's also a problem for united airlines heid address what's happening in terms of falling volumes there, right >> not only a problem for united but really all airlines. oscar nunez was succinct he said hong kong is a mess right now in terms of traffic going in there here's more what he told us about united perspective on asia

and china in particular. >> translator: tokyo is the predominant driver of the impact in the pacific region for us both shanghai and beijing are softer but not noticeably so it clearly is a hong kong market the rest of asia is great. we think it's taipei all the other regions are actually doing pretty strong but hong kong is definitely the driver and we've seen the recent -- a little stabilization out there. >> as you look at shares of united, remember they beat on the earnings by ten cents in the third quarter. they radsised guidance for the fourth quarter the 727 max continues to hurt these guys oscar said it's off the schedule until january 6th. >> yeah. with all this going on there, their performance is impressive and not just them. phil, appreciate it. phil lebeau with united and gm headlines for us today here's what else is ahead on

the exchange. >> coming up on today's retail sales number signaling the consumer is starting to crack? and if so, what will if mean for the markets? plus, affordability continues to be a major issue in the housing sector at what point could it turn into a crisis and tech giants on the hill today defending what some have called their liability shield. ♪ this is "the exchange" on cnbc ♪ ♪ ♪ ♪ ♪ ♪

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exchange u.s. retail sales fell for the first time in seven months in september. raising some fears of that -- that slow down in manufacturing could now be impacting consumer spending, too. that said, the chicago feds charles evans today say he doesn't think anymore rate cuts are necessarily needed this year joining me for more on this is brian mccally. and brian belsky, chief investment strategist. maybe i'll just call you belsky to differentiate here. >> let's do it. >> welcome to you both i will begin with you because we have had a little bit more -- little bit softer tone to the data overall lately. does that worry you? or are you still bullish >> we're still bullish i think the biggest problem we're really coming up again with our clients and our clients

are mutual fund managers, hedge fund managers. here's why i think they're a hypocrite. we can go and talk about strategy or talk about owning stocks they're so afraid to be wrong, they don't want to be right. every single thing has to be perfect. i'll double underline it. >> so in other words, they want positioning that looks good, that looks safe, that won't get them in trouble. >> exactly because they're -- they're playing defense not only with their careers but with their portfolio. but then the president tweets and they jump. that's not investing and i think what -- what that's leading us into 2020 and beyond is good old-fashioned stock picking. managements matter products matter. secular trends matter. fundamentals, earnings, things we've forgotten about. >> but brian mccally, stock picking is really, really hard and it's hard for people to do it well over time and clients are loathed to give those strategists money. they'd rather just be indexers, right? >> well, sometimes that's true at the hennessfocus fund,

perhaps brian would -- would -- would have less criticism for us we own about 20 stocks we hold them on average for about seven years. so we ta very long-term approach to a lot of fundamental research and really anticipate holding many of these businesses through economic turbulence. so we try to align ourselves with the right type of businesses that can do well in that environment. >> if you don't mind, give us a handful of those names then that you think investors could own for several years. >> certainly so a couple names we're quite excited about are carmax the auto retailer. o'reilly automotive. an after-market auto parts distributor. and hexel, an aerospace and par parts manufacturer. >> you're not worried about the softness we're seeing a little lately >> we're worried a little bit but we think the secular opportunity that car max has in front of it to go from being a traditional retailer to being omni channel retailer outweighs the concerns we have about short-term issues.

>> okay. that's sort of the very specifics. let's back out to the general for a moment leon cooperman was on squawk box this morning talking about what he sees as the major risk to this market, which would be for instance elizabeth warren presidency take a quick listen. >> if the president resorts to putting on another round of tariffs that probably increase the probability of recession and if we have a recession, the market drops at least 25%. if elizabeth warren is elected president, in my opinion, market drops 25%. bernie sanders, same thing >> so this is a bipartisan thing here also, the president putting out another round of tariffs could lead to a 25% drop here. but what do you think about this argument that if warren is leading in the polls now and if she becomes a viable challenger to trump that the market needs to start pricing that in >> well, i think it's -- it's -- creates nice headlines when you say 25%. we know typically when we have a recession, the market goes down more than 20% and we didn't get

that last year so he's obviously -- right now, this is all about tariffs. it's all about tariffs, right? versus recession with respect to elizabeth warren candidacy and presidency, it's already pretty much baked into the majority of consensus right now. that warren will be the victor it almost as if it's a foregone conclusion the majority of people that i talk to. >> then the market should go up 25%. >> here's the thing, though. now you got to start thinking about what happens to financials and overregulation or what happens to the industrial bell. what happens to energy what happens to healthcare so from an individual basis, you really have to start thinking about that but again, there is a lot of runway left. it's too early to be acting upon this but as of right now, this is about the tariffs and about how portfolio managers and investors in general can trade around that for the long-term. >> so mr. mccally, question to you then for all these names you're holding for a long period of time, what do you do with the possibility of more tariffs or these -- the election next fall?

i mean, how do you account for rtain outcomes we've got a higher u.s. exposure than international exposure in the sales in our businesses. we are a small, mid, and large cap. multi-cap manager in our strategy so naturally, skew toward the u.s. and so we'll be less impacted by tariff impacts and really, again, just trying to step back and take the long-term view understanding not only economic cycles but also political and regulatory cycles are going to impact these businesses. so just pick those that we think are most insulated from that turbulence. >> okay. and brian belsky, finally to you. i asked for his strategies what is yours? >> from brian's lips to god's ears this is about -- this is less about politics and the economy but more about fundamentals. you want to buy companies that have elasticity to them that can go through the time. you know, portfolios we manage,

the average is 14% we don't make a lot of changes we're talking google the apples. >> but the indexers own. i mean, these are -- >> but there still is a lot of negativity surrounding google and a lot of people have missed the facebook move. things like that you got to think about what's coming longer term like broadband and comcast all these types of themes we're spending our money in. from a fundamental perspective that can withstand against all these political upheavals. >> all right guys, thank you both the brians thank you so much. >> thank you. >> still coming up, netflix is on deck. what does the company need to do to convince investors it has staying power amid the streaming wars plus, vaping has been under fire but one judge in michigan says not so fast on banning flavored vapes he e te a wt it means for the industry the exchange is back in two.

exchange." here are some of the movers this hour with some recent ipo names dropping again shares of slack are getting hit hard again $10 to 28 bucks. the firm cites increased competition and weakening i.t. spending environment for the move there work day also sinking today after analysts cut their price targets following its investor day. the company warned investors that growth it slowing in this

is o its management software market finally, take a look at shares which are finally moving higher today. this follows a seven-day losing streak the year's best performing ipo is now down 21% in just the past month. now to sue herera for a update. >> hello, everyone here's what's happening at this hour a strong and shallow earthquake struck a southern philippine province damaging a small college building and prompting residents to dash out of their homes in panic the u.s. geological survey said the magnitude 6.4 quake had a depth of only nine miles shallow quakes tend to cause more damage than deeper ones jason van dyke, the chicago police officer convicted of murder in 2018 in the shooting of 17-year-old la kwon mcdonald officially resigned from the police force last week and will not receive a pension. he is currently serving a nearly seven-year prison sentence chipotle is going to pay for employees to get tech or

business degrees workers who have been at the company for at least 120 days and work a minimum of 15 hours per week can choose from 75 different degree programs at five schools and the los angeles angels have hired joe madden as their next manager. madden was fired by the cubs last month after five seasons with the club. espn reporting that deal is for three years in the 12 to $15 million range. you are up to date that's the news update, kelly. send it back to you. >> sue, thank you very much. sue herera there here's what else is coming up today on "the exchange." >> ahead, judge says banning flavored e-cigs is a bad thing netflix gets ready to report plus, is there such a thing as smart device etiquette? and need a billion dwlars to buy that nfl team? th m no ng batayloere a problem. it's all coming up on "the exchange." ♪ limu emu & doug

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when it works for you, or, you can wait, and pay it off in one lump sum when you leave your home. discover the option that's best for you. call today and find out more. i'm proud to be a part of aa i trust em, i think you can too. let's catch you up on a few stories that should be on your radar today. it is time for rapid fire. here to break down the headlines. welcome,verybo and first up, we got to talk about these big moves in shares from mckesso

urces teg the three largest drug distributors close to a settlement. mckesson up 4 1/2% what makes this one such a biggie >> so this is a huge overhang to these companies' stocks and wall street thought they would have to pay a lot more than $18 billion to settle the thousands of opioid lawsuits against them. it's not just the drug distributors that are in these talks. it's also johnson & johnson, which could contribute about $4 billion. and that is also less than wall street had potentially estimated for j and j. teva is also in talks to potentially contribute at least $15 billion worth of drugs to the settlement we don't yet know about any cash. >> wait. teva's contributing drugs to a settlement >> potentially ones that could be used to reverse overdose. >> -- >> this is what makes amera

great. >> well, actually it's interesting you bring up that point because part of the purdue settlement, which isn't part of this, that company essentially would be turned into a public trust and the sales of its current drugs, including ownershopioid would then -- >> fund the settlement. >> exactly. >> fund your problem with a new drug yeah. >> when the headlines like the does it jeopardize -- so if they say the stocks were up, it was less than expected does that mean they're going to -- >> right it's not a done deal yet so that could absolutely happen. there are sticking points. we're hearing over potentially even just attorneys fees right now. people are trying to sort that out. we should note they are up against a hard deadline. jury selection is going on right now for the first federal trial scheduled to start in the opioid crisis we're going to hr opening arguments on monday unless these companies are successful here. and right now, we've seen that they've filed to try to suspend the start of that trial. we don't know whether that's going to be granted. but the judge has reportedly

according to the "the washington post," already shot down a request. so everybody's trying to delay the start of the trial except the judge. >> really quick, meg's obviously expert but $18 billion, it seems a very small amount. i looked it up i mean, i don't know that much about it but according to the cdc, two thirds of all overdose deaths are directly related to opioids. >> even if you pair that with what would purdue be potentially? >> 10 to 12 billion. >> versus what was the tobacco >> 250. >> wow $250 billion. >> right maybe it's all that they could get. i mean, you have to wonder why did they stop there? who knows? i mean, maybe they couldn't get more people have estimated it will take a lot more to fix this problem in the u.s. >> right no it's a great point got to talk netflix, though. results are out after the bell today. last look at their numbers. remember, netflix missed last quarter. the stock has been under

pressure julia, jim has threatened to drop out of faang because of its performance. what are we looking for tonight? >> here's the thing. you're right netflix subscriber numbers are always in focus and now the pressure is really on after last quarter not only did international growth fall far short of estimates but also, you had domestic numbers decline. now, these are the two numbers to watch this quarter. number one is 7 million. that's how many subscribers are expected to be added this quarter according to the company's guidance the second number to watch is 9.5 million. that's the fourth quarter subscriber growth that analysts expect netflix to guide to and of course, now guidance is more important than ever because we'll see the new competition in the fourth quarter from disney plus and apple tv plus they both launch next month. kelly. >> i -- i mean we talked with an analyst the other day, robert, who said that disney shares are implying a $60 billion valuation for its streaming services. >> just for streaming. >> before disney plus even

launches. >> no it's amazing and julia was citing a study earlier that shows this space is already getting crowded before we have these new -- i mean, the public appetite for, a, the costs are getting up there i mean, like 20 something odd percent of people are already paying more than 100 bucks a month for streaming services that's before we have disney we have hulu we have nbc doing peacock. so i just think it's going to get tougher as we get further out toward the beginning of next year. >> and was cost ever the real issue with cord cutters? or is it just this is a better mouse trap do people just enjoy the streaming? i mean, i have my own problems when the wi-fi won't work but anyway, they enjoy the experience more. >> i have to say from my perspective as a netflix user and lover, i am going to sign up for apple tv plus when it drops november 1st because i want to watch that morning tv show and it's going to be another $5 a months, right? i also subscribe to hulu plus. i am a huge streaming fan. >> we see.

>> julie, so when they came out last quarter with the surprise miss, were they able to finger any reason why was it -- for example, is it the price increases? and you mentioned that there are other proposals about how they could do this. maybe add support in the future. could fence netflix in going forward. >> well, so netflix has been clear for years now saying they do not want to do ads. they want to focus on the subscription business. so they've tried to exclude that from being on the table. but what they said is they just didn't have enough big show launches in the second quarter and that's why they -- their numbers fell short and going forward, they feel bullish that they will see more subscriber additions because of high-profile shows and also movies worth noting netflix is doing ten theatrical movie releases this fall. so really pushing get oscars. and also, marketing the fakct that they have premium content. >> to the point, meg, that you made, this is fundamentally still a show in a hit-driven product which works for them now

especially while they're kind of the only game in town. but it -- it makes it harder, i think, it's more of a theater. you know, studio theater model going forward. >> one thing, they're all competing for stars. i mean, if you look at netflix, they have an eddie murphy film coming out but on the other side, amazon prime has had some really great shows i really like. "the boys. >> so good. >> i subscribe to that too. >> that's right. >> that's true. >> all right julia, as i said, thank you very much julia boorstin. netflix out after the bell now to michigan with a judge is temporarily halting the state's ban on flavored vapes which went in effect two weeks ago. ruling the harm done to businesses outweighs the aim of stopping youth vaping. pretty interesting stuff also, i believe there was a health angle to this where he said the need for people to transition off of smoking, traditional cigarettes, also had to be taken into account. >> a lot to consider here. number one, this is actually a public health concern and also a

huge small business success story. a lot of these vape shops are small businesses industry's grown from about $2,500,000,005 years ago to an estimated $9 billion this year about 90% or so of a vape shop's business is flavored flavored vaping products for juul, 80% of their products are flavored so it has a big impact on everybody's top and bottom line and you can understand where the judge is coming from a business aspect. >> there's kind of two separate issues going on at the same time there's the youth vaping epidemic, which people do blame on flavored e-cigarettes then, of course, there is the scary set of lung injuries and that mostly has been tied to vaping thc and illegal thc products so these vaping bans of flavored e-cigarette products won't necessarily stop the problems we're seeing with the vaping lung injuries. but if people are worried about the youth vaping epidemic and absolutely everyone is, that's

what those are directed toward. >> there was a little hypocrisy on both sides. so the judge saying i don't see a real health hazard here and what about the smokers who are trying to stop and on the other side, you know, she said the idea that we suddenly had a health emergency when this had been going on for a long time. that's a good point. i mean, why can the government suddenly -- the governor suddenly say by october 2nd, you've got to get all these products off the shelf >> so maybe saying the nature in which they're going about this instead of giving people -- >> right and then the businesses saying we're not concerned about our business we're really concerned about all the smokers that we're trying to stop out there and now can't i mean, that -- both those arguments struck me as ridiculous. >> fair enough i'm not sure even if they phased thisit'still goingo fundamentally cut their business. >> i mean, if 90% of your business is flavored vapes and you take that away, the math is very simple. they don't make a lot of money on hardware or on tobacco flavor the rationale i heard is people

are trying to quit cigarettes. they don't want to vape something that tastes like a cigarette. >> i've heard the same thing who would have thought before we go, how about some smart speaker etiquette. google's head of hardware told bbc news he would let his guests know he has a smart speaker before they enter his home went on to say it's probably something the products themselves should indicate i don't know if they would announce themselves when the door opens. >> just so you know, i'm here. >> outside of your house everything you say is going to be recorded on some nebulous thing and it's going to go somewhere you don't know where it's going i don't trust smart speakers i don't like them. if i'm in your house, please turn them off. >> please accept the following conditions sign here before you walk in the door. >> i'm with holland on this. i don't like them either but it never occurred to me that when i walk into someone else's house, if i don't like them, should i tell them to unplug or tub it o turn it off or something >> the smart speaker is designed to hear what you say from the

furthest corner of your room lo look, if you whisper, it designedo hear you. >> i don't know how to say that in a way that doesn't sound totally insane. >> it sounotally insane. the other thing that freaks me out about this is that the -- the google guy is implying that these things are something to be worried about. the people inside the companies are telling us we should be worried. >> which is why it's getting so many headlines they're like if this guy thinks -- all right. maybe the flag's in the yard frank, we got to come up with something. >> i'm going to sell those business idea. >> thank you all frank holland. meg terrel coming up, construction has yet to catch up as cost rise foabitis at with low supply and afrdily major problem for potential buyers housing health check next. for your heart...

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with a six figure income are now being forced or choosing to rent in record numbers. need further proof that renting isn't just a fluke take a look at shares of american homes for rent. it's one of the largest renters in the u.s. and the stock as you can see went sideways for years before a massive rally starting in 2016 that has tracked alongside home prices. here to break it down is tim he's president of lending start up blend and the former ceo of fannie mae welcome. >> thanks for having me. so housing is such a complex issue right now because of the last crisis. you know, we saw the bubble. we saw the collapse. then we've seen i guess a shortage that has really pushed up prices and kept people out. is it at another crisis point today? >> well, i'd say, you know, the fundamentals of housing are pretty good but the affordability question really is a crisis for many people among renters, for example, half of all renters spend 30% of their income or more on housing. a quarter of all renters spend half of their income on housing or more. and then on the home buyer side,

as you noted, home prices have been going up. it's been much tougher for people especially at the entry level to be able to buy the first home. >> and diane has reported for us time and again about how there is a shortage at the entry level points of the market how some baby boomers are competing for that supply because they're downsizing and the builders aren't necessarily keeping up i'm just surprised i mean, look, if it were my business and i saw that there was a shortage there, i would be doing everything i could to get more supply on to the market. >> well, i think the challenge is that it's really hard to do that at the lower end. at the entry level of the market when you think about it for home builders, there are a bunch of forces making it more difficult for them to. there is a labor shortage in terms of building homes. there's land acquisition costs, which are extremely high there's all kinds of regulatory and zoning challenges. so they really focus on building to a market that can absorb all those costs and that means that they're really focused at the

higher end. >> and this is having huge impacts on the way the housing stock and homeownership in this country could change you're seeing this, yes, in my backyardmovement where people look at minneapolis. they're pushing to allow for multi-family development and saying we shouldn't have this, you know, just exclusive single-family home building when you could fit more people and more price points in could this remake the way we think about homeownership? >> i think it's going to force us to rethink a lot of those issues because the fact is the only answer to this question is increasing supply. we have to just create more housing stock than we have in the past the last ten years, every year we have failed to build enough housing to actually meet the increased demand within that year so i think freddie mac has estimated we're about 2 1/2 million units short of what we need in order to just have market equilibrium. >> so what happens in the meantime prices have started to moderate. there might be some factors like salt that are a reason why

should we expect prices to take off again? or not >> i think we should expect prices to continue to increase unfortunately, they've been increasing at faster rate than wages. so that's a challenge for people but the real challenge is at that entry level, prices i think will continue to increase faster than any other segment. >> and finally, last time around when the political goal was increasing homeownership, it was a contributor to the financial crisis because the underwriting standards declined there was just a sense of more a is better and there was no -- you know, the whole story we were well aware of if we start again saying that we want homeownership to be a goal and pushing in that direction, maybe loosening underwriting standards again or what have you, are we creating the seeds of another crisis down the road? >> well, i think people really have learned the lessons of the last crisis and i don't think anyone's advocating that you solve this problem by lowering credit standards credit standards are really at an appropriate place what we need to do is think about housing stock as being part of the national

infrastructure we need to figure out how to create more supply and i think some innovations around manufacturing costs might help us get there. >> that's a discussion for next time tim, thanks so much. tim is a former ceo of fannie mae. president trump wrapping up news conference with italian president. eamon javers is there. >> kelly, we just had a fascinating moment in the east room with the president of italy and president of the united states side by side on the stage here behind me the president of italy was talking about a tariff war between the united states and the european union he said nobody would win that all sides would be harmed then president trump sort of interrupted him or responded to him by saying, no, in fact, the united states can't lose any tariff war between the european union and the united states. simply because the balance of trade is such that the united states will have more to tax than the european union will have to tax. the president of italy simply not responding to that but the president here of the

united states very aggressive on this idea that the united states simply can't lose a tariff war between the two economic powerho es here. also, on turkey, the president was asked if anything that president erdogan of turkey has done in his invasion of syria surprised him. the president said no, he hasn't been surprised earlier today, he said that the situation right now on the turkey/syria border is quote strategically brilliant for the united states. the president not explaining, though, why if it's the case that he wasn't surprised and if it's the case that the situation is strategically brilliant, why then did he authorize sanctions against turkey on monday the president simply reiterating here that he did authorize those sanctions. and then lastly, kelly, he was asked about the war of words that's erupted between him and one of his staunchest supporters on capital hill, senator lindsey graham of south carolina the president saying his dispute with lindsey graham boils down to the fact that lindsey graham wants american troops to stay in the middle east for 1,000 years.

this president making the argument that he was elected to pull american troops out of the middle east and that's what he's doing. kelly. >> eamon, thanks very much for bringing that us we really appreciate it. eamon javers at the white house. it could be soon easier to own an nfl team. a drastic move the league is considerg xtinne i knew about the tremors. but when i started seeing things, i didn't know what was happening... so i kept it in. he started believing things that weren't true. i knew something was wrong...

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welcome back, the nfl is considering increasing its borrowing limit for proo spective borrowers that would expand the pool the next time the team comes up for sale >> so this is something that the current owners are talking about, the current debt limit is $350 million the team valuations are now about $3 billion 10 years ago, they were $1 billion. the nfl rules say, have you to be a person that owns the team, not companies. and the main owner needs to own at least 30% there's not a lot of people with a billion dollars in cash sitting around look at what happened last year, it only got sold for 2.3 billion. they throughout it would be 3 billion. what they're saying is, go get the debt so us current owners

can sell it to you, because you bore reed it and you can meet the price you want >> if it's other owners who want to see those prices bid up right now, does it have to be that you're buying these teams in cash. >> what is the rational been nor that >> so what's happening here, this is not meant for current owners to take on debt this is current owners who create these rules they're country club they're seeing a future where a new generation might need to sell and they're not seeing a lot of buyers out there. the nfl was a conservative organization we don't want people who have flimsy financial backgroundses have you to be stable and sturdy this is before teams are worth plan a billion dollars >> there are many owners now who bought at a time that -- >> jerry jones bought for 200 million and it seemed enormous at the time. >> he had oil money. there were people who couldn't break into this now. are they trying to make sure

this doesn't become a lot of wall street billionaires are they trying to change the nature of ownership? >> no, i don't think it's the type of billionaires, we don't want this to become a corporate thing. recently they got rid of a rule that didn't allow for cross ownership. so you couldn't own an nfl team in one city and an nba team in another city that had been a traditional rule, a conservative rule. they got rid of that, they said, maybe steve wants to buy a team outside of l.a., let him buy that team. >> if those team valuations drop now you have people with a lot of debt, that's where this could all go bellyup >> not the current owners. >> eric, thanks very much. >> sticking with sports, nhl commissioner gary bettman will join power lunch next hour make sure you don't miss that. executives from google and reddit are testifying on capitol

hill today to protect their immunity from material users post el elan >> the hearing has just wrapped up, and the tech companies tried to con virns lawmakers they are working hard to remove content on their platforms they also acknowledge that simply did is difficult to keep up, and they need to do more meanwhile, the threat is rapidly evolving the word deep fake didn't exist a few years ago. >> we as a society have to understand that the source of materials. which publication is critically important. there will come a time, no matter what any of my tech peers say, where we will not be able to detect that sort of material. >> if tech companies don't step up their game, the government will intervene

>> please don't make me have to do this. >> this is still a debate that's in its infancy, tech companies are willing to go to the mat for this fight >> ylan stay right there, let's bring in nancy as i understand it, there's two provisions of this law, and it -- there's a bipartisan split on it, democrats mainly october to the fact that these platforms are not held liable for content that appean eir site republicans don't like the good samaritan part of it, that at least lets the companies police that content somewhat. which of these two blanks is most likely to be changed, if either, do you think >> well, i think what we're looking at now is potentially an overhaul of section 230 all together you're right to mention there are two provisions, the two provisions were always meant to affect the sort of balance companies would be incentivized to take a light approach to policing their platform. they don't stay away from what

appears on their platforms they're not going to be held legally liable if they stick their hands in and clean it up a bit. the companies have abused that privilege that was given to them by the law, there's a complete rethinking of how do we restructure this thing so companies have to take some responsibility whether it's on the democratic side, worrying about misleading ads. they complain a lot about allegations and bias and how those platforms are moderated. the push right now is to say, you nied to take more responsibility what that looks like isn't clear yet. >> if they're taking more responsibility, it's going to cost them a lot of money, it's going to mean a lot of lawyers, i'm sure i'm wondering, this was the law that past in 1996 that gave rise to the internet as we know it, are we so sure it's broken could tampering with it do more harm than good >> the argument that tampering with it all would lead to the downfall of the internet congress a couple years back

tweaked it they added to the list of content that platforms are responsible for sex trafficking posts. they add a little bit of a law to that. we can mess around with this a little bit and not trigger the parade of horribles that tech companies said were going to happen >> what are you hearing in terms of those changes it's interesting this involves the mexico canada, the new nafta bill which has a version of this if it were passed. >> there is some concern among lawmakers that were brought up today, that these types of principles could be exported to other countries that there is a version of this that is included in the new usmca lawmakers on both sides of the aisle said they don't like that being in there they would hope the trade a. ambassador would come address that today he didn't. >> nancy, do you think at a time when people are piling on big tech, would these changes take

away -- and are they meant to take away some of their market power? or would they enhance it, because new entrants are -- it's a tougher field for them, maybe for smaller players too. >> the latter, that's smaller companies, the argument is, they don't have the lawyers you mentioned. they don't have the resources to hire staff to do some of this moderation, they may not get off the ground in the same way they have under the old version of section 230. we don't hear those voices that much in washington you mentioned reddit, google they're testifying they're voices are missing >> i don't think there's any major headlines going out about a small company testifying on capitol hill >> no. >> they're the ones and the companies that don't exist yet that's what i'm saying, are the incumbents making the rules and there's no one to speak up for a company that doesn't exist yet >> we have to leave it there appreciate it. nancy scola and ylan mui following this for us on capitol

hill power lunch starts now >> thank you, kelly. we'll see you in a moment. the beige book will be released, let's get a check of where we stand right now, ahead of that release. the nasdaq fractionally lower across the board let's get to steve lease manning for the beige book >> slight to modest pace of growth a bit of a downgrade from the prior report in september. the beige book saying growth was slight to modest last month they said it was they added that activity varied quite a bit across the country we'll talk about that in detail in a secd. many business contactslowered their growth outlet for the next 67 to 12 months. manufacturers report higher input costs due to tariffs and trade tension weighed on global activity throughout the nation manufacturs l reduced their head count overall employment including the service ct