lindsey, home builders been a good trade does it continue >> up 40% year to date look, we're going to get a rate cut this -- today. and we've seen the last two rate cuts with that affordability we saw that in the gdp report this morning residential investment up 5.1%. >> thank you for being here. "the exchange" begins right now. thank you, scott hi, everybody. here's what's ahead. the countdown is on. it's an hour they got the goldy locks economic data they've been waiting for but the cancellation of next month's apex summit in chile. plus, we've got the mother of all earnings expectations for apple's report after the bell are pretty high with the stock hitting new record day after day and with will we get any more color on the launch of apple tv plus? we will ask. plus, flat sales are forcing one company to change its name how garmin managed to wage its way through the smart watch

competition. but we start with the markets. pre-fed set up. >> so it's the pre-fed set up. if you wanted the definition or the look of a holding pattern, this is what it looks like you've got the dow industrials up 17 points that's not very much just fractionally marginally through the upside. the s&p 500 down about the same amount on a percentage basis and the nasdaq down a whopping two tenths of a percent. the s&p was actually up five points and we did get down ten points on the heels of some of those chilean apex headlines also, want to take a look at what's happening on a fed day with the financials and interest rates always a big focus if you look at the difference between shorter term treasury notes and longer term treasury notes, remember that yield curve people talk about, it's actually been steadily rising over the past skuple months remember, at one point, it was the negative five basis points so we'll keep that in mind as the fed approaches then the stock of the day so far

today, general electric. it is off the best levels of the day so far but shares still up about 10% at this stage $10 a share or thereabouts remember, this is a stock over the last year that has found a bit of resistance at these levels up here so we can't break above ten consistently we'll see if it can happen this time around. i should note three years ago, ge was still a $30 stock so we'll see if the momentum can build. >> dom, thanks and welcome to "the exchange." i'm kelly evans. our top story is the feds looming decision on interest rates. there's your countdown clock they're widely expected to ease by another quarter point, which would be the third rate cut this year for more on that, i'm joined by julie. head of u.s. rate strategy and brian belsky's chief investment strategist. you couldn't make it to set, belsky >> i'm sorry i'm stuck in minnesota i'm sorry. but thanks for having me. >> we are -- we are thrilled to have everybody for this chat

because you guys actually three very different points of view. suvadra, you think we're headed into a recession next year, in which case i imagine you think there are many more rate cuts to come. >> absolutely. i mean, relative to the market's priced in right now, which is a cut for this meeting today and then really nothing much until the end of 2020. maybe one. so that stands in odds with what our call is, which is we think the u.s. economy goes into recession by mid-2020. the fed might pause after this meeting and then after that in the middle of next year, they're probably going to deliver two 50-basis point cuts in a very short period of time. >> but, julia, you don't see a recession in your base case, right? >> that's right. i think the feds preemptive easing helps make that come true so we saw, for example, in today's gdp report a positive contribution for housing helping them stay on track even as hiring slows. and i think another source of resiliency is actually the oil

market it's been so flexible in light of so many geopolitical tensions, just no oil shock to be seen. >> unless you live in california. >> right yeah there's lots of shocks in california. >> that's true that's true. >> but i think there is a lot of reasons to think that maybe this time around, we can see that soft landing scenario. >> so you're not saying there is a recession. more of a soft landing and belsky, you're even more positive on the outlook, right >> well, right since january, we've been saying we believe that 2019 would be this generation's 1995 so far, that's played out pretty closely. our great economics team at bmo seems to believe we're going to see a fed rate cut today and then nothing next -- next meeting and all of 2020. i mean, clearly u.s. consumption remains very strong. i think the yield curve banter was exactly that i think investors lack perspective and they're not getting on the handle that u.s. stocks and companies are the strongest in the world and the

rest of the world is not going to impact on what's going on here so i think that the status quo continues. yes, it's a soft landing and yes goldy locks. >> subadara, we saw the inversion, especially in the three month tenure i mean, that happened earlier this year and it was true for months and months and months we're finally now getting out of that obviously, the two-year tenure, that was a little less pronounced how significant were those inversions and if they're not inverted anymore, does the fed need to keep cutting rates >> that's a very good question because the three month tenure part of the curve was inverted between mid-may to almost august and now we've seen a tremendous steepening of that curve almost 50 basis points from the lows so to me, that's, you know, the curve sort of over inverted and flattened because of global qe and ecb, you know, sort of announcing qe. >> right. >> and now, what you're seeing

is as the market, bond markets especially, start questioning the efficacy of qe and negative rates overseas, you're seeing bunios rise. come from a negative of 70 basis points to now at negative 35 basis points so bond yields have sold off, the belly of the curve has also sold off that's what sort of led to the steepening of the three month -- >> you're right. those have been humongous moves. huge relatively speaking so you said it was for an interesting reason, though, that they were questioning the efficacy of more monetary policy that's not a place i think any central bank, including the fed wants to be. >> absolutely because negative rates are actually not -- not helpful. they're punitive they impact, you know, bank profitability. it's a real tax on savers. so, you know, and there's only this much they can do. i mean, what's the end game? if they bring down rates another 20 basis points, then what

that's what the market is starting to question. >> julie, that brings us back to the feds so is your view they do these three cuts this actually is a mid-cycle adjustment even though markets freaked out over that language i mean, how does powell need to craft this message today in order to not upset the apple cart so to speak >> i think he's going to keep his options open i think they're going to still sort of stand ready to act as necessary to support the economy. i don't think that he's going to be saying, okay, we're done now. he knows that inflexibility will not be received well by the markets. there's still a tremendous amount of economic uncertainty lots of downside risks in fact, there is plenty of evidence that the global slowing is affecting the u.s. economy. our own manufacturing sector, many of the globally exposed service sectors are seeing hiring slow. investment is a drag so it's not like we are immune to this and we can't be just confident that we're out of the woods. so i think the fed keeps its options open the markets are giving the fed room to pause. and i think they can say, yeah, we may take a little more time to assess the next move. but we're certainly standing

ready to do what's needed. >> so brian, we'll give you the final word on this how do you see the positioning heading into this? is it okay i mean, god forbid he repeats mid-sieng mid-cycle adjustment or maybe that's okay now. what do you think we should be especially listening for >> well, i think how he looks at 2020 is really the key thing you know, for the record, equities care about two tenth is the most important thing, number one. number two, this is really important. last year, santa claus got his butt kicked and the santa claus rally just got moved forward into september and october the market could be kind of drifting sideways here and this is not about the fed in our belief this is about tariff saber rattling and the more clarity we got on what's going to happen in terms of global growth and manufacturing, the other points are very, very valid if we get a clear tariff deal that people feel good about, this market could go up a lot faster and a lot stronger than

anybody can imagine. >> fair enough although, that's still a big if. guys, we appreciate it we'll leave it there for today brian belski, julie coronado again, we'll get that decision at the top of the next hour. but now, to the latest in the california wooiildfires where sa ana winds are picking up and making things worse. jane is live with the very latest. >> we've got a little bit of a break in the winds right now there are a lot of animal evacuations going on this is a scottish highlands cow named lucy she will be evacuated but she has to ride solo because of her horns. as we show you some video, this fire's exploded to almost 1,000 acres. zero containment the main focus is the ronald reagan library where employees are sheltering in place and where the library told us the archives are protected they've got fire doors and sprinklers which will be automatically triggered. but fires surrounding it you got the air force one exhibit there.

you got the president and mrs. reagan's grave site. this is really the first of the fires in this new red flag warning event we are going through. and because of the wind at times, some of the aircraft have had a hard time finding him. he's being very aggressive as i said, this is horse country, animal country. evacuations have been going on here at the underwood family farm where i am at and while farmer craig underwood has lived here all his life and seen plenty of winds and fires, today's a little different. >> we have never been threatened directly here. so this is a bit unusual for us. >> reporter: and so this red flag warning lasts through tomorrow fire season lasts at least for another month. kelly. >> oh, my gosh and the winds have been extraordinary. i know it hits home for you, jane, for many of us now as it continues to spread. we appreciate it we'll check back in with you as it plays out, jane thanks very much jane wells in california today

here's what else is ahead on "the exchange. >> coming up the big kahuna apple is set to report earnings after the bell will tonight's results be enough to keep the company's streak of all-time highs going plus, an insider's view. we'll speak with a former top official at the department of education who says the system is broken and student debt should be cancelled. and mapping a comeback look at how one stock went from being out of mind to seeing a 50% rally this year. what do advisors look for in an etf? don't just track an index, this is "the exchange" on cnbc is the fund built to sell or built to last? etfs are only part of a portfolio. so make it easy to explain. give me a quality fund that helps me get clients closer to their goals. flexshares etfs are designed and managed

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welcome back and check out shares of apple. they're on pace for their best year in a decade up 70% since january 3rd when the company, remember, cut its first quarter revenue guidance on lower than expected iphone sales and a weakening chinese economy. the stock has recovered all its losses since then and hit a new all time high in its past seven sessions now, with the company set to report after the bell, what should investors be watching for more on that, i'm joined by steve. it's great to see you. >> thank you. >> do you think expectations are pretty high for this report? or what do you expect? >> they've kind of risen i mean, the stock has been on a real roll. it's up 17% since the last

quarter. a lot of the news flow in the supply chain has been more positive in terms of the expectations for the new iphone 11 our survey suggests about 20% of what they sold in the u.s. was the new phone. >> is that a pretty good figure? 20%? >> it's about what you would expect yeah. >> it's about ten days of the quarter will include the new iphone 11, right >> that's right but they have all three models out this year they only had two last year so it helps the comparison a little bh bit year over year there's even talking about making 80 million phones next year so i actually think expectations have moved up a bit. so it wouldn't surprise me if it's a decent quarter but if the stock reacts a little negatively to it. >> and they're always conservative i mean, traditionally, the stock was at $142 by the way back in january when it had that warning. it's at 242 now. it's an extraordinary move so why is it -- i mean, they then cited iphone sales concerns and weakness in china. as you mentioned, you think the iphone data flow looks a little better what about the china exposure?

>> well, the china data looks a bit better, too. there still may be some share issue there but some of the numbers out of the china government suggest there is a big improvement of sale of phones coming basically into china. so that suggests apple should do relatively well. the multiple really has come up. the earnings really haven't changed that much. which is the highest we've been in eight years. >> in eight years? is that deserved to you? >> you know, our target always -- and we have a peer performance but our target was always a multiple. above that, we'll have to see. in terms of products, in terms of services. so again, i think it's a little bit over bought in the short-term. >> and there's going to be a lot of hypo wie with apple tv plus facebook they report earnings in terms of the results, iec chairman barry diller joins squawk box in an exclusive interview this morning where he defended mark zuckerberg's recent controversial decision not to

censor political ads. >> think of all the services, all these big monopolistic services, facebook is really the most benign. facebook does not compete with its advertisers like the others do facebook has spent billions of dollars to try and tame this because everybody would want to tame it. it ain't easy to do so. >> so from a stock point of view, steve, what is at stake here for the decision mark zuckerberg has made to say, look, we're not going to censor these ads? >> so facebook's the opposite of apple. the stock is down 5% over the last three months. its relative performance actually peaked in july. in our survey, it's the least favorite faang. >> even netflix? >> netflix would be the next worse but yeah that's correct. i can understand his point i thought his speech actually was fairly coherent in the idea that they've hired 35,000 people to sift through all of this stuff. and i think he's kind of saying no more and we really don't want to be out there having to decide

what's right or wrong in political ads. i can understand that point of view the problem here is governance of a platform. how much is a platform company like facebook responsible for in terms of what goes on? and when something goes wrong, is it their fault or not >> exactly that's why congress is looking at section 230 of cdma so if they were to change the regulation governing the internet, let's say, is that a bigger risk for facebook what are the main risks around the stock? which as you mentioned is certainly showing some, you know, pricing at a lot of caution these days. >> i think among the faang names, clearly facebook has the most regulatory risk we expect it's mostly going to be fines but there could be issues in terms of breaking up the company. which we wouldn't expect might even be good for investors do they have to open up data to other people can people opt out at the browser? so we'll see how this plays over time frankly, when you look at ibm and microsoft and companies who

got to the point anti trust was an issue, what really hurt them was disruptive technologies. i'm still looking for what could disrupt a company. and things like artificial intelligence, they're leaders in so i view regulation as an issue certainly but one that more limits the upside than scares me out of the name completely. >> they're desperately trying to disrupt from within and not face that like their predecessors did. >> we don't cover the stock. >> okay. fine we'll call that a neutral. how's that steve, appreciate you being here today. steve from wolf research meantime, former exxon ceo rex tillerson is wrapping up testimony in a climate change fraud trial. rahel solomon has the results for us. >> he just wrapped up his testimony. both lawyers on both sides are on break for lunch the one person we heard from all morning, the star witness of this entire trial, rex tillerson, of course exxon mobil's former ceo and u.s. secretary of state so this case, state of new york versus exxon mobil essentially focuses on one question. did the company defraud

investors about the future risk of climate change? and current risk of climate change so the state argues that the company internally used one metric and then publicly disclosed another. exxon mobil claims if what the state is claiming is true, they'd be essentially undercutting themselves. so the trial is slated for three weeks. it started last week it seems to be moving relatively quickly, though, so it may finish a little bit faster than we initially expected. nonetheless, closing arguments are set for november 12th. kelly, send it back to you. >> exxon shares down by about 1% today. coming up, apex summit in chile was supposed to be the setting to sign the first phase of a u.s./china trade deal but with chile now cancelling the event, what's the plan b? we'll have the latest. plus amazon and apple want to get in your ears but who has the better product we'll have a live review ahead on rapid fire. we're back in two. does your broker offer more than just free trades?

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giving up any compensation at all. you're continuing to work and make $30 million a year after this horrific two accidents that caused all these people's relatives to go. to disappear to die you're not taking a cut in pay at all >> again, our board will make those determinations. >> you're not accountable then you're saying the board's accountable. >> boeing shares are down about 1% today and we'll continue to monitor the hearing for you as the day goes on. now, to sue herera for a news update sue. >> hello, kelly. hello, everyone. here's what's happening at this hour rival factions from syria's civil war gathered in geneva to discuss a new constitution for the country. it is being billed by a u.n. mediator that could help syria emerge from nearly nine years of conflict >> the fact that you are here today sitting together face to face ready to start a dialogue and negotiations is, i believe,

a powerful sign of hope for syrians everywhere both inside and outside the country. >> first lady melania trump and second lady karen pence landing in charleston to visit an elementary school and talk to u.s. troops. they arrived at joint base charleston where they were greeted by governor henry mcmaster and his wife peggy. a nep liaison mountain near has smashed the record completed the feat in only 189 days the previous record, believe it or not, was seven years and ten months you are up to date, kelly. that's the news update this hour back to you. >> cannot even imagine. >> no, me neither. >> thanks very much sue herera stick around here's what's straight ahead of us on "the exchange." >> ahead hbo surprises the street with its pricing. will it be low enough to be a real threat? flat sales are forcing one

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welcome back let's catch you up on the stories that made the cut today in rapid fire. here to break down the headlines are seema mody, robert frank, and date rogers. welcome, everybody first up, under the radar stock competing with apple just smashed estimates across the board in a beat and raise quarter. shares of navigation and fitness maker garmin hitting their highest on earnings. ceo saying they're well positioned for the rest of year and raising earnings per share guidance trading around $26 back in 2010 and now it's over 90 with today's 6% pop. >> their fitness devices i mean, we worry about it with apple but the market's clearly there for garmin i got gifted a garmin gps by my parents a couple years ago i haven'ttouched it because i' a big google maps, apple maps, waze person.

i got the gps. >> for the car. >> i don't think that's the growth area. >> as you say pivoted to wearables, fitness, other devices that has really helped its bottom line growth and i think it's a tremendous story because there are other companies like black berry that didn't pivot fast enough and their market share really dwindled. >> and they pivoted -- they pivoted to this very passionate market, which is all outdoor recreation so it's endurance runners, it's climbers tr climb, it's boaters. it's campers it's things none of us do much in this building. >> hey, we had a 5k the other day. >> yeah. it's a market that's very passionate about those devices and they use them and they're growing. they just launched a swim device that allows you -- >> oh, wow. >> to figure out how fast you're going. how many strokes. >> it is a great relevance and revival story and i should have mentioned when we were talking about google's reported bid for fit bit earlier in the week, barry knapp e-mailed me and said garmin's the way to go if you do

anything fitness related i should have said it then then maybe people could have bought the stock because he's absolutely right. but let's move on and talk about hbo max, which at&t is unveiling. it will cost $15 a month media mogul barry diller was on squawk box this morning and saying there's no way all these streaming players can keep up with surging production cost. >> the question is, how many subscribers does it take times x dollars to equal the massive costs that are now taking place? because those costs are literally insane three television programs. three episodes of 20 each television programs will cost $1 billion today. >> they're not charging what these things cost right now, right? i mean -- >> well, no. you can't spend, as i say, it'll change by the way. i mean, if you're -- if you're a producer, make any deal you can in the next six months. >> by the way, how good does the new squawk box set look? >> looks amazing.

>> applause all around. >> a billion dollars for three episodes, i'd pay for that. >> you'd want to be selling into that market. so it was interesting where diller said you have six months basically to go, like, does he mean the bubble's about to pop on the other side? i think it's going to take longer than that for this to shake out. >> before people realize maybe all these content deals aren't quite worth what they've been shelling out for them. i'm just curious, you know, we got the price for hbo max, the $14.99 a month how many people are going to say, okay, i'll get that, hulu, netflix. >> and to your point, netflix shares are up today and i wonder if it's because that price point is a little high in other words, maybe netflix investors feel a little relief. >> netflix is 13 i think. >> who has better offerings i think? >> hbo content, though is fantastic and all the original programming they have on the actual channel is some of the stuff i often turn to when i actually do watch tv. >> i thought david's interview with john he did was terrific. so if you look at their aiming,

hbo max is looking for 50 million subscribers. right? disney's looking for maybe 60 to 90 million subscribers with a much lower price but staky's point was we're not making for content sake. we're using it to drive at&t use more user experience so we can sell more tv on demand and more connectivity. >> exactly. >> that's right. >> the number that jumped out to me he said for every basis point of churn, it's $100 million difference to at&t i mean, at that point, you go anything that helps people stick around including an offering like hbo max is worth it. >> yeah. he makes a great point hbo max can be successful but at what cost to a company like at&t that at the end of the day is a phone utility? so i think not only is a content war but a pricing war. i think $14.99 is very expensive and it's also going to be late to the game by the time hbo max makes its debut, you already have apple, disney on the 12th of nochb november we'll see by then. >> the morning show on apple tv

friday all right. shares of yum are down more than 8% today on an earnings and revenue miss they had weaker than expected performance at pizza hut and kfc. they also took, and this is super interesting, a 15 cent loss related to their investment in grubhub grubhub was down 40% yesterday and this is not the only company whose venture capital arm is dealing with some losses general mills selling its stake in beyond meat, which is down more than 50% from its summer highs. although, you'd still think they're making plenty of money on that. paypal its stake in uber. i wonder if we're seeing maybe a little bit of a rethink of companies saying, well, we're mature so we're going to gamble and invest on our disruptors i wonder if they're going to start pulling back the horns a little bit. >> i think, you know, for a food company like yum brands to obviously team up with a grubhub at the time of the investment, it made sense for them it's a $200 million investment 3% stake they got a seat on the board all of that. grub obviously had a really rough quarter.

and this, i guess, hit was tied to the investment. hit its eps. the valuation for grubhub in their view had come down somewhat more broadly within the delivery space, i think for food companies, you're seeing these delivery companies were meant to help all of these food companies. dominos is getting hurt by all of this competition. grubhub is also getting hurt by all this competition in the delivery space you know, matt maloney talked about a more promiscuous diner. >> that's where i want to go. >> and then yum brands -- yum brands is also being hurt as well because grub didn't perform as well as they thought. >> maybe it's just the wrong delivery company because you have door dash and uber eats that have been very successful. >> there is no right delivery company. it's a bad business. you can't make money. >> grubhub, their growth just wasn't as fast or as strong as expected by wall street. you wonder if yum had not made that alliance with grub, wall street would complain it's not being disruptive enough like they should be doing. >> i'm sure general mills felt that pressure. that's why it invested in beyond meat but you're right, robert

especially the people getting in door dash now. it's everybody thinks delivery is going to increase the market share. kate said it it's hurting everybody. >> well, i think rich allison i don't think is wrong about there going to be some consolidation coming down the line not all these players will last. but even companies that had exclusive deals in the beginning like mcdonalds and uber eats, mcdonalds is teaming up as well. >> we want to quickly mention shares of molson coors which are falling today. this plan involves cutting up to 500 jobs and this really caught our attention, they're changing their name they're going to remove the word brewing and formally change the name to molson coors beverage. this is a real sign of the demise of the beer category. >> i actually covered this merger back in 2004 i think it was for the wall street journal when molson coors came together.

at that time, $3 billion it was all about distribution. and no one saw what was coming, which is this huge change in taste. not only away from beer to sort of wine and spirits but also now toward spiked seltzers and all these things that are just healthier. >> you know what i was thinking if they just went with coffee products, they could have kept brewing in the name. >> yeah. >> anything you can brew okay finally, this one, i want to see. the battle of the tech titans continues with apple and amazon both unveiling new wireless head phones apple's hit stores today amazon's echo buds are available next week. but we wanted todd hazelton to come compare them. todd hazelton. >> is he there >> okay. todd guys, can someone tap -- can someone get todd, please you know why he's wearing -- they're noise cancelling todd, get over here, son we want to know which ones you like better.

>> couldn't hear you. >> can you hear me now >> i can hear you now. >> yeah. very good. >> noise cancelling. >> the apple noise cancelling famous -- >> these are them. >> characteristic upgrade for them do you like them which ones do you like better? >> i like them a lot i just bought them for myself. $250, though, which is a big upgrade over somebody who just bought -- >> how much are these? >> air pods. i know kate just did 159 but if you go up to 199 if you get the wireless. >> most people are like me, they buy one a week because we lose one a week. >> right that's one of the things people should know about these. the replacements are really expensive like upwards of $189 so if you buy apple care plus, $29, then you can get your replacements if you ever lose them. >> for -- for one -- >> no, if you were to lose -- >> you got to get the whole set. they should sell them individually. >> they do they do. they do. you should still buy like -- i mean, the $29 for apple care plus, you're covered. >> so they're more expensive but they have the noise cancelling that's the -- what about the

amazon >> they have rubber tips some people didn't like the plastic tips on the old ones these are rubber and there's three different sizes. so if you have different size ear canals, sometimes they say people have different sized ears, which is weird and then there's like a whole software setup that shows you if you have a good seal for noise cancelling so you actually know if it's going to work well or not. >> and what about amazon >> amazon also has their echo buds, which are more affordable. they're $129 but they're not, you know, they're not as exciting. >> do they come in black and white? >> no, they just come in black right now. i'm not a big fan of the case. it kind of feels cheap. >> which looks more dorky when you put them on? all right. let's check it out let's see the dork factor. >> they're both pretty dorky. >> do they come in white or just black? >> that's not bad. that looks like jewelry almost. >> the one thing i didn't like is the controls are way different. >> yeah, i'm over here >> i can't hear. >> are they also noise

cancelling >> yes, they are and they're $129 so they're a lot cheaper. but the controls are a little different. i don't like that you have to push in on this button and you can switch between them. and then you can also talk to alexa. so if you wanted to order stuff from amazon, you can order that which is pretty neat. >> now, put the apple one back in and let's compare what did you call it, robert >> the dork factor. >> yeah, those are more dorky. i got to say apple's more dorky. >> i don't think so. >> so it's shorter than the other one. >> i got to work on my side profile. but -- but i like these because you can take them out easily and then you can also, instead of pushing in like you would with the alexa buds, the echo buds, you squeeze on the actual arm. >> to bring up siri? >> no, this is to turn on noise cancelling on and off or pause songs and stuff. there's like a little clicky thing. >> and how do you do on the amazon ones? >> on amazon, you have to touch this button. sometimes it works sometimes it doesn't it's kind of wonky

i am going to take teez out. i think it's because they put echo in your house so alexa everywhere echo in your car eventually. so alexa everywhere. and now, they're starting to put it wherever you go starting with head phones. they announced the ring earlier. and then they also have glasses that are going to introduce alexa. and i think because -- i mean i'm not really sure why they exist. maybe they're just trying them but i think it's because you can buy things from amazon wherever you are. >> no, accessories are clearly the next frontier. yep. and we know they'll try anything and here they're making their foray. we really appreciate it. todd hazelton. seema mody, we'll see you again in a moment. robert frank kate rogers. a former trump administration official once in charge of student aid is quitting in protest over the debt situation. and now preparing to run for senate he'll join me with his plan next as we go take a look at shares of tupperware, which are sinking 32% following a miss on the top and bottom line in their latest earnings the company blamed the trade war

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welcome back a former trump administration official who was in charge of federal student aid is sounding the alarm and saying much of the trillion and a half dollars in loans will never be repaid he has stepped down from his position and is now endorsing cancelling most of that debt and plans to make that a platform in his run for the u.s. senate. joining me now is wayne johnson, former chief operating officer of the office of federal student aid under secretary betsy devos. it's great to see you. welcome. >> thank you for having me good to be here. >> this is such a shocking, interesting story. you're a republican, correct >> i'm absolutely republican yes. >> the catch here which makes this i think a topic of such broad interest is that your plan would allow people to forgive up to $50,000 worth of student loans. but it would also give people who didn't -- who already paid theirs a $50,000 credit.

and importantly, it would get the government out of the federal student loan business in the future, right? and how important is that last step in particular here? >> well, it's critically important. the federal government should not be in the business of making, you know, loans directly to consumers it's, you know, for several different reasons but probably the most important is that it's an unlimited supply of federal funds chasing an unlimited demand and the student basically being the facilitator. encouraged by the schools to take home the debt, which they burden for decades so it's critically important the other piece of my plan that i think is also important is that if you're going to cancel the debt, you don't want to get into a situation where there's going to be a recurrence of those types of loans from the federal government in the future so you got to go ahead and make the decision how are you going to satisfy higher education, you know, availability slash attainment and that's the reason for a $50,000 go forward education credit allowance that people could use. so it's -- it's all of those in

a comprehensive bold and quite frankly package that sets the tone. >> no, it is super interesting and innovative look, this is a crisis my dad works with a lot of kids, young people, who have student loan debt. when you sit down and look at their financial picture, it's obvious it will never be repaid. some of their parents have co-signed for this debt and if it's not repaid, their social security could be garnished in the future i mean, we haven't even begun to grapple with this. my question to you is, what did you see while you were running this particular office that really hit, you know, sort of made it clear to you that this debt is not going to be repaid and how did we get here? >> well, we got here because, you know, an asemably of different programs when the federal government made the decision to have the banks no longer do this under government guarantee. it was really i think designed as much as anything to attempt to capture the accounting

profits associated with, you know, what was being put on the books. but the -- the -- what -- what really captured my attention, i had -- i've been 35 years in consumer finance business. i went back to school to get a doctorate in higher education leadership slash and i focused on student loan debt and i got that doctorate awarded in 2016. then in '17, secretary devos asked me to take over the student loan program at the department of ed because i had the executive experience i had the understanding of higher ed and also the understanding of student loan debt so we set about basically fixing the operational problems that, you know, the department gets attacked on all the time and i discovered and basically about six months ago it really became crystal clear that we were making a very broken, flawed system from a law standpoint operate more efficiently and basically putting more and more people into a problematic

situation. so that got me thinking about, you know, what needed to be done it's crystal clear that it needs to be done we congress crystal clear in my opinion it needs to come from the senate. and when the opportunity to petition for -- to be, you know, basically appointed by george governor brian kemp to replace johnny isaacson, i saw as the reflection point. >> i will be watching this closely because even elizabeth warren gained traction after she announced her student debt plan. this is a huge issue people will vote for it one way or the other and your plan puts out a viable alternative. we'd love to have you come back and discuss. thanks for joining me today. >> look forward. thank you so much. >> wayne johnson formerly overseeing the office of federal student aid. coming up, chile cancelling next month's apex summit where phase one of the u.s./china trade deal was set to be signed we're going to talk about the impact of that decision and what happens next for this deal after this servicenow put our workflows in the cloud.

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welcome back to the exchange chile taking the bold step of cancelling next month's apec summit

this is a huge blow to chile, we're also trying to figure out, what does it mean for the deal that was supposed to be signed there between president trump and president xi >> the white house coming out saying, the white house and chinese officials are working toward a trade deal. the trade deal was expected to be signed at that apex summit. protests have unfolded over the last two weeks, recently becoming violent what's interesting is that for many years, chile has been seen as the crown jewel of latin america. growth has been rapid. the rich getting richer, the poor getting poorer. a lot of these protesters are complaining about high utility bills and higher water bills there's been protests that have erupted across santiago. >> are we hearing anything about where this may go next >> it's a great point. what's interesting, even beyond chile, i know we have discussed this, we haven't seen the rise

of these political upheavals look at argentina, electing alberto fernandez. brazil is returning to economic growth even there you're seeing protests on the ground broadly speaking for latin america right now. >> we're waiting to here any indication about whether that zealing signed in that time frame. sima modedy, that's it for the exchange don't go anyerwhe, the latest fed decision on interest rates is on pausch lunch right after this atients are the same. atients are the same. predicting the next step for them can be challenging. today we're using the ibm cloud to run new analytics tools that help us better predict and plan a patient's recovery. ♪ ♪ ultimately, it's helping thousands of patients return home. and who doesn't love going home. if you're on medicare, remember, the annual enrollment period is here.

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welcome, everybody to power lunch. we're just minutes away from the federal reserve's decision on interest rates let's get to our panel now with what we can expect today david kelly is chief global strategist with jpmorgan funds john bellows is portfolio manager with western asset you think a rate cut is pretty inevitable, even if it's not totally called for, necessarily? >> i mean, if you just look at the fed's mandate, inflation and growth, it's hard to say this is a must do rate cut

but i think from a risk management perspective, if we're not about to overheat, the expectations will which have continued to fall, despite the easing we've had this year, the fed feels like this is the right thing to do. >> the risk of a cut is pretty low. the economic risks that would ensue are pretty low >> david and i were talking about this before. >> i think there are risks, but we'll get to it. >> there are long term risks i don't think we should have headed down this cycle here. the economy has slowed dune to 2% growth. that's actually their target this is a tortoise, it put on returning shoes in 2018. started running faster off to the running shoes, donned some slippers, it's moving forward 2% there's no reason for the fed to be cutting rates to negative short term rates to deal with a problem that's not there >> there is a problem there. inflation expectations, they keep coming down, the fed is worried if it doesn't get ahead of it. >> you have to read about what's

causing low inflation. it's not interest rates being too high that's not the problem >> john bellows, why don't you jump in here let us know what you think is going to happen. >> the case for a rate cut is pretty straightforward growth has slowed. it's the second straight quarter of outright contraction. at the same time inflation is below target only 1.7%, as was noted, the market base for looking indicators are pessimistic that we're up to 2% in an environment of slowing growth and below target inflation. you don't have to overthink this, central banks should be providing accommodation, it's what the fed has done. i think they're going to do if again today. it's the right thing for them to do right now >> how does the fed tilt after this decision. that's the key question in the markets, baked in is a 25 point cut. what's not baked in is what happens afterwards is it a complete pause, a complete no more as we heard in 1998 >> right, so i -- i think the

markets moved a lot in the last few weeks, we've seen 20 basis point increase and two year yields 30 point increase in 10 year yields a lot of people are expecting the fed to signal their done i don't think that's what's going to happen. they're going to reiterate the same dovish arguments they've used all year. that's an environment where the fed needs to stay cautious, and i think air on the dovish side the backup in yields is probably misplaced and the feds could be dovish today >> why not keep options open at this point >> well, i think what we saw in this meeting -- >> rebecca. >> keep your options open. >> the fed didn't try to change anyone's expectations, the market feels like the market led the fed to this cut. if they don't want that to happen again in december -- >> if you give him a cookie or

another cookie or glass of milk, until you say, no more they will be patient before they make any further adjustment to policy >> patient, balance, whatever. >> patient means they're not going to move rates in december. i want them to say that. >> we have to get to the fed decision let's go to steve liesman now for that awaited decision. >> one quarter point cut, the federal reserve cutting interest rates by one quarter point for the third rate cut this year the fed removing the phrase that it will act as appropriate instead, the committee now says we'll assess the appropriate path of the federal funds rate rosen grant and george who wanted to hold rates steady, bullard who was at the last meeting who wanted the 50 basis point cut, now is voting with the majority fed says it will cut -- today's cuts were motivated by global developments and muted inflationary pressures the assessment of the economy,