to be more exacerbated as you get negative headlines like this. >> let's get final trades real quick across the board. >> you have to change it because it was baba so let's go crowd castle. >> i'll give you xre. >> run. >> stz constellation. >> domino's pizza. >> good stuff. "the exchange" starts now. >> thank you very much, scott. welco welcome to "the exchange." here's what 's head es the senate passing de momocracy bill it could have a major impact on trade talks. senator josh holly, one of the bill's co-sponsors will join us. plus, teflon tim strikes again the apple ceo touring a mac pro plant with the president in texas in what is sure to be an eye-catching photo op. a look at how mr. cook has become the trump whisperer and a top strategist says there is one worrisome chart on the majority right now dom chu's got the numbers. >> melissa, you just heard scott

on the half-time report mention this just in the last few moments, we got some headlines from reuters close to the trade negotiations saying the phase one deal may not happen this year and that's what sent the dow toward its session lows the s&p 500 off about 20 points and the nasdaq down by about three-quarters of 1% they were both record high performers in today's trade. target shares you can see here up over 80% in the last year up 12% today better earnings, better sales, they upped their outlook digital sales driving the whole thing. over the last year, look at this every time a quarterly report, it seems like this stock just goes higher and higher and we'll end here on shares of another record high. america's second biggest retail ho home improvement retailer. weaker than expected sales but

that pro-business to sell to contractors doing very well at lows. >> thank you very much, dom. our top story today, china condemning the senate's passage of a bill protecting human rights and democracy in hong kong and just moments ago house speaker nancy pelosi said the house will vote on the bill later today. this as china continues to crack down on pro-democracy protests there. the hong kong government said it would harm relations with the u.s. joining us from capitol hill is senator josh holly of missouri who co-sponsored the bill senator holly also introduced a bill preventing tech companies from sharing or storing consumer data in china. >> thanks for having me. >> i want to ask you about the trade headline just now that sent the markets a little lower about phase one possibly not happening. are you concerned that this is happening on the very same day the senate is passing this bill and beijing is coming out and condemning it?

>> well, i'm not surprised beijing constantly reneged on its commitments. it made a commitment in 1984 with an international treaty about the status of that city. now, it's trying to renege on it it has various times in these trade negotiations gotten to the table. said that we had an agreement and principle. only to back off any time the u.s. tried to put in enforcement mechanisms so i would just say to beijing to quit playing around if they want to make a deal, make a deal. but we're not going to be just told to trust them any longer. we're actually going to hold them to account. >> what are you trying to accomplish with the passage of this bill? because some of the provisions some people point out already exist in law the ability to suspend preferential economic status the ability to sanction officials. those already exist in the u.s. law. so what are you trying to accomplish >> this bill puts new teeth into those provisions it also directs the administration to undertake a review of the status of hong kong to make sure that the beijing government is actually living up to its commitments look, beijing needs hong kong. i mean, hong kong is really the

economic lung in many ways of the chinese communist party, of mainland china and so what this bill does, it says look, you can't just steamroll hong kong, violate your treaty obligations, and expect us to look the other way. because here's the bottom line we know beijing wants to dominate hong kong ultimately, to dominate the entire asia-pacific, and to shut us out of it we cannot have that and this bill is about us standing up. >> the protestors have used the stars and stripes as sort of a rallying cry they sing the star spangled banner is this a message to the protestors that the u.s. stands behind them in their fight for a democratic hong kong or is it something short of that >> no, i think it -- it certainly is a message to them that the world is watching and that the free world is with them and listen, it's very important. the protestors are not asking for anything new from beijing. they're just asking for beijing to honor the treaty commitments made decades ago they're asking for the basic liberties that beijing has already promised them. this isn't a separatist

movement this isn't a movement seeking change in the status quo they just want a return to the status quo it's beijing that's trying to change just like beijing is trying to dominate the whole region. >> do you want sanctions to be put in place and i'm asking you this because i'm thinking about sort of the worst-case scenarios that could happen and could the ultimate loser be hong kong in the end if it becomes no longer a conduit for finance into china if it's no longer a free-trade zone, that effectively is the demise of hong kong as we know it. >> well, beijing is already ruining hong kong as we know it. the city is in recession it has been for months that's entirely because of beijing's policies it's because of the violent crackdown that beijing has been pushing in that city for literally months now so i don't think that anything that the u.s. senate has done, congress is about to do, is going to worsen the status of the city that's on beijing. i think it is absolutely vital we stand up to beijing on this issue, on the trade issue across the board and say, again, we are not going to allow beijing to weaponize the international trade system, to build their

military on the backs of our middle class, and we're not going to be shut out of the asia-pacific. >> there are unintended consequences, though, of course to every action. senator, are you worried about the impact on u.s. businesses operating there? or operating in china for -- for so many companies, china is a backbone of growth when it comes to sales and what we could see is a boycott of u.s. brands. >> yeah. i'm not really worried about our companies doing business in china. >> you're not worried because it won't happen or you're not worried because you think that standing up with the protestors is more important than the interests of our companies here >> i think that our major multinationa multinational corporations who are doing business in china have a lot more leverage than they've been willing to use with beijing. and i would just say to companies like apple, like disney, don't become part of beijing's propaganda arm use the leverage that you have in order to stand up for the basic commitments that all americans agree on don't get co-opted into becoming part of the propaganda machine.

>> the mba has often been singled out, senator, and yet if you take a look at the number of nba fans in china, it's double the population of the united states what leverage do companies have over there i mean, for some, this is -- this is the big market this is the big kahuna when it comes to markets to serve. >> american companies have products they have investment that the chinese communist party in beijing desperately needs. i mean, the truth is that the chinese market is heavily dependent on american investment, on american technologies i mean, how has china built its technological sector it's by forcing these technology transfer agreements from american companies so they are very dependent on us and our supply chains. it's time our companies realize the leverage they have and above all don't allow beijing to put the screws to you. i mean, this is just the beginning of what beijing is going to do. it's going to ratchet up the commercial pressure. it's going to use that commercial pressure on our companies to try to get our companies to repeat the beijing communist party line and again, all the while, it's going to try to grow its

influence in the asia-pacific and ultimately shut us out that's a scenario we cannot agree to. >> you want to make progress on forced intellectual property transfer and yet we need to get that trade deal done one of the unintended consequences is that a bill like this makes beijing even more infuriated with the united states why not just put this off for a little longer? >> well, first of all, we've heard for years that we can't afford to stand up to china because of something you know, because they're too big. because we need them too much. and we've seen where that's gotten us. it's gotten us jobs lost to china. it's gotten us farmers targeted in a trade war i think the president has been right to stand up to china he's been right to demand a better deal. and my view is we need to multiply the leverage points with beijing, not to reduce them so i hope the hong kong human rights and democracy act, besides expressing our support for the people of hong kong will also be a new leverage point that makes it clear to beijing we're not backing down. >> and if this means phase one doesn't happen, so be it.

>> i think it hinges on the good will of beijing and i have to say that good will has been in very short supply for very many years. >> senator holly, pleasure speaking with you. thanks for your time. >> likewise. thank you. >> well, despite today's move lower stocks continue to hover near all-time highs and have been for the better part of two months but our next guest says despite the record bull market, there is one chart that is causing him to worry joining us now, the chief u.s. equity strategist at citi group. tobias, great to speak with you. you're worried about correlation. explain to us why. >> sure. so we look at the top 50 names in the s&p 500 in terms of market cap and see how they trade relative to another. right? they have different fundamentals different valuation. different drivers. when you do get high degree of correlation, past 21 days of trading in terms of directional activity, they tend to almost trade like an etf. that usually means that the

market is in a sell-off mode people are selling both their winners and their losers kind of in a worrisome pattern and it generates opportunity share price dislocation, things like that. when you have very low degrees of correlation, what it's suggested now is investors are being a little too confident in their abilities to kind of ignore macro conditions and just focus on idiosyncratic investment themes. and in that sense, we are at that level today we've seen the numbers drop below 10%. about 8%, 8.4. somewhere depends on the day and investors are feeling a little frisky. and it's not surprising. the master's moved up. people have almost been reluctantly pulled into the market feel they have to kind of be in it to win it and certainly late in the year with performance pressures, this isn't wildly surprising. but it does suggest that they've ignored a little wbit of the macro condition. give you one example you guys wither talki

were talking about we were in europe a couple weeks ago, literally nobody asked us about trade when we were seeing investors because it was kind of assumed that that macro fear has now been put to rest and you can see immediately as that news came out, the market kind of sold off so when you start kind of ignoring macro and you start just focusing, you get those very low correlations. now, again, the world's not a terrible place but we've had a nice run in the last six weeks we thought markets would overshoot. they have. and you got a little bit of risk nothing, you know, devastating but some risk here. >> so tobias, on the other side when the markets go lower, is it just a dash for the exits? does that mean that everybody's going to be looking to go out? >> well, i don't know if they'll be -- i think there's so many people that have missed this move i'm not sure everybody's going to kind of run for the hills because, again, you need fundamental problems and we don't seem to have it. and if anything, some of the data on the economy likely gets better in the next two, three, four months. and i think everybody will be happy -- excuse me -- if you

were to see, for example, an ism print above 50, i think it would make people more comfortable so again, i'm not trying to suggest people run away from the market we have a 3300 target for next year it just maybe we've moved a little bit too fast in -- and too far in that very quick timeframe. and -- and again,nothing devastating. just maybe, you know, cool your jets a little bit here. >> all right some good advice thank you. and here's what else is coming up on "the exchange. coming up, the president tours a u.s. factory making apple products a look at tim cook's savvy dealings when it comes to the president, social issues, and so far, little backlash on its presence in china. plus, bank of america makes a very bold call on a stock that's down 37% this year. and single-family rentals are in such high demand, it's getting almost impossible to find one

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what are you doing back there, junior? since we're obviously lost, i'm rescheduling my xfinity customer service appointment. ah, relax. i got this. which gps are you using anyway? a little something called instinct. been using it for years. yeah, that's what i'm afraid of. he knows exactly where we're going. my whole body is a compass. oh boy... the my account app makes today's xfinity customer service simple, easy, awesome. not my thing. take a check on the markets. the s&p 500 is close to session lows right now and this after a headline that basically reuters cites sources saying a phase one trade deal may be delayed at this point so we did see the markets lower.

the nasdaq is down by 1.1% and of course that's the home of so many tech stocks that are affected by this trade war take a check on apple, in fact, shows the story. you'll see the leg lower there on that headline apple shares now down by more than 2%. speaking of apple, president trump is joining apple ceo tim cook to tour -- aimed at benefitting both the president and cook eamon javers hi, eamon. >> just over an hour's time, he's going to do a tour of that facility that you mentioned where that manufacture that mac pro desktop computer but look, the president said as he left the white house earlier today that this is all about what he's been campaigning about and what he's defined his presidency on, which is convincing american companies to make products here in the united states of america. take a listen to what he said. >> we're spending a tremendous amount of money and i've been

asking tim cook from the day i got elected from the campaign, i've been asking tim cook if they would, we want to see apple build here that way, you have no tariffs. there's no tariffs >> but the tension here is that apple is exactly this type of company that the president's been criticizing it's a global fe nphenomenon, a is as we all know. take a look at the difference here between apple in the united states and apple around the world. in the united states, that's where they design a lot of those products and engineer a lot of these products but not necessarily manufacturing the products here. apple says it's going to inject $350 billion into the u.s. economy by 2023. and they say 2.4 million jobs in the united states are created by apple's ecosystem. so not necessarily apple employees but created as a result of apple's activities here but outside the united states, most of the apple products are manufactured and assembled outside the united states. the company says it's supported 4.8 million jobs in china in

2017 and of course, as we know, the company operates in 43 different countries around the world so both president trump and tim cook are going to be doing a delicate dance here. the president's going to be trying to convey this message and punch it home for americans that he is creating jobs here in the united states. tim cook, on the other hand, is going to want to spend his time trying to convince the president not to hurt apple on december 15th that's that next deadline for the next round of tariffs, which could impact all those apple products, guys, that are manufactured overseas. >> eamon, the supply chain for those mac pros that will be manufactured exist outside the united states, correct all the components that go into that machine must be brought from abroad. >> that's right. and in september, apple was able to get some tariff exemptions in order to continue to bring some of those products into the united states without paying tariffs so they can assemble them at that factory here in austin so, yeah, a lot of this is global supply chain even if it's

finally assembled here in the united states. >> eamon, stay with us we're going to bring out corporate media reporter for "the new york times. ed, great to have you with us. what is tim cook doing right here >> he's figured something out that the other tech executives haven't. as eamon talked about earlier, they got the exemption on those tariffs. that was because tim cook put in a personal phone call to trump and said, hey, can you not do that, please that'll actually hurt us and low and behold, trump sort of backed off of it. in exchange, cook has been talking about, we're going to open up factories in the u.s. we're going to create more jobs for americans. trump liked that so took the tariffs off. context, though, this new factory in austin they're talking about, it's assembling the pro, which is a high-end machine which i think accounts for something like less than 7% of total sales anyway. so kind of makes sense you're going to assemble the most expensive product in america but the bigger businesses outside of the u.s. anyway

so that's the bigger game that tim cook is playing. >> in terms of apple's user base, ed, how does tim cook toe the line you know, being cited by the president, having a great relationship with him. they're just a phone call away from him, et cetera, et cetera, and not infuriate anybody? >> apple customers and even apple employees, as well, you know, the thing is apple products have been worldwide products for years and years and years. and i think, you know, people have relationship to them. you know, it is very personal but at the same time, they don't see, unlike say media companies like a facebook or twitter, you know, they impart their own value to the device. it's a physical thing as opposed to sort of the position the company's taking so in that way, he has more room tim cook has more room to sort of like thread that needle sort of appease people like trump, as well as their customer base. >> eamon, in your opinion, i'm asking your opinion i realize but is this a more important photo op for tim cook? or for president trump >> you know, look. i think the messaging around this tells you answer to that question all of the messaging from this has been coming from the white

house. apple's not really given us any information about what's going to happen today. we don't really even know the full run of show inside the factory yet today. all the details, everything coming from the white house. apple, total radio silence on this for the most part i think that shows that the white house wants to be in control of this and that this message is important to this white house. and the president is gearing up for re-elect in 2020 he wants to be able to argue that he brought jobs back to the united states and he's going to use events like this to hammer home that message. >> all right gentlemen, thank you eamon javers in austin and ed lee with "the new york times." coming up, eu ambassador gordon sondland dropping a bombshell on the fourth day of impeachment hearings latest on capitol hill next. still ahead, walmart ceo reveals one of the compa'sny biggest delivery problems. coming up in today's rapid fire. "the exchange" will be right back i knew about the tremors.

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not much, how about you? >>are you answering my text in person? i am...yeah. >>lol. come on in. this is tech that helps you be there. the nissan altima. now offering the most tech-advanced engine in its class. eu ambassador gordon sondland testifying on capitol hill today in the latest round of impeachment hearings. elon moy's got the latest from washington. >> well, melissa, you're right sondland started his testimony this morning with a pretty damning accusation that he believed the administration's request to ukraine for investigations in exchange for a white house meeting or phone call amounted to a quid pro quo. but after that, he's been a sort of vague witness in answering questions from both republicans and democrats. >> i don't remember any heated conversation in the meeting.

i don't recall it specifically but i may have. >> we have all this, you know, back and forth but, you know, as it -- as we get to the end here, you don't have records you don't have your notes because you didn't take notes. you don't have a lot of recollections. i mean, this is like the trifecta of unreliability. >> still, sondland's statements have implicated not only former national security advisor john bolton but also secretary of state mike pompeo. melissa, pompeo spoke with reporters a little bit ago and he said that he is proud of the work he has done on behalf of ukraine. >> all right elon, thank you, elon mui in washington for us. here's what's ahead on "the exchange." ahead, a look at what target did right to post such blow-out numbers. bank of america says it's time to buy one extremely beaten-down stock. a look at what could be the most rare find in the housing market right now and uber wants to record

your conversations it's all ahead on "the exchan."ge for every dollar you spend at a small business, an average of 67 cents stays local. shop small and watch it add up. small business saturday by american express is november 30th. that's what happens in golf nothiand in life.ily. i'm very fortunate i can lean on people, and that for me is what teamwork is all about. you can't do everything yourself. you need someone to guide you

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let's catch you up on a few stories that should be on your radar. it's time for rapid fire

we're having a very detailed, good conversation about condiments but that's not part of this. here to break down the headlines, bill griffeth target, absolutely knocking out of the park. retail beats the street. hitting all-time highs now on pace for its best year since 1975 just yesterday, the consumer looked shaky in the back of home depot and kohl's but for target ceo and chairman, the consumer is stronger than ever. here's what he said to say on squawk box this morning. >> we continue to see a very healthy consumer environment obviously, a very strong labor environment. unemployment continues to be very low the percentage of consumers in the workforce continues to grow. wages are rising consumer confidence is strong. and all the indicators right now would say this is going to be a very solid holiday season. >> i mean, guys, listen. when was -- the moment i heard that, i thought how long ago was it when brian cornell said this

is the best retail i've seen in my lifetime? >> that was last year. >> was it last year? it was already last year. >> yeah. they've been saying this for a long time and i think to be fair even home depot actually said to me we are absolutely not seeing a slowdown in the consumer we lowered our guidance because these initiatives we have planned are taking longer to bear fruit so i just want to get that out there because, yes, there are retail winners and losers. some of these, i think, are self-inflicted to some degree. so you have to do your homework. which i think is interesting we talked about that move in target i mean, look how strong it is. up 12% it's not lifting out retail stocks i think investors are starting to realize there are different stories to be had in between but consumer in general i think is very strong going this hol holiday season. >> i'm a little slow on the uptake sometimes but this one really startled me the cost, you know, i was wondering how many people are actually going to order something online and then go to the store to pick it up? they are and it lowers the cost for home depot because they don't have to warehouse that stuff it goes from the store to the

consumer just as it would if it was a regular transaction. >> right and target finally sort of shared some of these metrics with us because i think many of us thought how can it be cheaper to ship from store and i believe it was at target's investor earlier this year when they gave us their full year and they said if we ship an item from the store, it is on average 40% cheaper than if we shipped it to your home from a distribution center. if you come to the store and pick up, it's 90% cheaper. >> the question, though, about target here is that in december of 2018, what was its pe >> yeah. >> it was 10 1/2 what is it today it's north of 20. >> you want to know why, though? you want to know why and there are those out there who will say it's justified and they will say the same thing about walmart and the reason is every time you see a chart of those two stocks, look at every quarter's earning report date and the stock surges in large part because of the ecommerce and digital sales

growth that they're seeing, which is north of 30, sometimes 40%. >> which it should. >> correct right. but this is a growth story so when you talk about melissa, the multiples, people attach higher multiples when they say the growth will justify the multiple -- >> so are we at a point where we have to rerate target and walmart? >> look at the target stock. i mean, if you take a look at that leg up higher, leg up higher in that chart every time they have an earnings report, that's what happens. so there is this re-rating of these particular companies whether it's justified or not. >> that's the question. >> i can hear some voices from the distant past saying, well, when you have to start rethinking priced earnings ratios and -- and re-rating companies and things like that, then you're getting yourself into trouble and you're smelling a top at some point so you have to be careful. i would say let's not forget how fickle the consumer can be. >> sure. >> there are so many retailers who, in the past, could do no wrong. i think of gap for one instance. admittedly, that's a different,

more narrow story because they only apparel as opposed to being a department store or discount retailer but there are plenty of those retailers who we thought walked on water and now look at them today. so just be careful. >> speaking of digital sales and walmart, becky quick sat down with ceo to talk about its direct to fridge grocery service called in-home when asked what the biggest problem the service faces. guess what he said dogs according to the walmart ceo, there have even been a few instances where an in-home delivery had to be rescheduled until the quote dog issue is resolved you actually asked about this. >> i actually did ask him about this because we were going through how is this going to work and the people aren't home and are they comfortable with it they said, look, you let in your house cleaner. you let in your dog walker i said, wait a minute, what does happen if there's a dog? and they said oh, there's a part on the app, on the service where you have to say if that's true well, i guess it's not so fine people either forget to do it or

don't want to do it. they don't want to crate their animal for whatever period of time is necessary to satisfy that. >> do we know what percentage of sales this represents? >> we have no idea i mean, i just asked the walmart cfo if he could tell me how the in-home delivery program was going. >> what percent of customers. >> the program's only available in three cities so far. >> that's true. >> all they would say so far is they're excited about it. >> i don't know. we're talking about -- we're talking about walmart and we're talking about dogs in a -- in home. >> it's funny. >> are we also talking about the fact that there are probably millions of americans like me who wouldn't want to let anybody in their home to drop things off? >> i have two dogs at home. >> yeah. i have two dogs too. i just don't even feel comfortable letting anybody have a key to my house. >> because these are people you don't see, you'll never see again. versus a dog walker, a house keeper, et cetera. you have a relationship with those people. >> i'd put those cams. i don't have them already

because i don't let anybody in my house. >> problem solved. all right. let's talk about canopy growth the stock has had a rough ride down 70% from its all-time high just last october. bank of america says the worst is over for the cannabis company. >> i think we're missing part of the story today because i don't think it's just the bank of america upgrade because the house judiciary committee about an hour ago passed a bill that would lift the federal ban on marijuana sales in this country. that's pretty big. and jerry nadler, who chairs that committee, says he believes that the house will be able to pass the entire bill by before the end of the year. now, it remains to be seen what happens in the senate. that may be a harder sell. but i think it points up to the fact that the industry, i think, believe that there would be full legality of marijuana in this country by this time it's taking a lot longer than anticipated but it is starting to happen here. >> for the canopy, that would be a great thing for federal

legalization but for u.s. operators, it would be a terrible thing because they've spent money building up the licenses, building up the retail footprint in each individual state. so they have sort of the lock on those states. >> exclusivity yes. >> once that barrier breaks down and anybody can go in and sell anywhere, their expertise, their edge is gone. >> the perfect case study on this is the casino market in many parts of the country. i remember when i first moved to the new york area, the only place i could go for a fun night at the casino was to drive 2 1/2 hours to atlantic city now, you can go anywhere some places in new york. i enjoy a casino every once in a while. i'm just saying. but i think you're right about the -- here's what i would say remember 30, 40 years ago? this was not a -- legalization of marijuana was like so taboo now, the political environment is kind of in favor of it. and i wonder how much of it is just because we have this fiscal shortfall that we have to make up and we want to find a way to tax it and the easiest way to do that is legitimize the business.

>> even jerry nadler pointed out that they do get political pressure from the fact that various states have approved these -- these laws at this point. so i think that it's a combination of the fiscal issues that we face in this country and also the political reality of what things are going on right now. and let's not forget who runs the house right now. >> sure. >> which party and that will have a big impact on the elections next year i would think. >> the black market, though, is still very, very strong in all the states. >> absolutely. >> you've seen firsthand, melissa. i watched the documentary. >> all right finally, uber plans to roll out a safety feature where drivers and riders can audio record rides. the feature will be piloted across latin america next month and uber will test it in the u.s. soon as part of its tool kit. but the privacy and legal concerns around the feature are myriad, as you can imagine i don't want anybody listening >> well, wait a minute what kind of conversation are you going to have with your uber driver >> what if you were on the phone with a source reporting on a --

>> that happened to me in an uber i thought to myself should i say something to this driver but i couldn't not take the call it was like a news event and i had to get to a location. >> but you have to opt in for this audio recording, don't you? >> i think it depends if it's a one or two-party consent state, right? >> they're testing in latin america right now so i guess we don't really know. >> wait, you guys have all been in cabs at some point where they have those video cams facing you, right >> do they in cabs >> i've definitely ridden in some kind of car service before where hanging from like where the rearview is like pointing back at me do i have to give consent for this like, i don't -- >> what happens to those images? what happens to that audio who owns it? >> well, i was ready to oppose this until you hit me with the source phone call. that's -- yes. and business deal. let's -- a business person. >> it could be anything. >> negotiating a deal. >> it could your personal life. >> right. >> well, that -- that's neither here nor there

i got nothing to hide. but a source call or negotiating a business deal of some kind, i mean, if it can't wait for 30 minutes, whatever the duration of the ride's going to be, then you got a problem. but that's a serious consideration. >> yeah. this is a really tricky one. >> it is i understand why they want to do this for safety reasons because there have been some tragic issues that uber's had to deal with of people who, you know, have died or been attacked or whatever but i don't know maybe this isn't the answer. >> i'd be more comfortable with video over audio. >> i would too i would too. >> as the parent of a young daughter who will maybe someday start using ride-sharing services, i'd feel much better if there was some kind of video evidence that was out there to track 'em. >> good dad. >> yeah, i try. >> guys thanks bill, courtney, and dom. the company that turns around poorly run hotels has attracted investors like softbank. we'll hear from the ceo next as

soon as we take a break. let's take a look at the markets. stocks falling on reports of phase one of the trade deal may not happen this year s&p 500 right now close to session lows take a look at the semi-stocks that headline hitting semis very hard now down by 1.4% "the exchange" is back in two minutes. rlotte! oh hi. he helped me set up my watch lists. oh, he's terrific. excellent tennis player. bye-bye. i recognize that voice. annie? yeah! she helped me find the right bonds for my income strategy. you're very popular around here. there's a birthday going on. karl! he took care of my 401k rollover. wow, you call a lot. yeah, well it's my money we're talking about here. joining us for karaoke later? ah, i'd love to, but people get really emotional when i sing. help from a team that will exceed your expectations. ♪ his haircut is "nice." this is the most-awarded minivan three years in a row. the van just talked. sales guy, give 'em the employee price, then gimme your foot. hands-free sliding doors, stow 'n go® seats. can your car do this? man, y'all getting a hook up and you don't even work here.

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oya is a budget hotel chain with estimated value of $10 billion. airbnb and sacoya capital. but raising concerns that very similarly raised those concerns about we work. seema modi in hollywood, florida, with the ceo. see ma. >> melissa, thank you. great to have you on cnbc today. i met you two days ago when you were primarily an indian booking site expanding across asia. >> 80 countries across the world. >> what is a pitch to american

hotel owners why should they take the oya model? >> thank you for having me, seema, i really appreciate it. oya hotels has evolved from a leading hotel chain to now being one of the leading hotel chains with a whole 1.3 million rooms but here in the united states, what we saw early when we came here during march of this year is for a long time, middle-class americans traveling across cities on highways, in business cities, or leisure cities, we felt they deserve better they deserve better products for lower prices and our proposal to our underlying asset owners is we will come in, invest the capital to make mid-market and economy hotels exciting. make sure your consumer ratings are higher and at the same time, consumers can get great products at low prices. >> on that point, what is your reaction to some of the hotel owners that say they sign up for the oyo model but they're not really seeing the benefit? >> i think generally if you see some of those responses, first

off, oyo's evolved so significantly, there will also be a certain set of assets that will have a challenge. and our responsibility as a company is to make sure we work with them and deliver the best results. the biggest we believe is they have constantly seen great jump in occupancies but that has also come with some technological, as well as process improvement challenges that exist. >> so are you confident that the u.s. hotel owners that sign up for oyo won't be feeling or won't be under more financial distress >> look, our perspective is that we are only adding to what the asset owners had they had an asset which existed earlier. oyo come in, invest a little more capital, improve experience, bring a good price point and bring technology that makes the life truly exciting. so in you thif you think about r 200 assets are already assets over the united states and every day, over 10,000 customers in the united states. so we are very thankful with

results we have been receiving here. >> your reported valuation is $10 billion. you are able to convince a consortium of japanese banks to give you a $2 billion loan that allowed you to buy back shares from existing investors, like sequoia and light speed. how did you do that? how did you convince these banks at the age of 25 to give you such a big loan? >> yeah. sure, i just turned 26. >> oh, excuse me. >> but that said, look, i've always wanted to try and increase my ownership in the business when the company was really small, i could not convince enough financial institutions, banks to be able to support us, raise more capital but i think at this point of time, oyo was in the sweet spot that we had some businesses that were doing very well in terms of economics and the same time, the company was kbroeigrowing very quickly. >> your mentor, did he play a role in making sure you get that loan >> so i think this is something that has been lot of discussion has happened and i think we are very thankful

to have softbank and softbank vision fund with a share holder. with that said, i think softbank did not have anything to do with this loan. >> what's your relationship like right now? os obviously increased focus on the vision fund. >> so two things it's undeniable that softbank vision fund is one of the -- of the current generation of entrepreneurs. there's been lots of companies have invested in and it ranges from advertising, food delivery, hotels, and so on and so forth our relationship is as any other portfolio company would be we are very thankful to have the opportunity to be a part of the vision fund but beyond that, we also have great share holders in sequoia, light speed, green oaks, airbnb, and others and we are very thankful to be in illustrious group of companies. >> do you call 'em up every week how often do you talk to him >> i wish i was as lucky to call him every week i think we -- we do our business

and we of course report to our share holders as we have to. but every time i get an opportunity to speak to him, i think it's a great learning experience. >> we'll continue to keep an eye on your company. a disruptor in the lodging hotel space. melissa, i'll send it back to you. >> all right thank you. well, there is one sector of the housing market where demand is soaring and supply is getting thinner and thinner. we'll tell you what it is and what it could mean for investors next "the exchange" will be right back re behind schedule. but sophie's enthusiasm cannot be dampened. not even by a run-away donut. we powered through it in our toyota prius. because a star's got to shine, no matter what. it's unbelievable what you can do in the prius. toyota let's go places. - when i see obstacles, i create opportunities. (soft music) - when i see adversity, i find a way.

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welcome back to "the exchange." there is one area of the housing market that is red hot right now but supply is ice cold diana olick joins us right now with where the demand is. >> single family rental. the demand is so high, the pickings are getting slim. single family vacancy rates are following. that's down from 7.1% a year ago. vacancies are even lower in major markets like phoenix, are las vegas and seattle. low supply is pushing rents higher, particularly on the lower end of the market. where they jumped 4% in september. higher rents were up less. all this despite the huge increase in the single family

market investors bought thousands of distressed home just between 2012 and 2016 most thought as the market recovered, rental income is just too good and investors are buying more. back to you. >> at some point something's got to give, right >> if rent's keep going higher, there must be a point where there's a chance to sell some of thighs homes that were bought for investment purposes? >> you would think >> the rental income is still coming in. if that demand should start to fall off, maybe some people will start to sell these homes, because there's such high demand and low supply but that is not where we're at right now elizabeth warren's plan to increase taxes could have a big impact on innovation and the economy. look for that next

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endorsed by aarp. learn more about why you should choose an aarp medicare supplement plan. call today for a free guide. a new column in the wall street journal is touching on the wealth tax not only for the billionaires of today, but the

billionaires of tomorrow great to have you with us. >> hi, melissa what do you mean the impact of the billionaires tomorrow. i thought people founded companies for different reasons? >> i think it's true for a lot of entrepreneurs at a certain point when they reach a billion dollars they're going to be face a set of taxes that will make it harder to build beyond that. mark zuckerberg made 40% returns on his investment. a lot of people didn't get 40% a lot of people got 10% or 5% or worse. a lot of folks are going to end up with far less wealth than they did before. should we care about that. there is research that companies tend to be prosperous places

the billionaires seem to be positive for them. i think it's a case for challenging this notion that we shouldn't have billionaires at all. >> this would have huge implications in terms of corporate america. stop because then incentive is not there any more you're talking about capping the size of companies and the growth of companies >> you're capping the sign of what any founder can fold in his or her company we know that they don't just take increases passively when states raise taxes, you often see wealthy people and entrepreneurs moving to other states opinion even though that's harder to do, you could have some individuals not coming

into the united states for the first place. what effect does it have on bill gates or elon muss if they're told you can be successful, but you will have to give up control of your company i'm not sure that's conducive to them being as committed as they are now. you say it's important to look at where that wealth comes from. >> i think there is some evidence that hereditary wealth is not associated with strong growth than people who built their own businesses that gives you clues as to how you want to address this from a tax point of view. you can get rid of this stepup that eliminates any capital gains tax when you die those would affect inherited wealth,

but they would leave alone the ones that are in the process of building their companies >> what is the most concerning byproduct or impact that you see on the u.s. economy. >> i'm not sure they've been entirely thought out >> the wealth taxes are at levels, if you combine them with their plans for corporate tax and capital gains taxes. it's 100% on investment income for the wealthy and certain businesses i totally agree they oversold how wonderful the corporate tax code would be to say we can impose tax rates of over 100% in investment and expect nothing bad to happen. i think in the end you probably would have less investment and

less productivity. >> have you done the sort of back of the envelope thinking about how one would pay a capital gains tax if you required a tax on investors that are still held not just the gains, but what you hold >> this is a problem that all people are grappling with. there are these ideas out there to attack capital gains that have not been realized before jeff bezos sells his shares in a.m. zoon, would you have to pay taxes on their appreciated value. how do you monday ties that. they would have to pay the government in shares themselves as eposed to cash. these are all issues that have yet to be worked out notwithstanding all the bold rhetoric, we're going to hear from them on the campaign trail that implementing these tax programs is a work in progress

>> devil in the details. that does it for us on the exchange i'll join tyler on power lunch right now. >> we start with breaking news, as we're just seconds away now from the federal reserve releasing the minutes from its last meeting. >> officials will believe the policy will be well calibrated the monetary policy was seen as likely to remain appropriate after that cut as well as the economy and economic data came in line with that forecast >> there were some divisions inside the fed on this issue a couple of the feds wanted to state no cut was