tv The Exchange CNBC July 24, 2019 1:00pm-2:01pm EDT
jimmy with the big sell. buy on the dip he said you said it was a steal. >> wwe >> that's right, jack. >> jmpr, juniper, bought it. >> that does it for us "the exchange" begins now. thank you, scott hi, everybody. here's what's ahead today. a major tech crackdown the doj starting an anti-trust review of america's tech giants while the ftc slaps facebook with a record $5 billion fine which jim cramer is calling invasive the stock reaction may surprise you. and beyond meat keeps rolling. beyond meat is trading above $200 today as the company forms the new partnership with dunkin'. we will speak with both ceos in just a couple of minute. plus, irobot is feeling the squeeze from tariffs meat has become a controversial term in and of itself. and ups is making a double
splash in delivery that's all ahead in "rapid fire" today. >> they are mixed overall, boeing and caterpillar results are pretty much the reason why you are seeing the dow underperform by nearly one-half of 1%. we're close to the lows of the session off by about 107 points. but s&p 500 doing fairly well, up two-tenths and a big star for the nasdaq composite hitting that record high and 3,000 over that level for the s&p 500. so we're still watching that a key industry group to keep an eye on, i mentioned those boeing results. a big drag it is one of the biggest waiting a 23% waiting of the ishares aerospace defense etf. north run and other defense contractors doing their thing. record high for this particular etf. so watch that industry group remember, this industry group is up huge, about 69% since president trump got elected. far outpacing the s&p 500.
and the stock of the day at least one of them, a record high right now for shares of chipotle mexican grill, over the last five years we have seen some pretty bigelows. but since then, especially here, we've almost more than doubled in terms of stock price just year-to-date in chipotle making this stock now worth more than kellogg overall. back over to you >> wow, dom, thank you very much and welcome to "the exchange," everyone i'm kelly evans. if you want to know just how big boeing's influence is in the u.s., listen to this earnings growth just turned negative for the quarter with boeing's big loss this morning the news in europe wasn't great either raising concerns about a recession there about weak manufacturing. and new home sales jumping 7% in june following two straight months of declines let's drill down on these earnings and markets and more. bob pisani is down at the new york stock exchange. it's getting worse with boeing but then could get better with
alphabet it's a murky picture out there >> it's very hard to figure out, the dollar make it's hard to out. china's slowing, europe's slowing. the impact of the global slowdown seems to be rather uneven just look at the comments on how china sales are doing from two companies that reported today. caterpillar and texas instruments. now caterpillar missed on earnings and guided towards the low end of its previous guidance they blame the weakness on two things u.s. oil and gas business and weakness in china. asia/pacific sales were down 8%. the company cited lower demand and pricing pressures. it's tough selling american products in china right now. however, texas instruments, on the other hand, they get 40% of their revenues from mainland china. so a big important place for them earnings beat they guided higher for the third quarter. on china the company said they had seen growth in their 5g
products, but overall, quote, we didn't see anything unusual this quarter. that stock's now at an historic high lifting the smh, the semiconductor index to a new high as well so, remember something, kelly. e are different industries, and it may simply be that demand for semiconductors is really strong globally. demand for machinery, different industry, is a little bit weaker but still very unusual divergences there. back to you. >> we look forward to rounding that picture out as we continue to move forward through the season let's get to the big story of the day, and it has two parts. the department of justice announcing a broad anti-trust review of big tech number two, the ftc slapping facebook with a record fine. despite all of this, we have this story covered from all sides. elon is live john ford has the amazon angle for us julia boorstin on facebook and josh lipton on apple but, elon, sketch this out for us let's start with you
>> well, kelly, the justice department is launching a broad review of potentially anti-competitive behavior in big tech it'll scrutinize leading online market platforms focusing on whether they are reducing competition, stifling innovation, or just otherwise harming consumers. in a statement assistant attorney general makan del rahim said without the discipline of meaningful market-based competition, digital platforms may act in ways that are not responsible to consumer commands they do not name specific companies but google, facebook, amazon and apple, they could all get caught up in this. this review is separate but related to the doj's ongoing inquiry into whether google and apple are month opolies. the doj said it will proceed appropriately. >> so, ylan, even the department of justice has two different probes into big tech one that as to whether they are monopolies, the other about
anti-trust that's a lot going on. >> that is and my understanding of this is that the new anti-trust review is focused on industry behavior. you know, are there particular practices that are troubling this is sort of a formal way for them to hear complaints of the likes we've heard from spotify or trip adviser or yelp about some of the big tech industries. the inquiries are specific to google and apple and those are probes that may or may not lead to formal investigations >> ylan, a lot of reporting. thank you. let's go one by one to the companies that are in this line of fire. treasury secretary steven mnuchin making it clear on msnbc this morning that amazon should be one of them >> if you look at amazon, although there are certain benefits to, they've destroyed the retail industry across the united states. so there's no question they've limited competition. >> well, let's bring in jon fortt for more on what amazon could be facing here >> i thought it was funny to
hear him say that amazon destroyed the retail industry. i am old enough to remember 20 years ago. i thought walmardestroyed the retail industry. but amazon is increasingly competing in different ways. it will argue and has argued that it is actually increased competition in some ways for small and medium-sized businesses who operate on their third-party platform now, most of amazon sales are not actually amazon direct they are third-party retailers, in many cases using amazon's fulfillment. it's not just amazon's platform alone giving some argument that this isn't quite as cut and dry as the treasury secretary presented. take a look in shopify it has a $36 billion market cap. that has tripled in two years. and its business is really allowing businesses to compete without being on amazon necessarily, though as part of the latform, you can also operate on amazon. don't forget about etsy.
they have an $8 billion market cap. that has quadrupled in two years. amazon was competing directly with etsy. and you know what, they are still doing just fine. one area that has popped out for amazon anti-trustwise is again that third party retailing platform there have been some complaints that amazon has a lot of data about what customer demand is for those third party goods. can then use that against its competition that might be an angle that the feds choose to pursue but we haven't even talked about cloud, kelly you know, amazon has not really tied the retail and cloud businesses closely together. that's often a way that regulators go against companies for anti-trust but it doesn't appear to be one necessarily that's right for amazon >> and just yesterday this announcement, we covered on the show about how they're going to partner with the coldwell banker parent company realigy to get their products into your home. then there's the doj probe
but with facebook there's also the ftc slapping a record $5 billion fine on the tech company today over its privacy practices. that settlement includes provisions that aim to create independence from mark zuckerberg's decision making here's what jim cramer had to say about it this morning. >> this is a truly invasive action against a company that may have violated privacy but has been -- you don't get to be the [ bleep ] thing for nothing. >> so their market cap absolves them >> look, if people -- if the customer felt that it was a destruction of their own privacy, why are they still there! >> a perennial question, julia, as we look to what the feds might pursue here. >> reporter: well, look. i think jim cramer was pretty adamant that this is a big move to regulate and create new oversight for facebook but many would say that this has
not gone far enough. now the folks at facebook, kelly, are saying that this is going to really be a dramatic change to the way the company approaches privacy that they are going to really now try to build privacy in every product and service that they, do that there will be no oversight and compliance measure that they are going to have to embrace here. but the question really is whether this could change the way the company works because these new ftc measures don't actually change the way the company itself treats users' data it has a lot to do with how partner apps can access data but not so much about the way facebook itself can use user data >> julia, facebook in particular, people coming at it from all sides i was almost thinking about the german auto companies when i heard this news today. you know, when the government says we're going to make you set up an independent privacy committee that's composed of independent directors in germany they have double boards to try
to give labor representation and, you know, traditional board representation, is this cracking down on the company or is this just headaching them more entrenched in their operations as one of our most important companies? >> well, look, i think the key thing here about these new ftc, these new ftc rules is it's really about transparency and oversight. i think it's less about changing the way facebook works in a day-to-day way and more about making sure that it's totally transparent and totally aware of the fact that everything it does is going to have to be communicating to outside third parties. so i think that that's really the change here. i think, though, it's worth noting, kelly, that even though this is a big deal, facebook is clearly trying to make sure this is a big deal. facebook issues are far from over legislators are really watching to see what the reaction is to this because there is privacy legislation that's being considered and there's also a regulatory crackdown from countries all over the world that is in process right now. >> yeah.
and the company, it's taken it all in stride. $575 billion market cap now. julia, thanks, julia boorstin. finally, to apple and a report in the "wall street journal" that won't help its case in the doj. the article saying that apple dom united states. but thwarting competitors, apple's ceo tim cook >> i think that with size i think scrutiny is fair i think we should be scrutinized. i don't think anybody reasonable is going to come to the conclusion that apple is a monopoly our share is much more modest. we don't have a dominant position in any market >> so you're saying you're not a monopoly >> we are not a monopoly >> let's bring in josh lipton. for more, josh on, what the government may be pursuing here. >> yes it's interesting you know, i actually caught up with jean muenster, the long-time apple venture at the watch.
in the same way that google and facebook are he made the argument to me those two are actually the primary targets. and google specifically he said because of what he called this undisputed market dominance in such they're around 80% by some estimates. google will say there are multiple search engines out there if kelly wants to go use microsoft or yahoo, no hurt feelings and, in fact, more than 50% of product searches they will say are with amazon, not with us with apple specifically, it's pretty interesting of evercore, another long-time apple-watcher. he would make the case that they don't have monopolistic shares, not in pcs so his point being there's no hardware-dominant position to fixa iton here there is more focus, though, kelly, on the app store, and certainly whether that has a potential soft spot. and it accounts for an estimated 30% of that faster growing
higher margin services business. and it is very popular the app store and google play, they do account for something like 70% of all global spending in apps according to censor tower. the question is whether that leads to some sort of quantifiable consumer harm like higher prices. some analysts i speak to, they think it that's going to be a hard case to make. because they say ultimately there's a lot of competition on the store itself there's competition even within certain categories there's free apps and paid apps. but we'll see. >> and it's a good point about amazon actually competing with google in search now josh, thanks, i appreciate it. amazon competing with google and apple. but let's see what kind of regulatory action this is all pointing towards and how worried investors should be about it the stocks as we mentioned are largely shrugging this off today and have been all along. joining me now is stephanie miller she is co-founder of samhill
strategy who's been following the ftc 16-month probe into facebook from the very start. guys, welcome to you both. and, tony, first to you on the facebook issue there's a lot of complaints today that it doesn't go far enough, the ftc says, look, it's a record fine, unprecedented and so forth what more do people want to see done here? >> right so it's sort of a tale of two settlements. there are the folks who agree with what the commission has done because it puts facebook under another 20 years of oversight by the federal trade commission it is the largest financial penalty we have ever seen for a privacy violation in the u.s. but there are a lot of folks largely democrats at the ftc and lawmakers on capitol hill who feel that the commission really should have gone farther here in the kinds of things that it did to hold facebook ceo mark zuckerberg accountable or in the kinds of things that it extracted out of facebook in the form of requiring them to change the way that they collect data in the first place that aside, if there's one point of agreement among everybody
here, it's that federal law has got to change. it's that the ftc maybe should've had more power to go after not just facebook but other companies that have privacy troubles in the future >> stephanie, i was struck by the fact when i was listening to the main guy in an interview with ylan mui this morning, he said $5 billion is a bigger number than we could have gotten if we pursued this in court, would've bogged things down. it also left me thinking but isn't that what the court system is there for in order to ensure fairness on both sides is there a reason why we are seeing them go this route? could facebook have fought this more is it fair to these companies to have this action taken against them >> i think a lot of people are going to have different views on how far or not fair this was obviously the courts are there to litigate these issues, and then the agencies do have the authority to reach settlement agreements the one reason why ftc really could argue it had very clear authority is that facebook had already enterd into a settlement agreement with the federal trade
commission five years ago. and in part a lot of this was because the ftc believed that facebook violated that so they had the right to go back to facebook and say, like, what's going on, guys >> true. >> so maybe facebook, you know, knew it could cut its losses i think the investor reaction not being very moved by this $5 billion number is probably anticipated by facebook and is one that probably makes sense for them to pay to show that they have skin in the game >> we don't have a ton of time, but i like how you called this the hipster anti-trust moment. what is going to have to be different about anti-trust today in order for the feds to pursue more action against these tech giants >> yeah. so that's basically a way of looking at competition not just from how much you or i pay because a lot of these activities by these companies drive prices down. the but really what is good for consumers. and over a longer term so my view is not that we should be worried about tech regulations over the next year even i think this is after our
presidential election. but this idea that you would hold these companies absolved at this point forward that's just not tenable to me. >> and, tony, same thing i'll give you the last word here but as you heard jim cramer say a few minutes ago specifically with regard to facebook, if customers are not revolting by not using the service, should we still expect there to be government action, and what type because the shareholders don't seem phased. right. it's important to remember something in response to what jim said this is a settlement the government can't decree that zuckerberg has to submit to this oversight. these two sides have to settle or it goes to court. so facebook felt that ultimately the settlement was unfair, it could've forced it to go through litigation it's sort of a difficult one because if you talk to some of the critics here what, they would say is there is no other viable social network. if you're upset with facebook, you might go to instagram. but instagram is owned by
facebook so these issues end up being a little bit overlapped, both privacy and competition. and that's why you're seeing lawmakers talking about both even in the context of the settlement today >> no. that makes a lot of sense. guys, thanks, appreciate it. tony romm and stefanie miller. we'll hear exclusively from ftc commissioner rebecca kelly slaughter. she voted against saying it doesn't go far enough to keep the company accountable. but here's what else is still ahead at "the exchange." coming up, dunkin' teams up with beyond meat for a new breakfast sandwich we will talk to the ceos of both companies about the new partnership and more plus, stuck in a corner. irobot becomes the new face of the real impact of tariffs we'll explain. and tesla's california nightmare. this is "the exchange" on cnbc
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the ipo at ipo to 25 it is trading over $200. today let's get straight out to new york where kate rogers is standing by with the ceos of oath companies kate, take it away >> reporter: thanks so much. we are joined by dave hoffmann, the ceo of dunkin' and ethan brown, the ceo of beyond meat. dave, i've start with you. you are a first mover in the u.s. why is now the time to get into the plant-based meat game and why partner up with beyond >> yeah. you know, ethan's been a great partner with me. and, look, i met him even before the ipo. we developed a relationship. i really believed in what he was doing. he could talk about the science, but it was all about clean ingredients, clean process we just hit it off we felt like this is the right thing for us to do dunkin' is all about democratizing trends just like we do with espresso. and as we talk about this, we think the big win here is bringing this to the masses at a
compelling price so our price point here, manhattan, is on parity with all other breakfast products and we think that's the right thing to do for the consumer. >> dunkin' has a blueprint for growth you got rid of some items to make room for busy potentially new items like this. they create a lot of foot traffic. do you think it'll move the needle beyond just that initial buzz >> yes and we are still about great coffee fads. but what pairs great with coffee is great food. we invented c plus 1 which is coffee plus one food item. and so we're excited this is -- look, we're testing it here in manhattan this is the right place to do it but we've got our eye on a national rollout >> we've run through all your partnerships, but it would eat up a lot of our interview time demand is through the room are you concerned at all about supply chain and being able to keep up with that demand right
now? >> we went through a pretty tough supply situation about two years ago and last summer where consumers really surprised us with a level of interest in the product in the plant-based meat that we were creating. but we learned from that and we were able to invest not only in facilities but people. and i just want to echo what dave said. it's really neat to find an executive and a leader like dave that has a vision for the future that wants to use his platform to bring healthier food to his consumers and we're very grateful to be able to serve dunkin' as a customer. >> how are you evaluating partnerships? i'm sure tons of people are coming to you are you saying no to anyone? has anyone said no to you so far? >> we're really focused on finding that leader that wants to show the courage to be the first mover to get into the market in a category that hasn't seen this type of innovation and so dave and dunkin' really demonstrated that. and the idea that we're going to take this product and make it accessible for people, provide the same pricing structure so that you don't have to be uber wealthy to enjoy something
that's so good for you that's great for the planet it takes a lot of money to buy a tesla. it takes $4.25 to buy this and you are making a statement about who you are, what you care about, what your values are. >> reports today had the chipotle ceo saying it's too processed to use at their restaurants. how do you respond that? >> i think everyone has to make their own decision but, you know, i have such confidence and belief in our system in our process. and truly a tale of protwoss do you want to take protein directly from plants or do you want to run that through an animal and convert that animal into meat? we are proud of our meat it's very clean. >> dave, you mentioned the sandwiches about 429 what's your read on the consumer from where you sit right now >> it's a very strong consumer
wages are up unemployment is down so it's a strong consumer. it's not maybe as strong as it was in recent months, but it's still very healthy we see that, and we see the excitement around this launch today has just been tremendous and, again, we expect big things out of this test today and we expect big thing when's we go live and launch it across the nation >> either of you concerned at all about any pushback on meatless marketing, on on states are banning that >> no. that doesn't concern us. we're going to put out the best product. it's a great product for the consumer it gives them choice we believe in all the benefits around health and the environment. but it's a darn good product and we want to do right by the consumer >> i'd say the same thing. we really are here to serve the consumer the consumer wants this. the consumer is very comfortable calling our products plant-based meat i think it'd be a tough thing for the government to get in the way with it. we are very happy and the relationship with the consumer is great. >> analysts say that if a major
play player >> we are working with the customers that are expressing. and this dunkin' relationship is a great one. it's a very, very large chain. it's part of the fabric of our communities. it's part of the fabric of this country. i grew up consuming dunkin' and my kids are doing the same so to be able to do that now and have a plant-based offering, it's better for them, and better for the planet >> where do you see the rollout going from here? who could be next? >> i think we are going to take it international after this. i see this being successful. we co-created something that was very proprietary just for dunkin'. we worked and we did that together hey, look, i think this is going to a partnership for years to come >> absolutely. >> dave hoffmann, ethan brown, thank you very much. we appreciate it >> kate, thanks very much. kate rogers speaking with the ceos of dunkin' and beyond meat on their partnership today coming up, seven-day shipping, new partners and drone
delivery ups is making a ton of news today and the stock is up 8.5% we'll discuss it all in "rapid fire." >> plus, sales of tesla's vehicle. that's straight ahead. it's part of being human. sonoma county declared a homeless emergency in 2018. you have to know the individuals you're serving to understand their needs. working with ibm watson we can bring together data spread across dozens of departments. that gives us a fuller view of the people we serve. dear tech, dear tech, we need to look after everyone in our community. and we want to help our fellow human beings. ♪ ♪ i felt completely helpless. trashed online. my entire career and business were in jeopardy. i called reputation defender. they were able to restore my good name. if you are under attack,
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this hour. soaring nearly 20% on pace for its biggest jump since 2005. the company reporting better than expected earnings and the results helped by growth in 5g infrastructure those are your keywords there. meantime, snap is jumping 15%. the stock now back above its ipo price of $17 for the first time since last year snap reported its strongest user growth as a public company and you can see investors rewarding that and at&t moving about 3% higher atmosphere its earnings and share per revenue did grow today. growth in wireless and media helped make up for a loss of nearly 1 million paid tv customers. now over to courtney reagan for a cnbc news update hi, court. >> hi, kelly here what's happening at this hour by a 52-40 vote, the senate confirming stephen dixon to head the federal aviation administration the faa has been without a
senate-confirmed chief for more than 18 months at california entrepreneur accused of paying $250,000 to get his son into the university of southern california has pleaded guilty to mail fraud jeffrey bizzack entered the plea in boston's federal court. nine months in prison and a $57,000 fine sentencing is scheduled for october. and the cuba government has said there was no evidence of a deliberate attack on embassy revealed significant differences from a control group >> the article recognized that the brain alterations are minimal, that the findings are not conclusive and that they cannot identify their causes >> so she says they can't identify the causes but it is still unclear what has caused the dizziness and general cognitive fog that's been reported that's a cnbc update at this hour back over to you, kelly.
>> i hope they can figure it out. terrifying stuff here's what else is coming up on "the exchange. >> ahead, irobot has a big mess to clean up. a triple play for ups. a rally, a drone, and more commercial space doordash being forced to change its pay model and what's in a name apparently a lot when it comes to meat. it's all ahead in "rapid fire. (soft music)
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i think they refrigerate milk in europe but, anyway, let's catch you up on a few stories that should be on your radar. robert frank, seema mody, and dominic chu, and we are going to talk beyond meat let's just wait till we get there. but first let's talk irobot. tariffs from the u.s./china trade war will weigh heavily on revenue. the company lowered its expectations for 2019, guys and the real question is, is this a barometer telling us something about the economy? or is it, hey, the company looking for excuses type of story? >> well, this is a company that is a classic u.s./china trade
war loser. not only did it talk about the tariff-related cost but tariffs are also, they say, pushing the economy in china to weaken even further. so that's hurting demand for a lot of their products. this is one of those companies that is taking a proactive approach to move some production out of china they're diversifying moving production to malaysia by the end of 2019. but here's the catch moving production is expensive and they say expect prices to go up >> and prices to me is the key here i wonder to what extent it is an excuse their new model of the roomba is $1,100 >> but in a way. >> that is a lot >> and big innovation is they squared the top so that it can now do corners how long did it take for them to figure that out? >> there it is on our big screen back there as well >> if you're paying anywhere
from 700 to a thousand plus dollars for an autonomous vacuum cleaner, you are not likely going to be as price sensitive to an increase because of tariff-related issues or anything else. >> or it's an extra $250 on top of the 1,000 so if it's 25% tariff. so my point is it is expensive, and a 25% tariff on a really expensive price gets to be meaningful at that level >> i'm going to take the other side of this just because we want some balance here i would say -- >> no, i wonder what you really think. >> what i really think is i don't own an irobot. i do have a dyson spring line vacuum >> they're expensive, too. but you juxtapose this story against texas instruments which, by the way, hit a record high. their cfo saying they don't have any impact because of the u.s./china trade war they are much more of a barometer i would argue for the global economy because their chips go into everything from
dishwashers and vacuum cleaners to guided missile systems and everything else. this is a very nearby market, i guess. >> a topic to what makes a burger a burger. according to a number of state it's meat. states like arkansas, missouri, and mississippi are passing laws to keep it that way saying only foods made from animals should have labels like burger, sausage, or hot dog. arkansas is being sued by makers of plant-based foods like tofurkey including by the aclu claiming it vitals freedom of speech >> those three states have one very big thing in common those three states have a disproportionate amount of their economy driven by meat processing and we're talking about missouri, arkansas, and mississippi. mississippi is also one of the biggest poultry states in america as well. the so you can chee why there would be a bit of a pushback against the use of meat in those terms because these are true meat-producing states in
america. >> and that's why their lobbyists have been at it. we talk about big tech putting a lot of money towards lobbying efforts. the u.s. cattle association has been putting more money to its lobbyists for this very reason this looks like it could potentially be a win for them. >> the milk ick, but as far as i can tell when you buy almond milk in the store, they're allowed to use milk. so the dairy industry presumably lost that one. >> the fda commissioner said almonds don't lactate. you can't legislate out the dictionary so if you say it's flourless cake or meatless whatever, the first word tells you that it doesn't have that product. >> or eggless mayo what was the big mayo -- >> when they used olive oil to make mayo and they said, well, it's not really mayonnaise ebooks are not made out of paper. if you can't figure that out, you've got bigger problems >> so you think they should be able to use whatever language?
>> absolutely. the california courts said, look, it's ridiculous. if it's two words and the first word is something else, it's not a problem. >> might eat a breakfast sandwich at dunkin' with made with beyond sausage. >> beyond meat sausage can't go bad. [ laughter ] >> that's what i want to know, viewers, can meatless meat go bad? or when does it go bad >> tweet robert craig. topic three, ups is up big today after announcing several new initiatives. they are expanding to 7-week delivery starting next year. they expanded a partnership with michaels and perhaps most surprising, ups says it is applying to the faa to fly drones for delivery over people at night and out of the line of sight of the operator. the shares are up 8.5% it's a huge move >> they this is all about
getting access and reaching more people we heard that fedex did the same kind of a thing with dollar general to promote access to rural america. what this does is start to shift the paradigm in shipping away from just the straight, hey, the truck shows up at your doorstep. now you can go get things, you can get them every day of the week at all of these locations it just signifies that we as a consumer group in this country are treating things differently with regard to how we buy and how we get them. >> and it could be a way to remake retail. i mean, there are ways that they might be responding by saying here's how to embrace ecommerce, and maybe still keep some of that foot traffic. >> and instead of allowing amazon to eat their lunch, ups and fedex saying we are going to take measures to make our shipping strategy a bit more efficient. >> the seven-day delivery, every time you're like -- i know that people can still get a day off it's not like the people have to work seven days, but call me old-fashioned. topic four, food delivery service doordash backing down on
a commercial tipping policy known as a guaranteed minimum. so here's basically how this worked the company guaranteed the delivery people a set fee for their dropoffs those consumer tips, well, doordash would just pay the difference between my tip and what they had already guaranteed workers so they keep the difference, doordash would the company is making sure that the workers' earnings will increase by the exact amount of customer tips. i don't know how this would work the old way is the way that the restaurant industry has been doing business for decades if they are now saying we're going to pass every dollar along, is that the going to hurt the business model >> why don't they just say your delivery tips are going to go to the delivery person. when i click on those delivery services and i always give an extra tip, 20, 25%, i just assumed it was going to that delivery person. >> everybody does. >> and it is shocking to me that the company was taking that and
not giving it. >> but it turns out that's kind of how the restaurant industry works. >> no, it doesn't. the restaurant industry, it kind of does and it kind of doesn't because they pay -- they can get away with paying a lower minimum wage because you are in a tipped -- if you're a server you get, like, say $2.25 or $2.50 an hour >> because we contribute and we make up for the fact that we get them back up to a minimum plus wage at that point so this is kind of like that but not -- i mean, you still would expect, like, with uber or lyft they tell you explicitly that your tips go to the drivers by the time it was all said and done i'm just curious why they wouldn't have done that to begin with >> as someone who orders a lot of food online, one tay to get around this is to use a cash tip. the problem is i don't i'm have cash in my wallet. >> i tried that recently and the guy said, no, we can't accept any cash tips. you have to do it through the app. so he was actually telling me i couldn't do it that's why i assumed it went to
him. >> we need more information on how this is going to work, especially as these companies are looking to go public coming up, no earnings or session in sight the nasdaq hitting an all-time high and a rate cut expected next week. is it a case of let the good times ll or roare investors too short-sighted? after this invest in all the ths that move us forward. every day, invesco combines ideas with technology, data with inspiration, investors with solutions. because the possibilities of life and investing are greater when we come together. ♪
welcome back the nasdaq hitting an all-time high today and the dow sitting close to it with an earnings recession seeming less likely, a debt deal in the books apparently and high expectations for a rate cut next week joining me now are brian belsky, and congratulations ip, who is chief economic's commentator at the "wall street journal." guys, welcome. and, brian, first of all to you -- well, i know you've been bullish for some time, but do the rate cuts make you more bullish, or do they make you go,
well, this isn't necessary because, you know, the economy's not that bad >> i was hoping you were going to bumper this from "the cars" "let the good times roll," from at least on a near-term basis, i think investors are short-sighted. i think most investors chased up the market because they really thought the fed was going to be more aggressive. that way you were transitioning back into this nonsense of that bad news is good news and good news is bad news and if our economics department are still looking for two rate cuts for the end of the year, i think the fed looks for one to undo what happened in december and then with the stock market hitting new highs, common sense would tell you that the fed has to hold here >> right >> earnings are pretty good. >> i guess my question is, you know, we were at all-time highs back in october when the ten year was at three and a quarter, and we sold off sharply, but then the first quarter gdp
number was is the fed telling the market, hey, you should be at all-time highs for the wrong reasons instead of it being, like, okay, we can be up here with the economy actually doing okay and without the need for those cuts? >> i think that's a great point. but i think there is this huge disconnect with respect to what happened in the fourth quarter, and if you take a look at how markets have been the last 12 months, we're up single digits we're up 7%. the market is up 19.9% year-to-date, because of what happened in the fourth quarter and i think, you know, the fed raising rates in the fourth quarter in the face of decelerating global growth and in the imf becoming increasingly negative, i think that's been -- the true story is that the u.s. is a home for stability,not only in terms of gdp, but growth and i think that's the theme and so while the near-term basis, again, kelly, i think investors could say, okay, 25 basis points, great, golf clap and then sell off the market and then we could have a nice rally at year-end as the u.s.
again continues to be the best house in a bad neighborhood but the most stable house in the world. >> and we got a reminder of that with the manufacturing numbers in germany, they were awful, pretty bad for the eurozone as a whole. you have the ecb meeting tomorrow, people at blackrock saying the central bank should buy stocks shouldn't they be tamping down expectations what they can do for the economy? we're not in the crisis any more why these extraordinary actions. >> could a kid with a hammer, every problem looks like a nail. they say, well, what are my hammers? i got rate cuts, i got bond-buying, right so the ecb is going to serve up more of what they have been doing in the past by lowering their key rate further into negative territory and you're right the european pmi data today was really terrible. the u.s. data wasn't that great either the manufacturing pmi for the u.s., i think, was the lowest since 2009 that said, the broader u.s.
economy seems to be fine so that sort of brings up the question, why is the fed going to cut next week and a lot of it has to do with what's going on in europe. to a great extent, you've heard fed officials say they're worried not so much about the u.s. but the global economy. and there is a growing sense at the fed that even if they think that the u.s. economy deserves an interest rate of, say, 2.5%, they can't allow the u.s. rate to get out of line with where it is overseas. so if marro draghi goes ahad he had and delivers more rates, that forces the fed's hand. >> if the european central bank starts buying stocks, we better buy stocks too at what point is it really necessary that just because they're facing problems, how much is a european slow down really going to hurt the u.s. economy? is it enough to warrant that we have to respond to that? >> i don't think you'll see the fed buying stocks. and i'm not even sure the federal reserve act permits it, notwithstanding the likelihood of getting tweets from a certain watcher of the fed, encouraging the process.
i think it's really about the interest rate. you know, the -- if you listen to the stuff that, say, rich clairit has said, he has said there is a strong global component to where interest rates in the u.s. have to be and the u.s. cannot allow its rates to get too out of line with where they are with the rest of the world. look at the euro today it's down a lot because of the european data. >> yeah. >> that as i think you were saying, you know -- or somebody else was saying on the show, that's kind of like bad for u.s. profits and in the end, bad for u.s. growth. >> i guess but belski, if people start buying stocks because they think our central bank is going to buy and then it's over we've got to -- i've got to go but -- i would think you would agree with that. we don't want to go there. we don't want to go there. >> no, we don't want to go there. andeni and i don't think we will go there. and to put the icing on the cake with respect to europe, i've been marketing in europe for 21 straight years, and for 21 straight years, my european clients have been telling me about european stocks because they're cheap. europe is the next japan stay away. come home to america >> i don't know. or hopefully they can figure
something else out thank you both, guys i really appreciate it brian belski, greg ip, and we've got that ecb decision tomorrow. still ahead, tesla results are on deck for today. they report after the bell le a new article questions their sas strategy that story is straight ahead hamn their cage. content on their endless quest, to nowhere. but perhaps this year, a more exhilarating endeavor awaits. defy the laws of human nature,at the summer of audi sales event. get exceptional offers now.
welcome back tesla reports its second quarter results after the bell, and analysts are expecting the company to remain in the red, despite a boost in revenue this as a new piece in the "wall street journal" points to a new problem. with so many different models available, tesla could be its own worst enemy, especially in california let me bring in wall street journal reporter, tim higgins. tim, welcome >> thank you >>is fascinating, because you say they have rolled out the model 3 now, ramped that up. it's available people can buy it. but at some points, it was only $6,000 cheaper than a model s, and it was cannibalizing model s sales, which is a problem for tesla, right >> yeah, this was a concern among analysts, that the model 3 is so new and so hip that buyers are going to go to that rather than the model s, which is way more expensive, and really a key pillar of the company's financial house.
so if customers start to pull away from the model s and buying the cheaper version, that's something that elon musk doesn't want to see. >> and the reason why they have been substituting is you sort of imply -- i'm not sure if it's true -- but i'm curious what you think, the model s isn't differentiated enough from the model 3, and now that makes me think about some of the musk's recent tweets where he was pushing back against i guess calls for a refresh or a redesign >> yeah. exactly. so the model s is getting long in the tooth seven years old. it came out in 2012. cars are usually updated more frequently than that of course, tesla can make some changes over the air with its software it's done some changes with its battery pack, these sorts of things but at the end of the day, it's, you know, an old car compared to the model 3, which is seen by customers as being the hot new thing. generation 3 is the idea of it and when you look at the high end of that car, you can get a lot of bells and whistles, you know, for a relatively cheap price compared to the high end of the model s which is, in their minds, maybe not as hip
and cool. >> sure, and you say that model s today on registrations in the second quarter were down by half in california to just 1200 so tesla has reacted to this seems by making the model 3 less expensive and the model s more so, is that right? >> yeah. they have been playing with pricing all year, really, trying to figure out the right place. so if you look at the model 3, it's cheaper they're trying to get more people into that vehicle and what they're doing with the model s, essentially making it more expensive on the lower end, but on the higher end, making it cheaper by throwing in the ludicrous mode, which has previously been a $20,000 upgrade into the performance version. so really trying to simplify that offering. so when you go to the website to buy it, it's -- you know, between a couple varies options rather than, you know, all these other options where you're going to have to try to figure it out. >> it's a great point, tim thanks for joining me. and again the earnings numbers,
the estimate is a 40% loss for revenue, $6.1 billion. we'll see how they go after the bell tim, thanks. tim higgins from the "wall street journal". and thanks everybody, for tuning into "the exchange" today. >> thank you, kelly. i'm melissa lee. welcome to "power lunch. new at 2:00, a battle on three fronts the war in big tech, facebook paying up to $5 billion for its privacy violations while the doj opens an anti-trust review is big tech just too big then a market tug of war earnings take center stage as caterpillar and boeing sink. but is the fed the only thing that really matters? we'll debate that. plus, a battle for the soul of tesla. one bear, one bull they face off ahead of results after the bell "power lunch" starts right now ♪ ♪ what is it good for ♪ absolutely nothing >> what a song