we'll keep an eye on that and many of the etf attractions as well this is certainly a big focus and very widely traded that does it for this hour of "squawk on the street. now downtown for nyse for the start of "squawk alley." good morning, 11:00 p.m. at alibaba headquarters in china, 11:00 a.m. on wall street. and "squawk alley" is live ♪ good wednesday morning welcome to "squawk alley."

i'm carl quint knanilla along w sara eisen >> technology is one of the leader sectors and president donald trump is on his way to meet with g20 leaders in germany later this week, including the one-on-one with russian president vladimir putin all this amid growing concerns over north korea's growing tension. that escalated over the weekend. joining us to discuss is john rutland, and math chthew mcgwir former director at the world bank welcome to you both. thank you for joining us >> good morning. >> john, your expertise is china. you have studied china for a long time. we have been trying to dissect the tweet this morning, trades between north korea and china grew over 40% in the first quarter. so much for china working with us, but we had to give it a try. that was from president trump as he embarked on this journey. what is the prospect of a risk

factor for investors escalating tensions between china and the u.s. the two biggest economic superpowers right now? >> they look like they are going that way it's in the interest of the chinese leaders, it's not the interest of the chinese leaders to have an out-of-control trade war. they are trying to pressure the u.s. about the senkaku islands and other assets in the south china sea and trying to look tough at home. so it is a very difficult thing. trump's plan is not very orderly. you know, we put bad missiles in south korea. we have been trying to talk about taiwan but north korea is shooting missiles into the water. so it's a pretty messy part of the world. so i think it's going to get tougher, but i don't think we're going to have an all-out trade war with china >> matt, what is your assessment, especially as someone who comes from the world bank, the world bank and the imf, they advocate economic cooperation, cooperation to solve global problems at a time

when that is needed on north korea. what is the status of global cooperation as leaders meet for g20? >> that's% exactly the role of the g20. these companies make up 80% of gdp. what they agree to lays the road for the rules across the board china is the leading trading partner of more than half the countries in the world one of the things the g20 has focused on over time is pulling in shadow banking and making sure there's solid regulation across the various economies in the g20. this is a concern people have had with china as john knows far better than i. this could be one of the things quietly if not in some of the more public settings will be discussed because as goes china, so will go many other countries, not only in that region, but in farther regions of the world as well >> john, what is important about

exports from europe, the germans are growing like crazy right now. and it's really chinese exports that are -- they are driving it. so, sorry. >> no, john, speaking of which, what do you make of these overtures between china and germany at a time when the trump administration has had testier relations with both? is that a leverage point to watch in how that relationship develops over the g20? >> it's very important you know, look at who we've got in the room. we have merkel, macron and trudeau. three enormously popular leaders, let alone modi from india. on the other side of the table, you have putin and erdogan and chi. and we've got mr. trump in there with no state department trying to negotiate with those guys i think we've got a formidable lineup there the u.s. vacated the position in the free world it's being occupied by the eu, by china and by russia

our interest is for the eu to take that spot in which case it's merkel and macron that are the leaders. but the chinese see this differently. this is their once-in-a-lifetime chance to get to the adult table and they are doing everything they can to get there. >> i agree if i can pick up on that, one of the things we have to remember about our relationship with germany, which has hit a rocky road about what president trump has said about chancellor merkel, over the last ten years, we have seen about $200 billion investment on the part of the german companies into the u.s. bmw, amerimerck, you can go dowe line and as chancellor merkel said, bmw is one of the lead automobiles in the united states as that relationship between

germany and china grows is, aught you not be investing even more in china. we are friendly, we are reaching out to you and trying to work with you you're getting static from the other side of the atlantic one of the things we have to worry about is the trade relationship as it pertains to germany because they have been such a great ally and important investor employing americans right here at home >> the driver -- i want to bring up a point on trade. why doesn't the market seem to be worried about this? china has key trading partners and economically important investors, are the investors not buying the prospect of this happening? >> first of all, growth is very strong in europe we have seen very strong numbers coming out pretty food in china right now, the emerging markets and the u.s. so it's the fundamentals underneath the politics which are showing us this year in

earnings growing quite strongly and revenues for u.s. companies growing about 5% this year that's pretty good but the driver between what you were talking about a moment ago is chinese leaders are very worried about hong kong's stability, about migrant workers and other stability issues so for them, having incoming capital from overseas offsets the capital outflows they have been trying to bottleup. so it is very good to support rnb. >> the other context in the g20, people may be waiting to see what the concrete moves of this administration are so while we have had a lot of rhetoric and a few things early like the tariffs placed on canada, i would note canada is the largest customer we have sold about $270 billion worth of goods and services to canada last year so that is a worrying trend that some have picked up on i think one of the things that people are watching for in the g20 is to see what the u.s. puts

forward and what stances it takes. and that will spell out more on where we are headed with the trade relationships and the impact it will have on american companies and communities. >> there are also major suppliers of steel to this country, something president trump has been talking about as well so, john, just final word here as we watch all of this develop with north korea they are taking front and center stage. why isn't china doing more to shut out north korea >> well, i'm really puzzled by that i have been in pyongyang and it's the most dismal place in the world. the fellow running it is absolutely crazy and the chinese interest is to get rid of the nuclear weapons i don't understand why he hasn't just disappeared with the head cold over one weekend, which is the chinese solution i think that is what is likely to happen. there are innocent people in north korea. and about a million bad guys

and if we blow the place up, we'll blow up the 20 million poor people with it. >> all right we'll leave it there guys, thank you. mad matt mcgwire, john rutledge, thank you, both. the dow is down 13 and the s&p again in the green specifically we're watching tech as we enter the second half of 2017 amid all the geopolitical uncertainty. for more, we are joined by the global adviser senior portfolio manager walter price and senior portfolio manager dan morgan two guys we like to have on together to talk about this. good to see you both once again. walter, for a while there nasdaq was looking at the four-day loss of the year, it could still happen this afternoon, we'll see. but do we think this sell-off in tech was limited to the past week or so >> i think it's pretty limited because you've got, you're about to approach a period of stronger earnings reports and i think that will help stabilize the stocks here. >> strongest earnings from whom?

>> well, i think it is very broad across all of technology you're saying that summit companies are strong, software companies are strong, so there's a nice tail wind to tech businesses for the first half of this year. >> we have seen this before announcements. i wonder if you think the period going into the first quarter is a sign for good reports? >> i'm optimistic like walter is in terms of numbers. the sell-off is more profit taking kind of coming in to end the quarter and so forth there were recent studies that just came out that showed demand for information technology from cios is expected to be up 4.9%, which is very strong so i agree with walter i would expect good numbers coming in here, you know, we'll kind of kick things off in about

two weeks. and i expect tech to perform very well in terms of profits. and hopefully add a little bit of juice to this wish-washy trade you have been talking about in terms of the nasdaq going down >> walter, besides pure earnings, i am fascinated on what is moving tech stocks around i can't help but notice that this is better than 2%, perhaps on the announcement the two of them will be working together on artificial intelligence partnerships between the autonomous driving platform, that has gotten working things into the platform. do you think ai is that present right now that these partnerships are really moving stocks >> yeah, i think ai is starting to be a significant business it's well over 100 million a quarter now. and i think it's growing very fast

and i think they are clearly betting they will help the chinese auto companies embrace ai and autonomous driving. so, yeah, i do think ai is pushing the needle and it drives memory demand. you know, people don't realize that for every $100 of nvidia on the board, it drives a whole semiconductor industry, actually >> i'll take this for a moment, dan. there appears to be some correlation lately with higher yields globally, but also with treasuries and the sell-off in the tech sector, something reversing a bit today. is this all one big qe, liquidity trade where tech has been the biggest beneficiary lately of that rally >> well, what is kind of interesting is we saw the fed come out a couple weeks ago and raise rates. with e swe see the ten-year go down that will slow economic growth we all know the kiss of death

for technology is a negative gdp. we all remember what happened in 2000 when we hit the cliff we all remember in late 2007/2008, it is interesting to see this on and off situation in regards to yields and technology i think people are kind of betting what direction the economy will go based on what the fed is doing, but also trying to figure out how that is going to impact technology going forward. so far, it doesn't appear to, based on the information i have, but you can kind of see this back and forth going on between what the fed is doing, what treasuries are doing and what is happening in technology. so it is very interesting. >> yeah. >> hey, walter, i'm curious, we went through a period where we talked a lot on this hour about tech of a pause and innovation, right? i mean, technology was sort of plateauing on innovation in terms of product phone improvements were incremental, now we are talking ai and everybody seems to have a digital assistance and maybe the aid is going to be amazing do

you think we'reexiting that period where innovation so to speak was leveling off >> i think so. i think that ai is affecting all businesses and will affect all businesses and i think if you get some sort of a trade rebalance, that will help manufacturing in the u.s. and that will result in more robotics being used and more vision systems so i think those all help drive the leading edge of tech and demand for tech. >> all right nice intersection between the macro and the micro. walter, dan, thank you, guys we'll see what happens as we kick off the earning season in a few days when we return, watch out, tesla. another automaker unveiling plans to go all electric by 2019 all bbibaba taking on amazon we'll hear what jack ma has to say about it and why samsung could be

overtaking intel as the biggest chip maker a busy hour ahead as "squawk box" comes back. these days families want to be connected 24/7.

that's why at comcast we're continuing to make our services more reliable than ever. like technology that can update itself. an advanced fiber-network infrustructure. new, more reliable equipment for your home. and a new culture built around customer service. it all adds up to our most reliable network ever. one that keeps you connected to what matters most. welcome back watch out, tesla another automaker is going all electric in the next two years phil lebeau is in chicago with that story phil >> john, we're talking about volvo and the announcement of volvo certifies what the company said a few months ago fazing out diesels. starting in 2019, all the models will come with electric motors

that doesn't mean they will build engines with the internal combustion engine, but this will start to phase them out. internal combustions will be phased out in announcing this decision, keep in mind that when you take a look at shares of volvo, this is a chinese-owned company and where are electric vehicles growing very quickly and the government encouraging electric vehicles china. so, at the end of the day as you look at shares of geely, that is driving the volvo announcement we want to switch gears and talk about tesla with a fair amount of news that come out over the last couple of days including q2 deliveries many are looking at to say, these were not exactly what we were looking for. a total of 22,000 vehicles delivered to breakdown as 12,000 being the model "s." and 10,000 the model "x. goldman says we think demand has plateaued in that 24,000 range for model "s" and "x" for the

remainder of the year, as a result, it's a price target of tesla dropping it down to $180 goldman also expecting lower margins than originally forecast in the second half of this year for tesla. that's one factor weighing on the stock today. guys, we have talked about this for some time, a big second half for tesla, we had the announcement about the model 3 and for the remainder of the year with the first deliveries of the model 3 will be heavy news flow for tesla. >> we were just talking about -- thank you, carl. we were just talking about the really ambitious-looking projections for the production of the model "s. what happens if what tesla always does happens again here and they end up missing projections but still being impressive is wall street losing patience do you have the take on that so far? >> you're talking about the model 3 in terms of ramping up

production 20,000 for the month of december wall street is looking at this and saying, look, they may not hit the full production of a half million next year but let's say they get up to 450,000. is that going to make people change their opinions on tesla a lot depends on what we have seen with the growth margins we are in the wait-and-see period where we start to see the ramp up in production. if we see a repeated quarter after quarter after quarter where they fall short of estimates, then i think you're going to see pressure on the stock. as of right now, we're in that wait-and-see period. >> we are seeing pressure on the stock today on the back of the downgraded spot almost 6%. phil, thank you. disney shares are under pressure today. down a percent after "the wall street journal" put a spotlight on ratings declined at its channel. we're talking kids and teen channels, not just espn.

julia boorstin is here with something you have been watching for a while. but the numbers are staggering >> espn has been in the spotlight, but disney channel and freeform are suffering from a massive shift away from primetime tv now, people under top age of 34 are watching about a third less primetime tv than they were five years ago. in the first half of the year, disney ratings on disney channel, disney jr. and disney xd xddeclined by double-digit percentages. freeform, which used to be abc family, generates revenue from ads and the cable group. so the channel says it targets a slightly older demographic than that all the channels play a valuable role in promoting disney's characters to drive its studio,

its theme parks and its consumer products now, freeform and the disney channel both losing about 4 million cable subscribers over the past three years according to kagan but they don't decline from growth in digital bundles including directv now and hulu that include their channels. freeform says it just had the best may ever in digital doubling digital viewing on the apps in the past two years for the quarter that ended in march, disney said on the earnings call the decline at espn was partially offset by growth at the disney channel and freeform so now we'll see if second quarter ratings declines hit the dismal third quarter we are on the lookout for disney to launch a stand-alone disney channel or freeform service as disney increasingly looks to take its brand and products direct to consumer sarah? >> yep, that is the question we will see. julia, thank you still to come on "squawk

alley," jack ma's response to amazon's alexa and apple's si rir ri we'll have recode's ceo weigh in

good morning once again, everyone i'm sue herrera. here's your cnbc update at this hour an overnight shooting in savannah led to a police choice that ended in a deadly crash four people were injured when shots were fired at the historic

city market. police then pursued a car leaving the scene which crashed killing the three people inside. and travelers coming to the united states from turkey may now be able to keep their laptops with them. turkish airways and emirates say they have been exempted from the device ban after meeting enhanced security measures the tsa tells nbc news it is visiting both airlines today to check on those measures. and some of the popular drinking fountains in rome are being turned off as the region deals with a severe drought. the water utility says 30 out of the 2800 spigts will be shut down daily and this could be the largest flag ever weighing in at 500 pounds, measuring over 11,000 square feet the massive stars and stripes was hung by volunteers in utah's grove creek canyon beautiful sight. that's the news update this hour back downtown to "squawk alley." sarah, back to you sue, thank you it is almost time for the

european globe let's look at how things are shaping up in europe >> the european stocks are off the lows after a day of mixed economic data. we had the composite for june revised upwards to 56.3 helped by an improved economy the reading is below levels in the previous month, but it does wrap out the best quarter in six years. on the flip side, uk services pmi fell to a four-month low in june moving on to news in europe, worldpay is taking a hit the uk's leading payment process sore and tentative deal to be acquired by u.s. rival vantiv. they offered worldpay at $10 billion. the company has been approached by both vantiv and jpmorgan chase about a possible buyout. shares are down 9% adidas up sharply after being upgraded to buy from whole on

hsbc the new management team's ability to show the long-term strategy is showing up them 18% year to date in berlin, german chancellor a angela merkel met with xi gin jinping. she called it a good opportunity to expand communication between the two countries. she would like to see quick signing of an investment treat did to lead to a full trade agreement with china merkel says she stands by her earlier suggestion that europe can no longer entirely rely on the united states. this, of course, as president trump gets ready to attend the g20 meeting. guys, back to you. all right, thank you, seema. meanwhile, move over alexa,

perhaps alibaba has its own home speaker. and it's going to take on amazon, google and eventually apple and samsung when they come to market. deirdre bosa has the details. >> in english it's called the geniex1. but the device only understands mandarin so alibaba announcing this overnight in beijing this is the latest entrance to the smart speaker market and its answer to amazon google echo home. and the speakers have popped up at a quick pace over the last few months it comes with entertainment, education, music and online shopping that's to tap into all bibaba's

market it will cost $75 and goes on sale august 8 to the public. search giant bidu has competitors as well. "the wall street journal" reports over the weekend that smartphone giant samsung is working on a device powered by bixby as a voice assistant samsung denied to comment on this the market has grown 130% this year in the u.s. with amazon controlling 70% of it. to put that lead in perspective, alexa just passed 15,000 skills. alibaba's genie launches with hundreds the company says. >> so, deidre, when we look at the home speaker market, we still don't have good numbers on exactly how many are selling we have percentages, amazon has this percentage of the market,

but amazon still hasn't said here is exactly how many, either tens or hundreds of thousands or millions of theme we're selling. so do we have a real good look at how the markets are >> they sold tons of echo devices and said it is one of the best selling -- this is coming from the company. but the skills number is interesting to put it in perspective. alexa has over 15,000. google assistant has 378 microsoft cortana has just 65. so it does have a lead as for numbers, you're right, they don't give us much. >> yeah. pretty hard to gauge when those are the numbers that we're looking at guys, is ed lee joining the conversation now >> he is right here. deidre, stay put ed lee is joining us to talk specifically about samsung trying to become the world east biggest chip maker good to see you, welcome

what does determine success here the number of the ecosystem,th number of skills deirdre was talking about? >> when you look at things like skills, that's the estimate. here's the thing, for those who have those echoes at home, you're using four to five skills at home. maybe ten. if there are 100,000 skills, you don't 90% of them are there. that's part of the issue it's not like a smartphone or tablet where you can see things and search for things. you don't know to ask if the skill exists that's part of the problem with the voice-enabled computing device it tells us something that it doesn't tell us. >> so the alibaba story is laid out. amazon does not sell its product in china so this is a big potential market, right? or are there other competitors >> it does highlight the fact that fundamentally, a lot of the big u.s. tech companies, amazon, google, facebook, apple or the other guys have a hard time doing that alibaba doesn't sell in new york they are trying to sell -- they

are trying to ease the direction of goods from china to the u.s but also create thousands of jobs but there's not an alibaba presence in the states this device could be a way of getting in there if that becomes true, you know, trade issues, if i'm google or amazon, i'm going to the trump administration and say, hey, why are they allowed to sell here and we can't sell here can you help us figure that out? that will highlight the fact. >> that's because president trump is going to start -- he's very eager to help jeff bezos right now. >> exactly >> guys, just to your point about the competition in china, remember alibaba's device only speaks and understands mandarin. but this could have interesting implications for apple they have huge sales in china. so you could think the home pod could get a foothold in china. but now alibaba has a head-start with the mandarin-speaking device. >> we don't know how well the device actually works yet. it's not so much a hardware

issue as a software issue, right? it's a really hard thing to solve. machine learning, it requires a lot of programming power so they are able to pull that off, great if it doesn't work as well, it doesn't make a difference how cheap it is. >> are we done debating whether or not digital assistance is here to stay >> no, it is definitely here to stay we went from pcs to smartphones and will go from smartphones to a voice-enabled thing. >> really? >> tablet is a weird interim step it happened for a while and smartphones got to good you didn't need a tablet. >> to john's point over the last couple of weeks, a lot of the assistance are things they have been doing on tablets okay for a while now. >> and that is why -- the tablet example is why i'm a little skeptical of all of these things that are supposed to be the next big thing. i mean, first it was the tablet. and tablets have made a significant impact but sales are leveling off then it was the watch.

with edon't have great numbers on watches, smart watches out there. and now we're moving on to the smart speaker. there's not a clear number on the adjustable market. how many are you going to have in your home there's not one on every wrist, is there one in every room or one per household? do you want your kids have it fettered access to a computer to talk back to them to tell them who knows what about the world i'm still a little bit skeptical. >> i always love john's skepticism he's exactly right to be skeptical about it i do think sort of the bigger picture on this, this is something my now former boss wrote about in his last column, the digital assistance, the voice assistance is the latest in the computing computers are embed in so many devices, the car, the reridge fray or the, that's what it is about. it's not going to be keyboard or

your phone, but you can summon things -- >> i thought of this as part of the smart home evolution. >> it is part of the smart hole evolution and the idea is the computer will become more invisible to you so many things will be embedded with computing power and you may access them to be a voice or whatever it might be and that is sort of what that -- the voice assistant is really the biggest manifestation of that idea. >> deirdre, thank you. and i want to get your take on a column from the journal today to discuss upheaval among ceos in the first five months of 2017 13 companies of market values of more than 40 billion installed new ceos that's more than double the change at such companies in the same period last year. not a lot of silicon valley on the list, but maris mayer being mentioned as stepping down recently you're not afforded the time to do a long-term change. you have to change now. >> less runway

"the journal" did a good job of framing the facts. at the same time, i think activist investors are a big factor for a lot of the ceo changes and have a lot more sway and power. and the markets in a way are listening to them more than you have before. and that is a big factor here. i think the travis kalanick situation is unique, however n the start-up, it's not publicly traded the constituency is much smaller. technically, he still controls the company. even though he's not the day-to-day ceo anymore, he still controls the votes and changes the board if you wanted to next month. i don't think that's going to heap i think there is a particular situation with silicon valley of the founder ceo. in other words, there's an identity crisis. just because you are the founder doesn't mean you should be the ceo. that was true five, six, ten years ago with facebook and google founders. but those guys figured it out putting the right people in the

right time. >> i was wondering who that person is for uber is there some sort of leadership vacuum among the number twos or the number sixes >> i believe there is. most of the ceos have been fired or have left in the turmoil. and in the valley in general, there are not many cheryl sambergs out there >> that's the rumor for every top job, right >> she's happy where she is. she is not jumping over to uber. but there's an identity crisis of how this works in the valley, whether a professional or if there are enough professionals out there to take the reigns and do the proper job. >> announcing a tentative $10 billion job to buy uk-based worldp worldpay worldpay was approached by vantiv and jpmorgan chase. to call this a thin story is

limiting because this is now global ballooning. >> we have been talking about how retail is really changing. the brick and mortar, people are buying stuff online. so this move is a way for vantiv to get to online payments. they have online payments but there are a whole lot of processor companies out there. stripe is a start-up they are valued at $10 billion so their evaluation is about what this deal is in this way. and i think it's a hard business because vantage doesn't put out, we don't know what their transaction fees are to the merchant but if you look at stress, they are making as little as ten basis points on the transaction. but they are growing because everything is being sold online. and it's a way to get a foothold on there in a low margin business they need a lot more volume. >> john? >> i'm curious your take on how this new wave of digital payments is playing out. when we first got apple pay, a lot of people expected, well, this is goinging to be about waving your phone in front of

the register and paying for things in person but more and more inside apps i'm seeing apple pay and fingerprint being used as a way to ease online transactions. what do you think the longer play is here >> i think you pointed out exactly the right thing, which is the inapt purchases more than the point-of-sail purchases at the kiosks in store. more people are buying off their phones so that's the thing you want to own. so whether it is an apple pay transaction or paypal or whoever is doing the transaction, that's the key thing to know. >> one thing particularly interesting about the story is jpmorgan was said to be a leading contender. that caught a lot of people's interest in the emerging of the old bank with new technology and i wonder how many other worldpays there are out there for jpmorgan to follow-up? >> i think there's a lot more emerging, especially online processing payments. and i think as i pointed out

earlier, because of the low margin, you'll see more consolidation. so you'll see there's a lot of players that paypal has a function that does it. the reason to do that is you can sort of find ways to squeeze more out of the merchant charging 2.9% on a transaction plus 20 cents to 30 corrects that will hurt smaller businesses and processing payments, they do mostly small and medium businesses so it is still a growth area you're going to need to get consolidation to get more margin that's what the deal is sort of going to preface going forward. >> make it up in volume, though. >> exactly. >> you can talk about anything thanks, ed good to see you. john when we come back, martin shkreli is back in court as they look to keep the phrma ceo quiet.

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i'm scott walker coming up on "the halftime report," one thing to keep stocks moving harder regardless of the president's agenda. and making changes as the fort folios get some big

changes. and our call of the day "halftime report" starts at noon carl, see you back in 15 let's go to the cme in the meantime to rick santelli. >> good morning, carl. trade is an important issue. hold up different countries look at trade, that's where it is going to get interesting and there's always the notion of trying to talk your way into a better deal. how will all this turn out and affect markets i don't know but one thing i know is g20. my own form of g20-plus. what is it last week was an interesting week if you are watching the big thing on market, especially the sovereign fixed income markets any maturity you looked at moved up in yields last week let's go to the white boards the g20-plus is 20 basis points. definitive credit is the

benchmark for the group. uk, france and spain just a week ago monday, the 26th, we look at that versus where the markets are today. it's pretty astounding really. the u.s., 2.13 to 2.33 the yeitalians up 24 spain up 18. this didn't really flat craft the 20-plus zone but the point is that i try to keep things simple we had an interesting guest on today that has seen a lot of trades, many believe it's the u.s. central bank and the federal reserve that is the catalyst for moves like we have seen last week that ultimately may push rates higher because of normalization, less purchases, watching maturities run off and not return to the balance shade in reformulated purchases

but i personally think it's putting the ball in the european court. this will be important today, in particular, because we get them into the last meeting. so if we get more context about the balance sheet, we should be able to tell by watching markets and how all the various markets participate. what the driving force is. and the reason this is so important, because mario draghi unlike janet yellen and ben bernanke, they do have an exit issue of something we have never seen before, at least in terms of the girth of the situation. whether it is how long they have kept the rate down, whether would they be otherwise? maybe they would be at this point, we're not sure. but really it's the balance sheet issue. many believe mario draghi will have a hard time exiting any time soon. this will be a big deal and a big deal understanding where the push is coming from so we can stay on the right side but one thing i can tell you, especially if you are watching the u.s. and the uk, you want to continue to watch 50 basis points in the ten-year boon and pay particularly close attention

to the 2.30 to 2.60 range we spent so much time in at the beginning of the year. sara, back to you. we'll see if we can successfully break out of there, rick, thank you. still to come, why federal prosecutors are looking to issue a gag order on martin shkreli. taking a look at the markets here, we have strength in sectors like technology, health care and financials helping to offset some of the weakness in energy, real estate and utilities. markets climbing back from the earlier sell-off we'll be right back on "squawk alley. she's nationally recognized for her compassion and care. he spent decades fighting to give families a second chance. but to help others, they first had to protect themselves. i have afib. even for a nurse, it's complicated... and it puts me at higher risk of stroke. that would be devastating.

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. federal prosecutors are looking the to silence former turing pharmaceutical ceo martin shkreli. our meg terrell is live on the scene. meg, they're worried about him talking to you >> reporter: that's right, sarah. they're worried about him making comments both inside the courthouse and outside the courthouse and on social media this is the news that came out monday night, even though trial wasn't in session that day during the long july 4th holiday. prosecutors did file this request for a gag order on martin shkreli and all counsel in the trial, saying essentially these comments he's made when he wandered into a roomful of reporters on friday during a trial courthourecess

th this morning, the judge ruled on that, agreeing with shkreli's defense attorney, ben broffman, that he won't make these comments anymore, saying, essentially, all your client has to do is stop talking in the courthouse and around the perimeter of the courthouse, to which broffman, the defense attorney responded, there will be no more commenting by mr. shkreli. in that order, prosecutors also argued that shkreli be bard from making comments on social media. they asserted he would been using handle blmbro from making comments on that platform. as of this morning, that account had been suspended also this morning, we learned from prosecutors that multiple plea offers had been on the table for martin shkreli leading up to the beginning of the trial. broffman, the defense attorney saying, shkreli responded, i would never plead guilty to something i didn't do, we're going to trial >> so, meg, on arrivals and

departure from the courthouse, are reporters expected not to try to elicit a response or ask him any questions now? >> the judge didn't say anything about the media, despite broffman, the defense attorney, blaming shkreli's words and actions on questions from the media, including us. so we actually on friday were directing our questions to br broffman, himself, the defense attorney when shkreli spoke over him in response to us. it appears that mr. broffman will still be able to comment to media, saying essentially he needed to be able to talk to media because of what he called biased coverage and he needed to be able sfoto respond to that >> so, meg, how's the actual trial going? or is it one big distraction after another because of his behavior and his profile >> reporter: you know, after a slow start, sarah, a slow jury selection process, the trial has been moving along fairly quickly. we've already -- we're already on our second witness of the day today. the prosecution really digging into the details of the case of course, shkreli has been accused of eight counts of

securities fraud, conspiracy to commit securities fraud, and conspiracy to commit wire fraud, to which he's pleaded not guilty on all of those accounts we're moving through to the details. one of the witnesses was questioned in depth into what short selling is so starting to get into the nitty-gritty here. >> meg, we'll continue to come to you for guidance on how it's going. meg terrell, outside the courthouse in brooklyn in the meantime, watching the markets. crude is getting some people's attention, down almost $2. squawk "squawk alley" continues moment what if we pull customer insights from the data in real time? wait, our data center and our clouds can't connect?

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got some movers today. let's check in with dom chu. >> guys, of course, we're still watching what's happening with o'reilly automotive shares they are now down near their lows of the session. near a three-year low after its second quarter same-store sales widery missed its own estimates. that stock is driving down other auto part, retailers auto zone all falling 9 to 14% many of these stocks have had very large runs over the course of the past few years and you we're starting to come off a bit on this o'reilly news. carl, i would note we're watching a couple of other stocks here, mainly on the biotech things an indication, the biotech etf that tracks them, up by almost a percent is over. the rest of the market, fairly

quiet. biotech stocks still showing some signs of life carl, back to you guys >> on that o'reilly news, some reports indicated that they guyed comps negative in fact, they guided to up 1.7 from a prior three to five keep that in mind. apple may be getting some help from the u.s. government in its tax dispute with the eu. a reuters report says that the government is seeking to intervene in apple's appeal of the decision that ruled the tech giant owed $4.8 billion to rooirld. that move has been criticized by the obama white house, which accused the eu to helping itself to tax revenue that should have ended up in the united states. we've been asking whether or not this white house would start to get involved with, with i don't know, eu google, now this, on behalf of u.s. companies >> i think it's funny that we found something that the obama administration and the trump administration looked like they can agree on and why not? this is potentially missed tax revenue, john, that should be the u.s. that's certainly what apple is arguing. and what the treasury has

previously argued, under treasury secretary liu, makes sense to go after it, doesn't it >> it does this is a big pot of money and people on apple's side of this have long said, look, somebody, some government is going to end up with this money and they have to figure out how to make the rules clear, so that it's clear who that is. not surprising that the trump administration, similarly, says, hey, billions of dollars in tax revenue, we'll take it >> they're going to have a tough fight, though. margaret is a tough cookie, she does her legal homework and she's ready to fight these battles in court and i think she knew what she was getting into when she brought this against apple >> we're definitely going to find out finally, john, we've been talking all morning long about what an eventful morning it is for payments and fintext, square's up better than 4% payp paypal's pretty good, too. >> paypal's up more than 2.5%. it seems like love is in the air when it comes to stocks when we're talking about speculation

around these two stocks, that they might get into something as well but in a market that's not muiing that much, interesting to see those two with some pretty significant moves. >> yeah. by the way, data continues tomorrow, adp on thursday, mortgage apps, oil and gas, and jobs on friday let's get over to scott wapner at the half. all right, carl. thanks so much welcome to the "halftime report." i'm scott wapner our top trade this hour, the real reason the rally in stocks may be far from over with us for the hour today, joe terranova, stephanie link, the brothers najarian. let's begin with the markets dow and s&p. they gave back their early gains. dow's trying to fight back, positive, still down 19. the s&p and nasdaq are in the green. but the focus for investors now turning to earnings season just around the corner. and our bob pisani crunching those numbers ahead of the results and coming up with what could be a pretty good story to tell >> it's