tracks the retail business down about 2% abercrombie the worst of the bunch on pace for its worst day in almost a year town almost 20% after the retailer said efforts to sell itself have stalled. dick sporting goods, amazon bucking the trend up 1% ahead of its annual prime day now back downtown for the start of "squawk alley." guys, back over to you >> all right thank you, dom good morning it is 8:00 a.m. at amazon headquarters in seattle, 11:00 on wall street "squawk alley" is live ♪ ♪ ♪ typical drive today time to emancipate ♪ ♪ i guess it was

♪ good morning welcome to "squawk alley." with me here at post nine sara eisen, mike santelli, carl quintanilla has the day off. we start with amazon prime day. the annual holiday made by amazon set to kick off tonight at 9:00 p.m. eastern with deals aimed at rewarding prime members and, of course, recruiting new members to the premium option. just how important is prime to amazon always tricky to get the numbers. deadria is at amazon hq with some details good morning, deadria. >> good morning. that's right we're in the heart of amazon's rapidly expanding campus where employees are getting to work gearing up for the big ta. as you know amazon does not disclose the number of prime subscribers but estimates put it between 65 million and 85 million subscribers in the u.s put that in perspective that would be nearly 70% of all u.s. households and puts it on pace to become more popular than cable tv that has been very good business for amazon

a recent study found that prime customers spend nearly double what non-prime customers spend and shop more often too. the reason most people still sign up the fast delivery of products there are a dizzying array of perks some listed here and that's because jeff bezos wants to make it irresponsible to not be a prime member. amazon has invested big to draw people in like an original content for prime video, groceries, airplanes for logistics network, the list goes on and on. the economics of prime make it crucial to amazon's business model. the idea is bring more people into the amazon ecosystem so that they spend more, have less reason to shop anywhere or in some cases visit other websites. ultimately, guys, prime day is about the ecosystem bringing more into the fold so they shop more and spend more, a lot, all the deals you will hear over the next two days are for prime members. that kicks off at 9:00 p.m. tonight or two hours earlier if you shop by alexa, part of their

big voice push this year >> deadria, thank you. and clearly, jon, that morning star headline is eye-catching 80 million amazon prime household, 90 million u.s. households have cable tv how are you going to pop the hype on this one >> you can't watch prime, but it's a very powerful group i think the timing of this prime day is interesting i mean, 7/11 prime numbers nice, but during the period between dads and grads, traditionally an electronics buying period, and back to school which is big on apparel and what not not a lot going on so if you're amazon why not invent a holiday once you've got that base that's big enough to prime the pump, if i can use another pun, i think the key is, can they sell enough dash buttons, get enough new people in the fold, to really then build momentum behind the next season which is back to school big on apparel amazon has had a nice push on apparel over the last few

months that i think is when you start to see the impact of prime day. >> it's starting to feel like cyber monday where it's really hard to know if it was a really blockbuster one or if you're just getting a snapshot of the long-term, very fast growth at the whole segment is undergoing. i mean really hard to kind of argue with it on a tactical strategic basis. the craze electronic etailors in new york had christmas in july wasn't probably as valuable as prime day. >> nobody else can do it it's not like somebody else can do prime day too. >> alibaba does singles day. compare it to that. >> can't have another prime day if you're not amazon speaking of amazon check out shares of best buy, getting crushed this morning, recode reporting amazon's quietly building its own version of best buy's famous geek squad. think alexa consultations and products that service live in seven markets. thought amazon killed best buy once, they didn't. i'm not sure this really kills

best buy, though i mean, if you're going to shop at best buy, for that installation service, are you really going to go to amazon it's two different streams of buying it could help amazon get share wallet, but i'm not sure a best buy shopper shopping because it was local and they were just walking in is now going to go to amazon. >> you wanted to look around part of the case for best buy, certain products you want to sample in person i will say in terms of the stock reaction to best buy this news caught the stock kind of perched on a him right there a huge outperformer year to date maybe that's why it was more of a dramatic pullback. >> joining us into this conversation we want to welcome from the aspen institute, president and ceo walter isaacson in beautiful aspen. busy day for amazon and jeff bezos. how does the rest of retail compete, with already such high

penetration of amazon prime day. >> what you said earlier was so right. they're building an ecosystem. and one of the cool things about prime day today is that if you do it with alexa start talking to it a two-hour head start. once again they're adding a little piece of the puzzle to the ecosystem. it was about 18 years ago today, that when i was at "time" magazine, i was the editor, we decided to make jeff bezos man of the year. and people were saying, well that's nuts. the internet bubble might burst. and one of my colleagues said, he's not in the internet business he's in the customer service business he'll be around in 20 years. he is. >> walter, i'm wondering for some historical perspective, didn't department stores kind of invent the modern holiday season and santa claus and reindeer are we seeing another wave of that from alibaba and from amazon, inventing these sort of

e-commerce holidays, times to buy that didn't exist before >> oh, absolutely. you've seen disruption in the retail industry, you know, ever since sears roebuck catalog started coming on the wagon and when things like that happened, you build events, events around it i grew up in new orleans and there was a wonderful department store and there was -- sort of mascot mr. ben gal, i thought mr. bengal was some major christmas saint or elf or angel, and then i realized mr. bengal was just a created day it's not quite as amazing as the way jeff bezos and amazon are now stitching it together. you know, you talked about christmas in july, with one of those retail stores we grew up with in new york, i mean this is -- that's nothing compared to the fact that my wife and i woke up this morning like well do we

need a toaster we're amazon prime we feel like we have to shop for something. >> walter, though, that story you told about putting bezos on the cover in '99 of "time" magazine as man of the year, now both sides of that came true, right. the internet bubble did bust at that point, and bezos proved he was in the customer service business that shows that the enthusiasm behind amazon as an investment can sometimes run beyond what the company is doing and do you think we might be nearing one of those points at some point here? >> yeah. i'm not very good at predicting future stock prices, otherwise i wouldn't have to write biographies or something, i could guess on stock prices. i do think that you can be absolutely sure that five, ten, 15, 20 years from now, amazon will be a safe and dominant player because it really does wrap people in to an environment in which, you know, now -- look, apple should -- apple should

have been dominant in the living room in the speaking assistant with siri. they had a great product siri. they're going it try to get into it in three, four, five months but they're going to have the third mover disadvantage because google and amazon are already in and now amazon is wrapping itself up with that personal assistant that you can talk to in your living room with a prime shopping day so it's not just about streaming video and music which amazon are also very good. >> you know going back to that headline, almost as many amazon prime subscribers in the u.s. as cable subscribers, i think it highlights the fact that it's not just for wealthy americans anymore. $99 a year is expensive, but amazon does have monthly payment plans and there are all sorts waives to get around it. free trials. i wonder, walter, what the impact is going to be on our country if this goes global and how it completely changes behavior around shopping and what we expect

>> i think it will change behavior $99, you tend to pay $99 a month for cable sometimes, you know, that's just 8 or $9 a month for amazon's prime service which is giving you an array of things movies, streaming music. my music now, my play list all comes from amazon. i'm amazon prime and the interesting thing is they built these things organically. sometimes people, you know, other than their purchase of whole foods, sometimes corporations build up dominance by, you know, buying out other companies, so i don't think you're in the situation where you're in anti-trust or something because this has been organically grown. >> interesting point walter, also we wanted to get your take on that possible cyber partnership between the u.s. and russia president trump tweeting he discussed creating, quote, an

impenetrable cyber security unit to guard against eelection hacking and the like before rolling back those comments in this tweet, quote, the fact that president putin and i discussed a cyber security unit does not mean i think it can happen it can't but a cease-fire can and did referring to the cease-fire in syria. what does that look like senator lindsay graham saying it's close to the dumbest idea he's ever heard. clearly president trump has already walked it back >> that's a high bar with senator graham to be [ inaudible ] probably heard a lot of dumb ideas. i mean the poor secretary mnuchin hung out to dry. he must bety fide it was -- mortified, he said it was a great idea and trump says it's a bad idea this is a bad situation. i sometimes ask people, you know, here at the aspen institute we do the counter factual, imagine if it happened the other way around, and

imagine vin weber said this, a republican leader, said last night at one of the dinners, imagine that the russians had hacked our election system and had gotten in it and it happened hillary clinton and that hillary clinton had not told the truth about various meetings that she and her campaign people and family had had with the russians they would be calling you know for hillary's impeachment. we have to come together as a nation and say whatever party gets hacked we can't allow russia to do what everybody knows it did, which is try to influence our election through hacking and this goes to a larger question, cyber security summits with russia are not going to solve it but even with other people are not going to solve this issue we have to create over the next ten years a more secure internet >> walter, thank you for joining us today and as always, walter isaacson from the aspen institute.

>> when we come back big news, newspapers looking to take social when it comes to advertising dollars. details are next and then it's the official start -- unofficial start to earnings season as we await comments from fed chair janet yellen wednesday and thursday and later much more on jeff bezos' big day prime day. kicking off at 9:00 p.m. eastern. a 30-hour day. "squawk alley" is back after this a used car,

major newspapers such as "the new york times," "washington post" and a slew of others are teaming up to ask congress to grant a limited anti-trust exemption to allow them to negotiate for digital advertising collectively to compete with the on-line platforms that dominate the space, google and facebook "the wall street journal" publishing apiece ove the weekend entitled "how anti-trust undermines press freedom" charging news companies cannot compete with these tech giants facebook and google and for more we are joined by the author of that op-ed, news media alliance and president ceo david leading the effort thank you for joining us. >> thank you very much for having me. >> so you say this so-called due op poly of google and facebook of internet advertisers is more threat j threatening to the news business than having the president of the united states calling out your prominent members as fake news and failing publications

why is that? >> you know, more people are consuming more hard news than ever the demand for our product is bigger than ever and i think people right now in particular understand it's importance is greater than ever. but we're -- we have a big change in business model as we move into digital and digital distribution is great because it will reach a lot of people, but it's not providing the economic return you need to sustain the business and while we're asking is we can get together as a group and collectively engage with the biggest distributors of content, google and facebook, in particular >> so they might say they've been very supportive, especially to real news outlets that do hire employees and as you say, send correspondence out to war zones and they want to eliminate the problem of fake news how -- are there other practices where they're taking advantage, talking about predatory practices, what do you need that collective bargaining power to

do >> well, we'll have to do more because first of all, those two organizations in particular currently attract something like 70 plus percent of all digital advertising dollars. we need a fair revenue share around advertising we need support for subscription models we need better brand connection and identity and they collect a lot of data on our readers we never benefit from so essentially, you know, we need a better, more sustainable deal in order to make sure that we can continue to create the news product that people rely on, that our democracy relies on >> david, you have plenty of my sympathy as a former newspaper guy myself, but newspaper companies have been notoriously bad at working together effectively. i think back on cars.com, at career builder, the cross-company efforts that were supposed to shore up the business side. do you really need the anti-trust exemption to work

together when working together has proven so difficult in the past >> two different things. they have had a difficult history of working together, i grant you that i think we are entering into a different era. but when it comes to do you need the exemption, we come back to apple and the book sellers i think the u.s. government is clear that the book sellers are not allowed to collectively engage with apple. that presents a problem. i mean it is a real dichotomy where you have a couple companies, hugely dominant in their space and very good at what they do but much smaller players in the on-line world can't get together to engage with them. it's really an unfairness that needs to be addressed. >> and david, how much of a long shot do you think it is that you will get approval to be able to act collectively in this area? >> well, i'm not a handicapper on legislation i don't think it's a secret right now getting any legislation passed is a big lift across the board you probably have trouble naming post offices at some point

but what we have to do is make the argument and push it forward because it's important and i do think there's a lot of sympathy out there because right now, more than in a long, long time, people understand that news is important and that bad news product, fake news, is really dangerous. we need to sustain the system. >> right but you have a president that's calling some of your very organizations fake news. and you're asking that administration for the anti-trust exemption >> well, the -- first of all, the number -- history of our industry is that politicians all complain about what you do but at the end of the day people generally and policymakers broadly understand that the news business pays an incredibly important role and the society and if you're in a fake news world that's really bad for everybody. you need legitimate organizations that hire reporters and do real reporting. >> agree with you on that. being a news organization.

david, thank you. >> thank you very much for having me. >> to talk about this effort, news media alliance president and ceo. straight ahead, where investors should be putting their money ahead of a busy week for the markets. "squawk alley" back in a moment.

the major average is up slightly this morning following president trump's return from the g-20 summit. the president tweeting yesterday the g-20 summit was a great success for the u.s. explained that u.s. must fix anyone bad trade deals it has made will get done. the president's return and congress back in session plus janet yellen's testimony this week what can the markets expect out of washington. let's bring in the global market strategist at jpmorgan and terry haynes, head of political analysis and managing director at evercorps isi terry, so has the game or the state of play shifted in washington basically since the president's been overseas and now back it seems as if health care has

been a little bit slowed down, if not in jeopardy, and we have tax policy again being maybe pushed out a little bit, so where does that leave policy hopes? >> well, i think -- good morning. i think we're about where we were it's important to remember that washington was out for a week to week and a half with the independence day recess and where we are is that the senate first has to get together on a health bill. we remain moderately optimistic that gets done but i'm very prepared to revise our view at a moment's notice. senator toomey sid on your air this morning, there will be a new version and a lot of effort to bring the sides together. i think we see where that goes over the next week to ten days if that continues on to some success, then there's an end game, you know, getting the house on board, getting the president to sign the bill over the next few weeks if that happens tax reform remains op track for later this

year or early next if it doesn't happen, though, if the aca doesn't happen, i think a lot of things get delayed in the system and odds change, including for tax reform >> and samantha, the markets have been okay with this for a while now. a lot of other things going okay they don't have to necessarily worry so much and paint everything on policy, can that list >> it can. prosperity fixes a lot nominal gdp growth globally between 4 and 5% we're expecting double-digit earnings growth across regions that's a good buffer for the market, so even if we get noise out of washington, not even signal, just noise, you look back to the fundamentals enough to keep the markets roaring higher >> what about health care stocks specifically, the second best performing group of the year, just behind technology do you see that as policy driven and if there's a re-set of expectations, does that change the trajectory for the group >> i would agree that health care is a sector that could absolutely be impacted by any sort of regulation change or

even the uncertainty, but to date it has not. if you look at the baskets in the quote/unquote trump trade they've all unwound. the infrastructure basket, tax reform basket. realistically health care as well, if we had any surprise upswing in regulations, something positive as viewed by the market we could move higher. we don't have to track down just because we don't see anything out of washington. >> terry, it seems like the run up since november was based on this idea, there would be deregulation, which is happening to some degree, but also this tax reform, it seems from now there's kind of a rerationalization that maybe we don't need all of that how much risk is there at these current levels if tax reform looks more and more unlikely >> well, what i think on this fundamentally from a macro perspective is that, you know, we still think that tax reform is 60, 65% likely to happen between the fourth quarter of '17 and early '18 we never believe that it was

available any sooner than august of this year even under the most optimistic time frames. i think there was a lot of irrationality in the market about that but that's still on track. i do think that deregulation proceeds more slowly than most people think what most folks have not understood and continue not to understand is that regulators have to both propose rules and then investigate and ultimately unwind or recalibrate. that takes an awfully long time. so deregulation is to us a medium or longer term play, not really a shorter term play >> and what about just quickly on the trade side of things, i mean that's one area where the president can act with a little more kind of single focus, is that something that we have to be alert for >> well, yeah. we always have to be alert for that i know particularly after the election there was a lot of consternation about the direction that the administration was going to take but i think the administration's

direction is fairly clear. there's really three components. they want to push bilaterals instead of multilaterals, even the president's tweet today mentions that, they want to engage in stricter enforcement of existing trade agreements and they also want to make sure that they work within the wto system, but reinterpret the wto to refavor market based transparent economies. you see evidence of all three things that administration is doing. >> yeah. that does seem to focus. thank you very much, terry haynes and samantha. appreciate it. let's get to seema moody here with the european close things are shaping up pretty positively over there. >> they certainly are. european stocks are on the rise after snapping a four-week losing streak. that includes the german dax getting a lift from news of a widening trade surplus thanks to strong demand from outside the european union experts jumping to a record high of more than $123 billion in

may. that's a 1.4% rise from the previous month about a 14% drop from a year ago and encouraging sign for german chancellor angela merkel ahead of the federal election in september. sticking with germany the ten-year bund yield pulling back from 18 month highs but it has doubled over the past month. inflation data on thursday, that will be key. now, ing's chief economist says despite that strong trade report, he cautions the increasing value of the euro could impact german exports in the coming months. the euro trading near 18-month highs. all right now lower at 113 against the greenback. the uk construction firm getting hammered and losing more than a third of its value today the ceo stepping down after the company issued a full-year profit warning and added it would undertake a comprehensive review of the business the stock wow, stock of the day in europe, down 38%.

back to you. >> ouch. seema, thank you send it out to sue herera at hq for a news update >> good morning, sara, good morning, everyone. here's what's happening at this hour the israeli military says troops have shot and killed a palestinian assailant who attacked a soldier at a west bank traffic junkship. it says the palestinian attempted to ram his car into the intersection before trying to slash an israeli soldier j before a packed crowd in morgantown senator bernie sanders speaking in west virginia, appealing to republican senator shelly ka pitot to vote no on the republican health care bill. >> we are not supposed to be taking from the most vulnerable people in our country, from the children, from the elderly, from the disabled, from the sick, and the poor, in order to give massive tax breaks to

billionaires >> a teen wilderness survival teacher at a camp in colorado fought off a bear after waking up to find the animal biting his head the bear dragged him 10 to 12 feet before he was able to free himself. he was treated briefly at a hospital and then released that is one lucky guy. that's the news update this hour back downtown to "squawk alley." guys, back to you. >> one of the many reasons i don't go camping. >> i was just going to say -- >> list of fears. >> reason number 101 why sue does not go camping. there you go. >> yeah. somebody is going to be getting bear spray on prime day. when we come back, amazon a few dollars from breaking back above $1,000 a share as it prepares for the annual prime day 9:00 p.m. tonight it starts. what's means for the stock when "squawk alley" returns i was wondering if an electric toothbrush really cleans...

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can we at least analyze customer can we push the offer online? legacy technology can handcuff any company. but "yes" is here. you're saying the new app will go live monday? yeah. with help from hpe, we can finally work the way we want to. with the right mix of hybrid it, everything computes.

amazon is gearing up for the start of its now annual prime day. let's get back to courtney regan at hq. some of the numbers behind the big day. good morning, courtney. >> good morning. what started as a 20th anniversary celebration has become an annual shopping event. amazon's prime day does kick off tonight at 9:00 p.m. eastern with 100,000 deals rolling out every five minutes over 30 hours for prime members in 13 countries. last year's prime day was amazon's biggest day ever, bigger even than its cyber monday with orders up 60% worldwide compared to that first inaugural prime day. slice intelligence says in 2016

amazon's market share of on-line sales was about 4% higher in the month of july than it averaged the rest of the months of the year, because of prime day now price brinks carl quist found while last year's prime day deals were 30% less in terms of pricing on other sites, there are always exceptions and many of the deepest discounts are on amazon's exclusive items like the kindle, like the fire tv and the echo which means you can't price compare any of those devices. last year, the echos and these devices were among the top sellers, expect the echo to be a marquee sale item and likely large tvs as well. we don't know the extent of the deals yet amazon says the about best way to monitor the deals is through the app and asking alexa. a former employee, now ceo of boomroom commerce says placement on page one and amazon search is really the new prime real estate in retail. he says that products that populate on page one of an amazon search get around 90% of the actual purchases

the first three results are responsible for 60 to 70% share of thepurchase for that search how do you get to the top page through a combination of sales volume, keyword, product reviews and more that's where you want to be. back to you. >> thank you we're watching shares of amazon ahead of tonight's rollout seems to be up better than 1.5%. but for more on what to expect for the stock now we are joined now by rbc capital market senior internet analyst mark mahaney and oppenheimer's managing director of internet research jason helstein welcome to both of you mark, start with you, so this is supposedly possibly amazon's biggest day, but one day in isolation, i don't know, we don't hear about logistics backups with ups and fedex around prime day how are we going to gauge the success of this day versus others >> i think it's going to be hard to do that i assume that they'll put out another press release with some

hints and clues to how it did. we think this could contribute a billion in sales for the company. you're talking about 50% year over year growth that all said still only accounts for about, i don't know, 3%, maybe 4% of the quarter's total revenue capture. the one key thing is, given the timing of prime day, it's not running into any crush of other shipments, so it doesn't -- it's not running into holiday shipment crushes that way you avoid some of the logistics problems that later in the year events would have we think it's just a sign of the maturity or the growth of amazon we don't look at it as a major investment thesis point one way or the other though. >> jason, the myth of amazon getting pretty large at this point, they're disrupting everybody and everything it seems this year, their emphasis is more on the ecosystem, ordering through the echo, giving you discounts on dash buttons, is that how we should look at this? amazon trying to prime its ecosystem with this day?

>> i think that's right. again, there tends to be focus on the revenue or the top line but if you think about it you're giving 30% off or more, what's your gross profit on that. also, remember, this is about a day to bring people on the platform and then really to encourage those third-party sellers to really see what amazon can do with them. we don't know what kind of discounts they effectively give to third-party sellers to be there. there's just a whole lot of moving parts but to back it up if you look at the most recent quarter, retail products grew 16%, but retail subscription services grew 52% when you think about this, if the future is really about more digital, if they can get you to get an amazon fire tv and echo, a dot, that's what they're thinking about >> mark, what about the international story? amazon is adding three new countries this year to prime day. china, india and mexico, i believe, all growing markets what kind of international

growth is amazon facing when it comes to prime and what kind of opportunity is it? >> so, you know, amazon now is about 50/50 company, 50% of its retail sales are outside of the u.s. i think, you know, earlier in the show there was a commentary about how international markets from probably seeing better growth, the point of view of our strategist jonathan at rbc, and companies like amazon are well levered to international growth. they still got a couple markets that are very early stage. india is one of those. we expect amazon to push more and more into other markets like brazil it's definitely part of the growth story its growth there is faster than in north america although a couple of fly wheels that worked in the u.s. that have not yet shown up in international markets, but we expect them to, one of those is prime, probably the rollout of newer categories like groceries and then third is the rollout of the echo devices we barely have had an impact in the u.s. but if we look back on this three years from now and see continued acceleration and growth for amazon in the u.s. my

guess will be because of echo and another year or two in international markets and that will be the driver in international markets. those eco devices. >> we've been marveling how many prime subscribers there seems to be by the popular estimates. how penetrated do you think the u.s. is? are we close to as far as they can get in prime, keep enhancing what prime offers to really grow that from here, or is it kind of up and away for more households? >> it would seem like the u.s. is close to fully penetrated as you reported they're offering a discount on prime if you're on food stamps and while some argued is this a publicity stunt, an opportunity to go kind of inflict pain on walmart because of their customer -- because of the way their demographics break down but that's somewhat telling that, you know, most what we will call it, you know, middle to upper income households are on prime and so really, to mark's point how do you then grow that prime base outside the u.s.? >> wonder why we don't see more retailers inventing their own

holidays thank you, mark, jason, we'll see how it turns out mark mahaney from rbc and jason hallstein from oppenheimer. as we head to break take a look at shares of dtesla after rough week last week under pressure from "the wall street journal" sales of the model s and model x fell to zero in hong kong in april following the government's decision to end tax breaks for electric vehicles the stock actually is up half a percent. but clearly the bad news continues after that article plus rick santelli, what are you watching today got a strong dollar. see that. >> i'm watching the markets and anxiously awaiting janet yellen's two days of testimony but beyond that we're going to have some fun and talk a little poker after the break. we're going to talk about four of a kind and flushes.

here's what's coming up on the halftime report today. wall street divided on the markets some say the risks are rising while others argue the rally is far from finished the retail wreckage continuing, a big downgrade for costco, trading that plus the chips with a price bump for nvidia and a thump today for intel. plus, the best and worst from our traders in our quarterly report all coming up top of the hour. see you in just a few. >> thank you very much we'll be watching. out to the committcme groupo

>> thanks, mike. i like being real-time, you know, we're live and i like scott judge wapner's tease. are risk premiums going up or are the markets going to rise. i think you can have both for a while, while longer maybe i should say that we could have risks go up, bubbles potentially continue to form, and markets still continue on their path which is kind of what i was thinking about today central banks, okay, let's see, we sort of have the bank of england, the u.s. central bank, ecb, bank of japan, kind of four of a kind. i can't help but think poker think of poker table especially as janet yellen gets ready to explain to both the sides of the aisle exactly what's going on or maybe more to the point what isn't going on. you know, when you have four of a find, that's usually a pretty good hand and i think the four of a kind, the central banks and

their policies there's strength in numbers and we see that because in a way, there's only three of a kind to some extent now because our central bank, while still reinvesting maybe 3 1/2 of a kind, they're talking about changing, a taper. so who has the best seat at the poker table? anybody who's played cards realizes that where you sit with respect to the dealer is really important. because you get some looks okay you get to check to the highest bidder right now, i'll tell you, i think that our fed is kind of like the dealer. they're going to be potentially the first to actually try to balance the balancing sheet act and try to taper but mario draghi, who supposedly is right in that cue as well, he gets to watch what goes on and i'll tell you, that's a very important seat he may have the best seat because quite frankly, think about mario draghi's hand right now, okay, he's got a buffet table of securities that he's

pretty much gobbled through. he's like a hungry pacman. pretty much most of the securities are eaten up already. so if he wants to keep doing this and many believe, no matter what he says, especially considering where his seat is, that they're going to watch what happens to our markets when we get specificity on specifics, specifics from janet yellen and the program, and he will then make a decision. most people i talk to don't think he's going to stop or even taper significantly, which augers the next question, what buffet table is going to replace the current buffet table and in that regard, maybe we should think bank of japan and all of the things they've purchased so while it all seems pretty clear right now, i really do think four of a kind could lead to a flush and that's what we need to pay most attention to. mike santoli, back to you. >> all right, rick, thank you very much. poker tables and buffet tables, appreciate that. still to come, tuning out itunes why the company's music and t fo platform may be falling

ouofavor "squawk alley" is back after this ff any company. but "yes" is here. you're saying the new app will go live monday? yeah. with help from hpe, we can finally work the way we want to. with the right mix of hybrid it, everything computes.

welcome back a warning sign for apple the company's market share for renting and selling movies on itunes is falling, according to the "wall street journal." this as the company marks nine years since launching the app store on this day in 2008. our next guest has built his company in the app ecosystem walter driver is the ceo of skoekly, a social gaming start-up that makes game s like

the walking dead and dice with ellen. walter, welcome. >> thanks for having me. >> so i'm interested pb walter, on your take of what has made apple's ecosystem work so well relative to, say, facebook's ecosystem, where some of your early efforts in social gaming were -- kind of puttered out >> yeah, i think the mobile app ecosystem has been a much better place for developers to build sustainable, long-term businesses over the last nine years. i mean, we're seeing massive growth of app store revenues, $28 billion paid out to developers in 2016, which was up 40% year over year for apple, and gaming companies represent the largest segment of that revenue. and we've seen companies now like super cell, that were built entirely on the app store reach $10 billion valuations, just in the last nine years. so we think that the mobile app ecosystem in the app store is supported much more durable long-term businesses

>> now, these are, in a way, two completely different issues. apple selling moves on itunes. they've been doing that for a lot longer than the app store has been around. but i wonder your take on this yes, amazon and comcast, the apparently of this network, are getting more on demand viewership but is that really a threat to apple's strength in the business or is it more a commentary on how digital viewing overall is shaping up >> i think it's more of a commentary on how digital viewing overall is shaping up. i think apple is in an extremely strong position when it comes to how people spend time and money on their phones, which is where we think, you know, revenue is going to grow and engagement is going to grow for quite a while. people first started with being able to download content through itunes and being able to play it wherever they wanted and we've seen things move to streaming services like netflix, spoti spotify, that are kind of

personalization. and by that, i mean, they allowed you to watch or listen to whatever content you want, wherever you want and offer personalized recommendations for you. but we think the next big stage of entertainment is going to be driven by truly personalized content, which is going to be software driven and respond to a user's behavior, their decision making, it's going to allow them to have an identity inside of a world. and these are experiences that that companies like scopely provide that are far deeper engagements than passive entertainment. and that's why we see the average player playing 54 times a day. and the average customer across our network spends $75 a month compared to $9 a month for netflix. so what i think you're seeing is people are spending a lot more time and experiences that are personal and unique to them. and i think this trend on the itunes video consumption is really a reflection of just people's consumption habits. and i think apple is an extremely good position when it

comes to thinking about where these software-powered entertainment experience is going over the next few years, because we have a huge part in the market and it's going to be difficult to displace them when it comes to be the kind of distributor to these kind of interactive experiences. >> a lot of what you described about that world that we're getting into maybe would seem to sideline the app store and other approaches theme's had does the approach have to change at all in terms of discovering how people come upon new apps, new games, things like that? >> i don't think they're on the sidelines at all, because they're taking 30% of the revenue that's been in the app store. of that $28 billion of gross revenue, which is 35% more on a gross basis than ipad sales last year they're taking over $8 billion of that is going to apple. so i think with wwdc a few weeks ago, apple previewed a new app store that's going to be rolling out in the fall, which just shows that they're very focused on driving more engagement with

kp existing products. i think we're moving to a stage where they're helping people engage already more with the products they're already using than driving new downloads and new products and you're seeing a huge increase on subscription sales, growing exponentially over $2 billion a year and that $8 billion of app store revenue for apple is very high-margin revenue relative to their hardware sales, and i think many analysts underappreciate how much higher margin revenue that is, and just how -- what a great business it is for apple >> well, walter, we want to see if these moves by apple actually end up driving subscription revenue the way in-app purchase changed the game back then walter, thanks for joining us. >> thanks for having me. >> dow's up 12 points. "squawk alle "squawk alley" will be right back

the nasdaq is outperforming the three major averages it's up a third of a percent the tone improved when oil prices turned higher, but we are watching a few individual movers some of the newly listed companies like s.n.a.p. under prrk aga pressure again, guys, and flirting back with that ipo price of $10 a share

>> today on the eve of prime day, i guess you've got to look to ecommerce ebay actually doing better than amazon, ul nearly 2.5% >> and paypal got an upgrade >> blue apron is up for a change we've been monitoring this one since about -- >> i know, i was joking in the break, never trade hungry. hopefully those who are long it will do well now back to headquarters for the half welcome to the "halftime report." i'm scott wapner taking sides the report on where the stocks will head from here and whether the risks to the rally are growing or just growing tired. with us for the hour today, josh browne, jim leventhal, erin brown is with ubs o'connor also with us from minneapolis, pete najarian. let's begin with the markets and a flurry of forecasts the today over where your money will work best in the months ahead teu can see stocks somewhat