good morning it is 4:00 p.m. at 10 dimon street in lonlddon, 11:00 a.m. here on wall street. ♪ ♪ ♪ ♪ good monday morning. i am jon fortt with morgan

brennan. wilfred frost. carl has the morning off there's a lot going on of course, but we start with the market major indexes in the green dow, s & p and nasdaq look for a sixth positive session in seven. nasdaq coming off the best day in over a month. joining us, our own bob pisani and mike santoli trade worries, fears seemed like last week. now we're up about 259 points on the dow, s & p chart looks similar, up two-thirds of a percent. >> you can see what happens when you have a weekend devoid of headlines about trade wars escalating nothing happened this weekend essentially. we saw a rally we saw a rally in china which has been dramatically oversold where we are now i think we have a great jobs report, we have modest wage inflation, good job growth the fed in a dovish box that's positive for the markets

trade war remains the marginal sentiment mover that we've had see, no talk, market lifts and beat up sectors, industrials, materials, semi conductors on trade wars start to lift. the issue is what will happen for earnings season. i think the bar is lower this time last quarter, everyone anticipating we raise estimates for second and third and fourth quarter and they did this time from what i hear, people will be happy if they affirm guidance. >> if people are primed for the second hand softening in earnings segments, i wouldn't argue. i would go further on trade and say we used it up as negative catalyst for awhile. i think you have to get to a point where a lot more goods are effected, and tariffs put in place soon because what it does to the point about being absent meant mover, s & p was 782 in june had a 3% dip

you had sentiment looking optimistic and it is subdued treasury yields have come in, defensive has come into the market because of the trade headlines, and that sets you up for relief on no incremental trade headlines. >> the remarkable thing is rotation i talked about this in the early hit at the open. normally this time of the presidential cycle, these two quarters are terrible. normally the s & p is down we were up 4% since the end of the first quarter because we have had a wonderful rotation into the defensive names we have seen utilities, health care, consumer staples, a modest market leader. if everything else is held back, banks, industrials and materials, and semi conductors, if the trade war eases, you get rotation back in that's why this is a powerful market there's nothing that comes in

and dramatically keeps selling off. something else comes in, they start to buy it. >> we have seen a bounce in equities and trade warfares are sluffed off. not necessarily in the bond market 10 year, 2.85. which market is right? >> i don't know if there's a serious argument between the two markets right now. the treasury market is going to trade off fed expectations, off the inflation outlook, wage inflation didn't give you a reason to get scared friday. right now, we're range bound with treasury and with stocks. you go back three weeks, we are flat for the s&p 500 although i think it is interesting, you hear this talk of fed governors coming out, saying we should not tempt a flat or inverted curve >> i have the image of that

dovish box >> but i wonder the president's calculation has been if you're going to fight a trade war, now is the time to do it, with the economy on the pace it is. what is the market telling us about that calculation or its resilience in the face of pressure he is trying to put on other countries. >> the market tells us that the base case is that the trade war will not escalate into a serious conflict that's what the market is telling us now that could all be totally wrong, but that's clearly the bet somebody said 30% chance of serious trade war, 70% chance of a modest skirmish. that's what the market is saying i'm worried whether that's the base case. the interest rates, fed is raising short term rates long term rates are not going up, that's creating a yield curve flattening remember, global demand situation, 2.8% on the ten year. look at germany. it is flat japan is zero, negative at some

points the rest of the world is coming in, interested in holding on to our treasuries there may be external factors that are unusual the fact the rest of the world is dovish while we raise rates it makes our ten year more attractive globally. >> what it sounds like when doves dry in the market. >> we miss prince. we do. we do. >> today's gains coming against the backdrop of china trade tensions tech caught in the middle, questions remain about intellectual property theft, threats to national security and direct foreign investment. tesla is raising prices in china as a result of the tariffs while chinese smart phone maker stumbled in market debut joining us from hong kong, code executive ed toitor cara fisher

always concerned how you're feeling. what is your take on this debut, short of what a lot of people expected and market factors effecting that well, i think it is a hardware company, not an internet company, i think that's what it says hardware companies are valued at different numbers. the trade wars that are going on probably have some effect on it, although i suspect it is more that it is expensive for a lot of people. what's interesting is debuting in hong kong, not doing the new york markets there's a slew of other chinese companies that may debut on this market it is important they have a relatively good showing using the markets here but i think it has more to do with expense, and it is a hardware maker, hasn't shown enough internet promise in services and other things like that >> and sort of going off that

argument, hardware maker, maybe expectations were inflated going into the offering. also that they need to expand to other markets, including the u.s. if they want to continue growing revenues when you have this escalating trade conflict between the u.s. and china, does that effect it longer term? >> well, i don't know if they would have gotten in the u.s. anyway a lot of chinese companies had issues, not just in this administration but the previous one about moving into the u.s., there hasn't been a lot of aggressive growth by chinese companies in the u.s. because of all kinds of reasons, national security, all kinds of things, issues around how the government regulates these companies. i think they have been expanding to india, other areas. let's see how that goes. i think you'll see less of the expansion into the u.s. than maybe you would want i doubt that's something that

will happen. it will effect u.s. companies and chinese companies. >> the impact of the escalating trade war, not escalating over the weekend, but certainly over the past few days on the relationship between china and the u.s. and tekin tch elon musk and tesla raised prices 20% on cars in china. what do you think is the likely impact of that does it perhaps accelerate the plans to build more in china or at least provide extra validation for that strategy >> well, it is interesting a couple months he was complaining about the disconnect between tariffs on cars, they were higher going into china and didn't want to partner with chinese companies necessarily.

he complained to trump in a tweet. obviously this isn't helping i was hiking near the peak yesterday, so many teslas, it was fascinating to see them in driveways. i think it has 9, 10% of the electric vehicle market. it is a popular car. i think the issue is trade wars will raise prices and retaliatory tariffs back and forth is not the direction he wanted i think he want deescalation of prices, tariffs, excuse me, so this doesn't help them at all in that area. the question is does he then have to manufacture in china which requires him to partner with chinese manufacturers which he or tesla resisted it creates more tension between the countries and problems for companies like tesla, apple and the others that do a lot of business in china and sell a lot in china at the same time. >> cara, we talked about this on

friday and is xiaomi the type of company that president trump wants to stop or slow in its tracks clearly today it is an advanced technology company making high quality hand sets and other bits of technology, hardware. originally started life as a low end smart phone maker, making copies of u.s. models. in the last 15 years, played catch up easily. >> yes it is like the apple of china i guess. or had been in the past when i covered it i don't know if that's the case that he is trying to slow down these companies. i don't think xiaomi was making moves to the u.s. as much as other places, it is more it is a hardware company, hardware is hard as we say, its internet business is not as robust as other chinese companies, and i think that's the issue more than

anything else. although trade wars can't do anything but hurt chinese and u.s. tech companies because there's a close relationship with so many of these. these are global companies that's what makes it difficult, the trade wars if they don't escalate as you said previously, if it is a small skirmish, maybe that's all right. i think the issue is bringing down tariffs on both sides, equalizing them. these companies are caught in the cross hairs, although in this case it is not as much issue of the tariffs as high priced stock and how we value it, just like anywhere else. >> right i want to move on and get to twitter. over 1 million a day, that's how many fake and suspicious accounts the social network suspended in recent months, adding up to 70 million total in months of may and june i noticed a decrease in the vaguely spam bots following me,

which is nice. all of this in an effort to disrupt spreading of misinformation on the platform shares of twitter down sharply, on pace for the worst day since march. from a product perspective, this has to be a good thing nobody likes these fake accounts do you think the market reaction is temporary or are investors shocked by the volume of accounts twitter dealt with and perhaps how many they haven't dealt with yet >> i suspect it is going up. i don't think they're vaguely porny, they are quite problematic. i know but i think the issue is why haven't they done it before for years. they have been on this growth and numbers, i don't want to curse on the air, but this is not true

it allowed it to become a cesspoolin how accounts are created. they have to create a place you know you're talking to real human beings or bots or fake accounts the level of activity, of bad accounts on the platform is problematic. the company needed to deal with it, five years ago, four years ago, three years ago, two years ago. wall street will react, but should have known much of the activity on twitter, a lot of it is problematic and needed to be fixed. so if they're having a business and real people are using it, they will be rewarded for it i'm glad they're doing it now. i'm kind of questioning why they didn't do it before, we'll see where it goes. i think there are many more problematic accounts and issues around the growth of this

company, and maybe there's a limit to the amount of growth that it can see and wall street has to understand that >> yes, and with stocks up 80%, can't help but think it is profit taking going on a healthy run. >> of course, absolutely the issue is cleaning up the platform like a lot of social media platforms, i have been hammering on this for a year now, it is a problem that's the bottom line of the companies, they have to clean up the platforms, make them great places to engage in, even if there's normal noise that occurs in these places. >> before i let you go, given the fact you're in hong kong, i want your take on what sentiment

is on trade and all the back and forth. what are you experiencing there? >> well, i just got here, i don't know it is late at night. so far the food is delicious but i think the issues, i am at the rise conference taking place in hong kong this week, interviewing people from grab, talking about tech addiction and fake news. i suspect we're going to end up talking about tariffs and relationships and where china is obviously china has come very far forward from the old image there are so many innovative companies and so many issues around free speech "new york times" had an amazing story yesterday, today or yesterday, whatever day it is around artificial intelligence and use of facial recognition. there's all kinds of -- china will be a leading technology power in the world we have to wonder what it means,

especially in the values that they bring, these companies bring and values the government brings because the government has an iron fist over technology development in china there's a lot of big questions besides tariffs. but you should read "new york times" ai, facial recognition. if you're not disturbed by it, i'm not sure what's wrong with you at this point, because it is disturbing >> yes i do find all of that tracking, surveillance stuff disturbing. china is doing it on a different level. thanks for staying up late with us it is 11:17 p.m. where you are in hong kong kara swisher apple music gains on spotify's lead in the streaming market we'll have knifive reasons to b apple. more "squawk alley." ♪ you never drop to your knees, ♪

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welcome back shares of apple are moving higher, financial times reporting that apple music is closing in on spotify's lead for music streaming subscriptions. they published five reasons for investors to buy apple stock before beginning of the school year we're joined by the analyst, jim suva thanks for joining us today. >> thank you so much, morgan. >> layout the case of the most recent note. what are the five reasons? >> we layout five reasons why

apple will trade higher. from new product launches that come out in september, three new phones, to also them growing the services which includes apple care, apple music, apple pay, and lots of other things and people often forget that outside the united states in countries like india, there's opportunities for apple to grow. we like apple and have a buy rating on it >> apple has a record buy back in place what surprises me, we have seen recent weakness in stock i would expect it to trade higher if for no other reason because of the buy back? >> great commentary. i want to note buy back is $100 billion as you correctly stated, 10% of the company's market cap. increase earnings per share by about 10%. the reason the stock is underperformed recently is some

of the expectations in the marketplace for the new products such as iphone x which launched last year, demand for $999 price point is reaching a high price point where not everybody can afford it. there are expectations being set lower. we like lower expectations so apple can come in and beat and surpass those expectations, but that's why year to date on the capital deployment which you reference, the stock underperformed relative to those metrics. >> jim, what about the dangers for apple stock going forward, specifically china and markets outside the u.s. there was a time a couple years ago when apple relied on big launches in china and moved up china launches to be day and date with the u.s., specifically because it was so important, with all of the trade tensions going on now isn't that a risk for the

successful launch of all of the products you're looking forward to in fall >> you are absolutely correct. trade wars are bad for technology companies simply because it raises prices and creates uncertainty not only in the supply chain for manufacturing but for end users. any price increases tend to stall demand, and are not good for consumers. therefore, we believe at the end of the day things will work out. should there be a tariff or price increase that does increase the cost to apple, apple will pass that onto the end user, at a price point of $999 now for the highest iphone x product, we believe a higher price point would be very much a risk you're absolutely correct. trade wars are not good. that is a risk that being said, don't forget china is what is the headlines today, which is important and right to focus on. in future years down the road, we think the focus point is

countries like india where we see a lot of growth there, where apple has less than 2% market share. >> we mentioned at the top the kind of gap closing between apple music and spotify. what's your take on what apple is doing in the video content space, whether they're going to roll that subscription into one in the near future, and do they have to do that to be seen as a services company >> we actually believe what you reference is absolutely correct, that these services will increase and become more and more and more prevalent. apple focuses on a premium customer experience all the way from e-mail to texting to emojis, apple pay, apple services, apple care, making premium user experience. this started out years ago, you remember itunes, you would buy a music sound track. now it evolved into a monthly

subscription model we believe that to continue to take on, not only as far as music but content, movies and themes we expect that to continue to grow as part of apple's ecosystem of premium content, that's what we call apple services, apple wood. kind of a play on hollywood. you see the share gains that apple gained a lot of share in apple music. when they put their mind and focus on things and a great customer experience, they typically succeed, and we're seeing the fruits of those efforts now play out. >> i still wonder when they're going to make records with some of the talent on board like dr. dre' but there's a conversation for another day. jim, thanks for joining us boris johnson resigning as foreign secretary in the uk this morning. we breakdown what his exit means for your money and the future of

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. the markets are about to close in the uk and across europe extending a daily win streak to five, shrugging off worries of trade tensions ftse is leading the way, on pace for the best daily performance since late june as the pound falls. theresa may facing pressure, and boris johnson joining the list of cabinet members that resigned a story that you have been following for us. >>yes. seven people of the government resigned or left the cabinet since november but the really important developments, in the last 24 hours, three high profile going. david davis last night, boris johnson, foreign secretary, lead campaigner, resigning this

morning. and that significantly increases pressure on theresa may. she has been in parliament, and she continued as normal. clearly that's really her only strategy, not like that's a surprise, but she continued as normal, articulating the details of her brexit plan which was hashed out friday and has been the catalyst to force hard brexiters to leave. >> recap what changed where they are backing away, what does it mean for execution of brexit? >> on friday all of the cabinet came together at the prime minister's country residence, and seemingly agreed to her plan forward. over the weekend they've come together with advisers and decided this is a soft brexit, not a brexit plan i can support, and three of them, david davis, steve baker, boris johnson in the last 24 hours resigned over the back of that she continued as normal, suggesting she's taking this to

brussels, try to get agreement at the moment, she has every right to do that the question is whether enough back bench mps in the conservative party now think enough is enough, i'm going to follow the lead of the likes of boris johnson, call for vote of confidence in theresa may, only 15% need to send that letter to the 1922 committee, 48 mps in total. chances of that happening and vote of confidence materializing has massively increased. but we're not at that point yet. >> so we shouldn't have a conversation about potential successors >> you can have the conversation if you look at betting odds who would be the next conservative leader, don't know when that eventuality would take place, of the top six, only one is a true remainor again, that points to likelihood if you had a vote of confidence and she did lose it, you would look as a more hard line brexiter as replacement. we saw donald tusk from the

european commission tweeting he hopes not just david davis and boris johnson leaves but the idea of brexit leads if they resign and doesn't catalyze a toppling of theresa may, maybe they push ahead with the soft brexit she wants. points to the direction of sentiment. >> soft and hard brexit. you'll continue to follow that and all consistencies. sue herrera has a news update. john, thank you very much. here's what's happening at this hour movie mogul harvey weinstein pleading not guilty to sexual assaulting a woman in 2006 the third criminal sexual assault case brought against him. more than 70 women accuse him of sexual misconduct he was later released on bail. headed to the flooded cave where four members of the team

and coach remain trapped four more boys were rescued this morning, bringing the total to 8. no word on their condition and health. the israeli prime minister says gaza's entry for food, fuel, medical supplies will be closed immediately he said they will use a heavy hand against hamas, adding more steps will be taken. british police say they believe the latest victims of poisoning by nerve agent must have handled that materials container. the death of dawn sturgis sohows they were exposed to a high dose one remains in critical condition. that's the news update this hour back downtown to "squawk alley." morgan, i'll send it back to you. >> sue, thank you. back at hq. early investor hans tung is with us on how the smart phone

maker can turn things around more "squawk alley" after this alerts -- wouldn't you like one from the market

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a lackluster opening for a high profile ipo xiaomi making its public market debut today with shares slipping as much as 6% on the first day of trading, pricing at the low

end of its range joining us, early investor and former board member live from hong kong. he is a managing partner at ggv capital. hans, always great to have you with us. assess this for me is the market getting something wrong with this company? do you think it is just a general market condition and trade war concerns effecting the stock? >> it is probably a combination of both market conditions, u.s., china relations and investors trying to figure out if it is hardware or internet company investors seem to be looking at the internet service revenue, given more of an internet company revenue. and look at the hardware

business and i think over time as investors get to know xiaomi better, you will come to view it as a different kind of hardware company than we are used to watching >> here's the part i don't get, hans i am partly paid to be ske skeptical. it was supposed to take down apple. hasn't quite done it, and i don't see why it has to be either hardware or internet. i can see it has to be both. but if it is not particularly the best at either one, and if hardware is growing faster than services, why is that good >> you look at how the consumers are behaving they like the xiaomi smart phone and tv, very affordable prices,

a third or half of the cost of samsung or apple iphone. once people are used to buying and using it, they like it so much, they buy devices from xiaomi companies at home, whether air purifier, air conditioner, this variety of products initially you see the hardware sales growing faster what people miss is you have more products from xiaomi at home consumers end up using internet services more. happen only after multiple hardware devices for xiaomi. it is a different business model, hardware and internet services are linked and -- >> hans, as they expand to other markets and look to grow revenue, keep numbers as strong as they have been, how critical

is expansion to the u.s. market for this company, given that we have seen a more hawkish stance from the trump administration towards chinese telco's, is that a big risk >> i think to justify -- i think for most of us, tracking for awhile, we don't think that's the case at all. the internet users in the next 12, 13 years, coming from developing companies where xiaomi has presence. they're now in 74 countries. few years ago debated whether they could do india. now number one, far ahead of apple. it is fair competition, based on consumers in india, choosing great prices that xiaomi has over time will be using internet service from xiaomi as well. what people don't give xiaomi credit for, as they expand to

countries, not only selling hardware, promoting internet, they have strategic investment around their platform by investing local that want apps preloaded to the phone an interesting model that people haven't seen investors need time to get used to that. >> that brings me to the last question there's a lot of comparison to apple. do you think it is perhaps better to compare xiaomi to samsung in the multi prong approach, not just phones, has multiple appliances, multiple lines of business, and also vertically integrated. is that something you expect xiaomi to do, take more ownership over its supply chain and technologies underneath going forward? >> i think you will see xiaomi invest more in tech for sure i'm not sure it is exactly like samsung. xiaomi has its own direct

distribution channel, own retail stores has products from both itself and from ecosystem companies xiaomi is really different and it is something that investors need time to get used to last thing i will add, most people treat hardware like a dirty ward, it is a gadget you have to have fun and variety but in emerging markets, china, india, other places, xiaomi products treat as life-style necessity, part of what growing middle class need for a first or second home. their hardware is stickier than gadget hardware we see in the u.s. that's something investors need time to understand the difference >> as an early investor in the company, given the ipo, are you a buyer or seller? >> i will be buying for my

personal account we remember what it is like for category definers, have a harder time to convince investors they have something creative and different. i think stock at the current price is definitely a buy. >> as for the future in countries outside of china, what's the next india for xiaomi, is it brazil is there another country it faces doubt that you would look for it to make big gains >> it is top three in indonesia, top three in russia, in roads in different parts of europe as well as middle east. so you see in developing markets where again the next users are coming from, xiaomi is in position to tackle that. >> all right hans tung. we will continue to watch. rough start for xiaomi

but it is a long day thanks for joining us. as we head to break, look at shares of groupon. the company was looking for a buyer. the stock is up 6% more "squawk alley" after the break. eligible for medicare?

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let's get a check on the markets. we're nicely higher. four major indexes up a half percent. dow up 1.1 financials and industrials top the pile more "squawk alley" after a short break.

keeping our eyes on the at alliance investors. the chief market strategy, they're both joining us on the set. good morning to you both peter, i'll start with you clearly, good gains, last week and today. there are good volumes if people are back a ways is that more resounding >> well, i hate for anyone to draw an analogy based on this. it feels a lot like the summers we've seen, especially like the summer of 2007, and we had the

summer rallies, very little volume today's reaction, industrials, very technical the dow was at 200-day moving average. the emerging markets have been pummeled for reasons undiscussed. but are also bouncing. so, i'm hesitant to really make too much of these rallies in these environments >> the other sectors, financials, the top or best-performing sector is that something similar. >> well, it's interesting an a followthrough from friday's strong report financial sectors are down 3.4%. given the tax reform and leveraged to rates that the financials are cut out for form.

i do think this is a start of rotation rotations. >> for a flatter yield curve, even since the election. 0.2 spread, 135. we didn't feel we'd get enough growth and inflation to make ten-year yields rise quickly enough to offset other factors including the ecb in europe which helps to anchor the long end. and the fed's conviction around u.s. growth and its need to raise rates. we think we're going to have a pretty flat yield curve. for banks it's not all that positive thing unless we see loan volumes increase which we really haven't we're talking about the strength of the economy and the jobs numbers. we've seen strong consumer stock yesterday. can that continue regardless of

the trade? >> you know, i think consume discussion, a couple things we're looking at, obviously with oil prices rising, that's not a positive for the consumer. and also the sector where we have rising rates and potentially rising conditions. with more rates still sub-5%, we're positive on the consumer second half of the year. >> in light of this, we talked about consumer stock, financials it seems at the second half of the year, you've got market events taking place. you've got earning season, this whole idea it's as good as it gets midterm, trade escalations that continue to escalate and the fed. what are the big things to watch? where do you put your money? >> i think we're actually going to move away, the big catalyst,

to move more towards earnings as the more meaningful cat littlal. there's a diversity in you, in whether or not the inverted yield curve matters. so, i think that will be very important. and in addition, this sort of unsung catalyst is really ecb. i think whether or not ecb remains accommodative into the beginning of the year is an important factor that is not that widely discussed. >> i just add in the term term election front that will be a huge one going to third and fourth quarter regardless of who wins, republican or democrat, it has moved and we'll have a strong back it feels like we're setting up for that again particularly in the technology sector which has been weighed down by trade wars

and it could be a buying opportunity. >> peter, i understand you're not putting too much on this tariff stuff and important moving forward the low volumes. some of the s&p sectors that are a lot higher this morning, producer manufacturing, distribution services, transcription, consumer durables actually the ones you'd expect to be out about all of the tariff talk, does that mean anything or any kind of a natural rebound, do you think? >> i think it is a natural rebound. i think a lot of these sectors have been too beaten down on trades and tariffs including the big staples names. we actually liked a long the reason for that, we actually thought that valuation has gotten too beaten down on trade and tariff concerns. are i think we've seen peak earnings i don't think taxes and other

fiscal stimulus are going to drive earnings high enough for investors to be pleased with the earning outcomes >> guys, thank you very much for joining us >> thank you coming up, more on the selloff. we're seeing in twitter with shares down, gosh, about 8% following that report in "washington post" over the weekd enin cutting out fake users. more "squawk alley" after this break.

we are watching a morning for twitter. the stock down 8.3% this is its worst day thus far since march. that said, it's still up 78%, roughly, to date 137% over 12 months. so, the stock is doing well overall, guys. interesting to see twitter hitting a bit of turbulence which i have to think strategically getting with the account is good. >> especially when you have a facebook high friday >> yeah, and the stock

performance as you said has beenout tang the tech sector is up bought not as much as other others. very strong performance from the banks. >> groupon, more i've been staying because of the hatch that said, let's go to "the halftime report" hi, welcome to "the halftime report," i'm scott wapner. on top trade this hour, back to the rally as the s&p hits its highest level in three weeks can earning keep that momentum going. here to dedate it, joe terranova, pete najarian and yim crimin jim cramer >> the financials lead the way as wilfred just told you, all right, jim, trade is dominating everything