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♪ you got me ♪ you got me ♪ got me, got me, baby >> good wednesday morning. welcome to "squawk alley." i'm carl quintanilla with morgan brennan at the new york stock exchange jon fortt, of course, out in san francisco at our one market bureau after a couple of days of great coverage on the west coast. we're going to begin today with the markets. stocks rally again today, extending yesterday's gains as u.s./china trade optimism drives the major averages even higher with us now on where stocks going from here is keith lerner, chief market strategist at sun trust and jack avelin with crescent wealth advisers good to see you both >> good morning. >> jack, let me begin with you 2760 here, as more optimism about u.s./china trade and the border win assu border, i assume, is driving things how much do you think the rally we've had since christmas eve needs to be digested here. or is this going to create a little more fomo having reached that 200-day >> i think we were a little bit

to the downside, we were at the lowest level of optimism since the financial crisis so i think some of this was a simple bounceback of reality and expectations that said, we do need to see some progress in these china trade talks. my concern, however, that this tactic, which has turned into a strategy, will likely morph into a policy, and there may be tariffs that are going to be in place indefinitely and i want to make sure that investors understand and calculate that possibility into their current assessment of the market >> and keith, to that point, that does seem to be one of the key questions here, is are those tariffs immediately going to come off, if there is, in fact, some sort of deal that happens do day get gradually reduced do they go back on are we even going to get a deal? >> yeah, i think that's actually an open question but i think the more important thing is that there's progress being made and there's likely to be a deal some time over the

next several months. listen, there's a big incentive for the administration to have the economy looking good into the election next year and i would say the big thing is, you know, when all of these fears that people have been talking about over the last several months, don't forget, as a lot of those fears were overdone and they become catalysts. so you had concerns on trade, you've seen some progress. you had concerns about earnings. we've had a better-than-expected earnings season. you had concerns about the fed and now the word "patient" is in the vocabulary so all of those things have become catalysts i would say, short-term, because of the fomo and investors are still so under-invested, we could squeeze a bit higher but we do suspect we're due for a period of consolidation after a 17% move off the lows. >> a couple of data points that are out there. on the one hand, the labor market looks pretty tight. workers are quitting on the other hand, we just got this number showing that there are more auto loan defaults than

there have been in a really long time so, worker wise, consumer wise, are things healthy or not? should we be looking at positive or negative impact down the line on companies, because of these data points? >> you know, on just about every metric that i look at on the labor market and household income would suggest happy days are here again we've had wage growth of 3.2%. we're projecting an additional wage growth of 3% over the coming four quarters and that's leaving overall inflation in the dust. and yet, you're right. this fed report on auto delinquency is a head scratcher, because it just doesn't seem to add up, with all of the other pieces that are falling into place. you know, that said, you know, we're looking at work stoppages. work stoppages now, over the last 12 months, have involved over 700,000 people.

this does not include the government shutdown. that's the highest level since 1983, when we had very tight labor market and inflation was running near 4%. so that is somewhat of a concern. but, you know, we do have to way this, these auto delinquencies into the consideration >> keith, you know, you just mentioned that 17% gain from the bottom you also mentioned consolidation. where should investors be putting their money right now? >> the way we're thinking about it, big picture, because we invest globally, we are invested with a bias towards the u.s. we have increased emerging markets in our most tactical portfolio, we've made a big increase in emerging markets in october. and on a sector level, i think we should be playing a combination of offense and defense. we came into the year very establish on technology and also industrials, which is the best sector year-to-date, because we thought a lot of bad news was priced in. and you're seeing now technology, as far as like software, some of the internet names, regain leadership so we like that. but we also want some areas like

health care and consumer staples that are less dependent on the economy. and as we have some volatility, which we do think will come back into the market in the months to come, that you'll be able to withstand that somewhat. so we like, again, staples and health care on the defense side. >> hey, jack, one last thing on sector correlation everything's really tight together right now, as we await this one big binary thing that is u.s./china trade. but if we get it, how much does the sector correlation bust up and what's the -- how does that affect the vix in the longer term >> yeah, i think that a high sector correlation would suggest obviously a lot of passive investment buyers. and that could certainly spike the other, you know, spike, if people start leaving the market. and that would raise vix the fact is, you've got a lot of macro-investing going on, and that suggests a high correlation. one of the things i like, speaking of correlation, is the relationship between the

relative strength of financials and the health of the overall market i do like the fact that now financials are starting to outperform that's a good indicator. in fact, the relative strength of financials is pretty high correlated to the overall direction of the market. so, financials is a sector that i'm keeping an eye on. >> yeah. that's -- yeah, that's key to watch. guys, good start to the hour appreciate that very much. a lot to watch today, keith and jack we'll see you soon >> thank you >> thanks, guys. and ahead of uber and lyft's highly anticipated ipos this year, our deirdre bosa is taking a look at the expected structures for both deals. what that means for investors. deirdre, the companies look similar on your phone, but not necessarily as public companies. >> yes, they're both ridesharing companies, have similar businesses, but they could look like very different public companies. they could trade very differently. lyft's cofounders are reportedly looking to go the way of some of the biggest tech ipos of the last few decades, google,

facebook, snap, that is maintain control of the company through a super voting share structure uber on the other hand, its government structure was overhauled last year when soft bank became its largest shareholder. the deal limited founder travis kalanick's power and put in place a one share, one vote structure. each would have important ramifications of how they are traded when they become public, as both have indicated they would this year. if lyft cofounders, john zimmer and logan green, they take near-majority voting control, lyft will be nearly immune to attacks from activist investors, but it will also be available to resist changes in discipline if the company struggles. now, that could be interesting, given that carl icahn, one of the best-known activist investors, is an early lyft investor now, we have seen dual class shares play out with snap. founders evan spiegel and bobby murphy, they control about 90% of voting power and public investors can't do much about its sagging performance and the executive exodus that we've seen now, a sunset provision for lyft may be one way for the company to maintain control for a period of time, while also setting a

timeline on those dual class shares uber, though, when it goes public with a single class of stock, it's more likely to be included in stock indexes and index funds, but a potential drawback of its structure, it could be more exposed to short-sighted investor demand. so, john, i don't think there's one right way, but they certainly have ramifications for how these companies are going to be traded. >> it's interesting to me that uber is going this route it seems like every hot ipo over the past decade gave founders preferential treatment is there kind of a backlash post-snap in particular to that, plus, i guess the fact that uber had some reputational issues earlier? >> right, i think there is some backlash we had the s&p index say they weren't going to accept companies, that's why snap's not included but uber doesn't have a choice, even if it wanted to have that dual class structure, all the drama it went through a few years ago limited travis kalanick's power and put in place a one-share, one-vote structure. so, that was part of the deal,

how they got money from softbank, so they can't even if they wanted to >> well, could end up in a way being good for them. deirdre, thanks. >> john, i'll pick it up sticking it ipo and transportation theme, virgin trains u.s. actually abandoning its plans for a public listing it would have been the largest ipo so far for 2019. it was looking to be valued as high as $3.15 billion. this is, of course, fortress investment group's passenger railroad, currently has a route in south florida that was looking to expand, as well as plans to build out a railroad between nevada, between las vegas and southern california. was re-branded back in late 2018 to virgin, given the ties to richard branson and virgin group. it had been looking to price at $17 to $19 a share currently, a money-losing company. in terms of those nixed ipo

plans, the spokesman for the company saying, quote, as we explored a public offering, a number of alternative financing sources became available that allow us to keep the company private and meet our growth strategies but, carl, this is one to watch in the coming years, because it's been a long time since we've seen anything remotely relating to a private passenger railroad being built out meantime, we've got a big show >> fascinating i was going to say really quickly, the names we're talking about, lyft, uber, virgin train and levi's levi strauss is the one hole in the donut, right everything else is tight a lot of tech, a lot of mobilities >> the big trends to keep on watching still to come, the latest from washington as sprint and t-mobile executives testify in front of the house on the company's merger but next, we've got akamai out with strong earnings reports this morning beating the street on both top and bottom line fs. the ceo sits down with us next on the quarter stay with us

welcome back to "squawk alley. akamai out with a beat on both the top and bottom lines, forecasting current quarter profit above estimates, driven by strong demand in cybersecurity and media content delivery services. the stock seeing initial gains, but now pulling back just a bit. it's currently up about 1, 1.5%. joining us now for a cnbc exclusive to discuss, akamai technology's ceo, tom leighton tom, great to speak with you

today. >> thanks for having me. >> i want to start with -- i want to start with the security piece of this. because, again, in this past quarter, you saw strong, strong gains there. as we continuously live in this world of iot, internet of things, that is affecting everything from the gadgets that consumers engage with to heavy machinery and manufacturing, where are you seeing that growth for security >> we're seeing very strong growth across all of our security solutions starting with preventing denial of service attacks, when you create bot armies with those internet of things to attack a site also, the capabilities to stop takeovers of websites or corruption or theft of content on the site. also, bot management you know, people don't think about it, but today, most transactions on the web are no longer human they're actually bots. can be these iot devices being

hijacked to do bad, bad things like take over your bank account and steal your money so we have products that stop that from happening and they've been one of our fastest-growing, you know, product lines in a long time. so all of that is contributing to a very strong growth of our security business. >> now, i realize you're more focused -- akamai is more focused on cloud security and security of companies, but when you see a situation unfolding like the one with, for example, jeff bezos and ami and security issues there, does it have any kind of impact on the demand you see for your services? >> yes, security is impacting everybody, both as individuals, but also enterprises now, we sell our services to enterprises and they are very concerned with data breaches, you know, the kind of things you referenced they're concerned with theft of, you know, property, funds, you know, bank accounts being taken

over, goods on a commerce site and so that's helped create a lot of demand for our capabilities, which are pretty unique in being able to stop these kinds of activities. >> tom, i want to talk about content delivery networks, long your bread and butter and kind of core business there's some expectation that the growth there slows throughout 2019. there are some tough comps, also how much does "fortnite" play into that? because that was a big, big phenomenon last year, continues to be strong, but now, i guess, it's sort of baked in. are things like that, trends in the gaming business, making these comps stuff in cdm >> yeah. now, it's always hard to predict what's going to become hot in the year ahead a lot of our traffic is driven by gaming downloads and video. especially ott and as we look at the year ahead, you know, we think we're going to have a good year, but we really see the growth picking

up late in the year, going into 2020, as more ott offers come online you know, and that helps drive growth as more people watch those ott offerings and at higher quality levels and traffic, of course, drives revenue. >> tom, does something like apex legends, which just came out a week and a half ago, seen as being potentially another sort of "fortnite," would that have an impact on how you see the year playing out, if that continues to grow? >> yeah, sure. as a game gets hot and you get, you know, many, many millions of people downloading it, that's a really large piece of software that they're downloading, and that drives traffic. and you know, we do project traffic to grow substantially on the akamai platform this year, because we carry so much of the content that's being downloaded. >> hey, tom. everybody is talking about u.s. growth versus international growth for year, i think revenue --

u.s. revenue up 2, versus international, 23x, 4x are you seeing any slowdown in clients in asia or europe? >> no, we're seeing very strong growth, especially in asia it's our fastest-growing geography. and i think we expect that to continue in 2019 you know, there's a lot of folks online there, a lot of the world's biggest companies are there. people don't think about it, but china has some of the world's largest companies now, bigger than the u.s. companies. and so we're seeing strong growth throughout asia >> tom, this time last year, we were talking about the repeal of net neutrality here in the u.s you've got now two quarters, i would imagine, under your belt since those -- since that rollback went into place have you seen any kind of impact or change on business from an akamai standpoint? >> i would say no real impact. you know, the repeal of the rules shifted the balance of power a little bit from some of

the big tech companies to some of the bigger carriers, but no impact to our business you know, we work with the carriers and the big tech companies. >> well, tom leighton, thanks for joining us today on the heels of akamai's earnings stocks up about 1.8% thank you. >> thank you and after a quick break, sean parker sitting down with cnbc earlier this morning. we will tell you what the former facebook president said about the addictive quality of that social network and why he says your amazon alexa hears everything and mayb you should be concerned about that that's next. don't go anywhere.

so we're increasing the amount of social validation or feedback that you're getting, and that feedback loop is getting tighter and you're getting more addicted. so the product was designed to be addictive, but it was designed to be addictive in a world where -- >> people had something else going on >> and you were only allowed to do drugs in your bedroom at your

home now it's sort of pervasive you're taking it with you everywhere >> that was former facebook president and napster founder sean parker. parker went on to say, it is against tech companies' own financial interests to police themselves on data privacy and security jon fortt continuing to throw bombs regarding data and privacy and facebook >> yeah, he is i wonder, though, if it's against tech companies interests' writ large, or just against the ones who are running businesses based on advertising and maybe based on microtargeting tim cook, of course, would still argue it's very much in apple's interest to run the other way on this one and we'll see how it plays out >> yeah, i also thought it was really interesting, some of the comments he made by the way, he's made these type of comments about facebook before and we've heard this from some of the other tech ceos like marc benioff, as well but some of the other comments that really jumped out at me from this particular panel discussion were the ones around

amazon and this idea that alexa-enabled devices, that amazon is not guaranteeing your privacy. and i think a lot of folks that have those type of devices in their home are not thinking about it that way, that there's the potential for eavesdropping and what that means. >> yeah, brave new world we'll continue to monitor anything else that parker may say. meantime, t-mobile's john legere and marcelo claure testifying today in front of the house subcommittee on their proposed merger. john faber joins us with the latest >> not a great deal of fire at this point, although you never know with legere in particular, and claure, for his part, can bring it, as well, if he wants to but the two sides arguing voe si vociferously why their deal is pro-competitive, why it will be a positive for the u.s. and for consumers in the face of certainly some opposition that views the idea of four wireless carriers shrinking to three as

something that would be a negative for consumer who is rely, of course, on wireless services, perhaps the most important single bill they pay every month. in a back and forth with lawmakers, john leveraggere, t-mobile's ceo, discussed the fact that even with this deal, they will still be facing something of an uphill climb to compete against the likes of verizon and at&t >> this industry is a duopoly, controlled by at&t and verizon, who control over 80% of the profitability and 95% of the cash flow. and after the merger, they will still have almost 70% market share. what we've done for six years at t-mobile as the un-carrier, the whole thesis of this transaction is to use this increase in supply, capacity, and decreased price to supercharge the un-carrier, to bring competition. you will see users have an 87% decline in the price per gigabit of data. you will have an eight-fold

increase -- user as will go from 10 gigs to 80 gigs and that's just in wireless. we expect to take that competition also to the cable industry, which is not only a duopoly, it's a monopoly and most of america, 79% have no more than one choice for high-speed broadband access. and we plan on entering that market, having as many as 9.6 million customers serving 50% of the geography of the united states and saving just in that part, over $13 billion a year to people on their cable and in-home broadband bills. >> all right i thank all of our witnesses for your comments. my time's expired. >> one of the underlying themes here is that together these companies will simply be able to face the challenge of spending that they have, that they wouldn't be able to mount significantly separately and that does seem to be a key here bringing 5g to the masses, bringing it nationwide, is going to require a very deep balance

sheet and a lot of capital and strong as t-mobile has been in being the force behind lower prices for so many people over the last seven years, let's call it, since their merger with at&t or their purchase with at&t was prevented by the doj, they would say, now, to mount the next challenge, they need sprint. and for their part, marcelo claure, who would come on here time and time again, carl, when we would ask him, well, what about your debt load well, what about so many of the challenges that you have and the fact that you've cut back on capex, he would always say, no, we're going to be okay now, of course, in his testimony, these are all issues as to why, in fact, they should be allowed to get together with t-mobile >> but is there any sense this is really scrutiny today or is this just jumping through the requisite hoops to get this done >> i think there is some scrutiny, certainly, with the democrats having taken control of the house, it's a more important voice than it had previously been. but the doj will weigh in very carefully here, the fcc, certainly. they listen, they hear, but that will be where the key judgment is originally, when this deal was announced at the end of april

last year, there had been hope that it would have been approved by the end of the first quarter this year. that's certainly not going to be the kacase, morgan, but they ho by the end of second quarter >> i'm curious what this means for broadband and the services they could roll out there if they do merge and the competitive landscape and prices there. >> one of the key things i saw in legere's testimony, not sure if he said it exactly this way during the hearing is that in rural areas, they certainly see 5g as an alternative, not just to broadband, that is currently brought in via wire, but to video as well. something that people should keep in mind as they continue to see the changing landscape there and the cord cutting that's going on >> david faber, thank you for bringing us the latest shares of both companies are higher right now european markets, meantime, are closing. and seema mody joins us now with a look at today's action a lot of green arrows across the pond, right, seema >> yes, that is right, morgan. this trade-induced rally has really gone global prospects of a trade deal coming

out of those u.s./china trade talks, sending european stocks higher, led by italy and the uk. germany up about a half a percent. the weaker euro is also helping european equities. the euro now trading at the lowest since june of 2018. it comes as growth metrics out of europe continue to disappoint euro zone industrial production fell in december by nearly 1%. goldman sachs today downgrading its growth outlook for europe. economists are betting, though, on a comeback in growth in the back half of this year a number of u.s. officials are in beijing talking about trade, but secretary of state mike pompeo is on an eastern european tour in an effort to increase u.s. engagement in the eastern european region, given the rising influence of russia and china. in hungary, pompeo warning of the dangers of allowing china to gain a bridge head in hungary. and in poland, he discouraged the use of huawei's 5g back to earnings one specific stock in focus is heineken, up 6%. strong volume growth in its core

products helped beat profit expectations it did see a pickup in non-alcoholic products, guys ubs put out an interesting note, saying that low to non-alcoholic beers are becoming increasingly popular among women and millennials across europe, making it a new prospect for some of the big bureaus. i, personally, don't understand why you would drink beer if it doesn't have alcohol in it, but in europe, it's taken off. >> i think they're grateful to have any beer drinkers at all, given what spirits have done to beer over the last few years >> like diet cake, what's the point? >> there you go. now let's get to sue herrera who's got a news update. >> i sure do, jon. thank you very much. good morning, everyone here's what's happening at this hour the u.s. indicting former u.s. air force officer monica whitt for aiding iran. washington characterizing it as a cyber spying operation, targeting u.s. intelligence officers the u.s. sanctioning two iran-based firms and several other individuals associated with the two companies

under pressure from his own party, president trump appears to be leaning towards signing an agreement that would avoid a second government shutdown but sarah sanders telling reporters the president has not yet made a final decision. >> again, we want to see what the final piece of legislation looks like it's hard to say definitively whether or not the president is going to sign it until we know everything that's in it. unlike nancy pelosi, we actually like to read legislation before we agree to it severe winter weather in chicago leading to some hazardous situations ice helping to bring down power lines and heavy winds have power company officials concerned the problem could get much worse and in addition to that, sheets of ice have been falling off of buildings and on to the sidewalks, creating quite a hazard that is the news update this hour back downtown to you guys on "squawk alley. carl, back to you. >> all right, sue, thanks very much when we come back, goldman's lead internet analyst, heath terry, is going to join us to talk about some tech names

in the meantime, we are seeing a bit of a midday sell-off dow's down 77, about half of the hssion highs, back to 2750. weave some bearish inventory numbers on crude, don't go away. what do you see? we see a billion more people breathing free. we see access to fresh food being the global norm, not the exception. we see homes staying cooler, without the planet getting warmer. at emerson, when issues become inspiration, focusing core strengths to create a better world isn't just a result, it's a responsibility. emerson. consider it solved. servicenow put our this changes everything.

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markets losing their steam, but the nasdaq still on pace for

its eighth straight week of gains for the first time since august f.a.n.g. stocks fueling this rally with those names up at least 8% in 2019 netflix leading the pack up more than 30% and joining us now from goldman sachs' technology conference here in san francisco is heath terry, lead internet analyst at goldman sachs. heath, good morning. >> good morning. >> so you say that amazon represents the best risk/reward in your coverage universe. i wonder about that, because from some others, we've heard some doubts recently on what really the driver is there there's been some retail slowdown in growth is it aws that's still being underestimated, you think? >> yeah, i mean, i think as far as things go, aws is the one that's probably still being the most underestimated. but when you think about sort of the biggest drivers in technology, amazon's got leverage to three of them.

the shift of retail spending dollars online, the shift of workloads into the cloud, which obviously they leveraged with aws, and then the growth in online advertising, and particularly, the shift of online advertising dollars from consumer packaged goods companies that were so relatively early stage and so those three things combined along with where the stock's trading right now is what leads us to think that that's the best risk/reward in internet, still. they'll go through growth cycles where things accelerate and decelerate, but with a longer-term view, that risk/reward is really as good as it gets. >> and so, heath, if we really do see these big anticipated ipos this year from the likes of uber, lyft, airbnb, et cetera, where's that money going to come from and is it going to have an impact on the stocks that you currently cover? are investors either going to turn more attention to tech again, writ large, and it lifts all boats, or are investors going to take some money out of

some of the tech companies where they've had it and put it into those? >> look, i think realistically, you have to look at what's happened historically when you've had big ipo or big equity issuance years and there's a pretty highly negative correlation between equity issue and sort of giving a category, particularly internet, and stock price performance. so to the extent that we do see a really big year from an ipo perspective, that's going to be a headwind that these companies have to fight through. at the same time, these are companies that are taking massive share of the broader economy. i think we all see it in our daily lives, of how much more time and money that we're spending on technology and so i have to think that portfolio managers are going to asset allocate in that direction, as well so it won't just be internet money funding internet ipos. i think you will see, particularly given how high-profile some of these potential deals are, i think you'll see money coming out of

all areas of the market to fund those issuances. >> heath, you're joining us from california right now the governor there yesterday, gavin newsom, proposed this data dividend that would allow residents in the state to essentially get paid for companies to have access to their data now, we're still light on the details, but in terms of the impact this could have on some of these big tech companies, what are your expectations is this a real risk investors should be taking into account? >> you know, look, i think you have to take sort of all of the regulatory issues around the space into account the idea that the data dividend is essentially the same thing that we're seeing across europe, georgia this morning announced thae they were considering a tax on netflix and streaming entertainment like that. so i think, you know, anytime you have companies that have had the success that these companies have had, and that tech in general has had, obviously, the government is going to want their share, as well

and, you know, these companies right now, for better or worse, are sort of easy targets >> heath, you also liked netflix. how do you game out what's happening in the content business this year, especially as it relates to disney, you know, and some of the other more traditional players who are going to be putting big emphasis and presumably marketing dollars, behind their ott services >> yeah, you know, netflix is sort of the gold start ndard on this i think what we're seeing in survey work we've done of consumers is they are open to having more than one of these services i think for consumers that are just going to have one, there's no better dollar content ratio than what you get from netflix you look at the amount of money they're spending on content that you get access to for $9, $10 a month depending upon the plan that you're a part of, none of the competitors, whether it's amazon, disney, hulu are able to

offer that same sort of value relationship once you've gotten to that place, then you might think about the -- yeah, go ahead? >> but do you think it might affect their ability to raise prices the way they just did if there are other competitors out there? might people be less willing to upgrade to a higher level or pride them with that level of extra margin that perhaps they've been getting used to >> yeah, we're far less, i guess, optimistic on prices being a big driver for netflix we think most of the growth that you're going to see, the overwhelming majority of the growth you're going to see going to come from subscriber acquisitions this recent price increase we think is probably going to be the last one for a while i don't think netflix has any interest in giving a big price umbrella to new competitors like that netflix is still priced below most of their cable competitors and i think that's where they're going to want to stay, at least within the u.s there are probably more pricing opportunities outside of the u.s., but for the time being, we wouldn't expect price to be a bigger driver of growth there.

they're going to get plenty from subscriber additions >> all right well, many of us will be watching that, literally heath terry, thank you heath from goldman sachs >> thank you well, coming up, what the ceo of kizaiser permanente told jon fortt at ibm's think conference yesterday but first, as the dow pares gains, take a look at the worst-performing stocks in the average. 'veing, pfizer, and cisco. wee got a lot more "squawk alley," straight ahead ♪ -it's all about the big picture. with miguel, our certified financial planner™ professional, we looked at business insurance, our mortgage, even our plans to adopt. -it's not about this fund or that fund -- it's about us. -welcome to our complete freedom plan. -it's all possible with a cfp professional. -find your certified financial planner™ professional at letsmakeaplan.org.

welcome back at the ibm think conference, i had the chance to catch up with one of their partners, kaiser ceo bernard carson who uses ibm cloud. they told me they're about halfway toward their goal of their patients' data being completely cloud ready, and thus ready to be analyzed by ai i asked him specifically, what's the cloud doing for his business >> over time, we have to -- we can build less and less data centers. so a major capital outlay for kaiser permanente, we get to redirect that capital to more medical office buildings, more hospitals, and togive it back in the form of better rates to our customers, through our affordability agenda we're collecting more and more data every single day, like everyone else is, and to have that kind of technology now allows us to be much more

efficient in the storage of our data and then, you know, one of our concerns is always to make sure that that data is as secure as humanly possible, to also deal with making sure that we are safeguarding it against cybersecurity, and the technology is incredible in addressing those issues and getting much better. >> now, for those who aren't familiar, interesting thing about kaiser, it's vertically integrated the health plan, the doctors, it's all connected, all the different specialists that a person might see so they're really looking to use data in interesting ways, for example, collecting data both from the patient, perhaps from social media to figure out who's at danger, at risk for suicide ahead of time, get those people help also, there's a big push on telehealth, telemedicine we talked about that he said that there's still going to be a big place for in-person visits, but this could really add a lot to the experience.

and then once all of that data that they've got is in the cloud, they'll be able to accelerate efforts like that, just that much faster, carl. >> yeah, interesting we got cpi today and medical costs were 24, running above the rate of overall inflation. but who knows what they would be if these tech advances hadn't come along in the first place. >> also really interesting on those issues on security >> good stuff, jon appreciate that. when we come back after the break, shares of activision higher today, despite a miss on revenue and the announcement that the video game maker would cut its workforce by about 8%. we're going to discuss what has happened to gaming stocks in just the last couple of weeks, so sy ths.tawi u

we have a headline out now on apple josh is here with that story >> all we got is right now is this headline there's an employee, that unlawfully traded apple securities ahead of earnings that's all we have right now i'll try to bring you more inside coverage if i get it. >> thank you cvs putting the idea behind its aetna merger we have more on the concept and what it could mean nfor health care >> they started the store and

redesigned it about a month ago. they have been test driving a lot of new things. one of the things you notice in the store is a lot more area gives to health care services and goods. they have also now got a wellness studio. they have been inviting seniors to come in and take yoga classes to connect with other services like the dietitian to help manage things like diabetes and hypertension also a therapist to help with breathing issues >> sleep apnea is one of the most undiagnosed issues. we can screen and then provide

an fit masks and teach people how to use them so kind of closing that loop. >> they have gotten rid of a lot of items that are low margin haven't really helped the store and brought in a lot more durable, medical goods like walkers. they have cpap machines that they can get you a prescription for and get you hooked up and show you how to use it the whole idea is to keep people coming in here to continue to manage their conditions. right now, they are piloting a test reaching out to people who are on aetna pls plans who are at r. they found they come on in and start these new protocols. >> physical locations, who would have thought it. thanks activision announcing it will cut about 8% of its work force with a miss on revenue

josh joins us here in san francisco with more on the quarter and the trouble in gaming of late josh >> activision got in lower than expected for 2019. the stock is higher here today the strategic changes the company is making. they are investing resources and poor franchises. they are looking to update them more frequently and regularly. the players want more new content. he says we wait and see how well activision executes. >> the trends in the gaming business so interesting. we're talking about fortnite earlier in the show.

sglo >> we have heard from ea and activision there we know what a phenomenon that is. they had 200 million registered players and how they play the game, the purchases they are making for the weapons, skins or the costumes, characters wear. that's a lot of money. epic games the company behind fortnite estimated they raked in billions they have their answer to fortnite now >> it's not as if that's affecting the big game makers as much as maybe the whole free to play in app purchase model that

mobile introduced is leaking over to them is it clear which studios are better than it that was a surprise announcement that surge is greater than what fortnite saw when you look at this, it's also a chance to give out how it wasn't the first free the play game when you talk, they will say fortnite or epic games was the first to combine analysts will say these guys understand gaming. gaming infrastructure. how exactly put out a game that will be well received because it is competitive it's fun it's well designed and it's very social final point there, it's also easy to follow, jon. it becomes its own source of

entertainment. >> on twitch or youtube. another thing investors should be excited about they don't have to buy ip from disney for these things to be lites. these are all made up. thanks morgan, back to you. thank you. taking a look at markets right now. we're off the highs of the session. the dow is up 101 points after being up as much as 200 points the s&p 500 is up and the nasdaq is moving closer to the flat line we have more squawk leafr isreakaly te hey, how ya doing? uh, phil. are you guys good with brakes? we're ok. just ok? we got a saying here. if the brakes don't stop it, something will.

that's not a real saying. it is around here. i wrote it. just ok is not ok. especially when it comes to your network. at&t is america's best wireless network, according to america's biggest test. now with 5g e. more for your thing. that's our thing.

welcome back conducting a live interview with jack dorsey over twitter yesterday. among the topics, fake news, inaccurate posts in which he gave himself a c grade he said we made progress but it's been scattered and not felt enough kara also asked who the most exciting tweeter is and dorsey answered elon musk afterwards dorsey discussed how

difficult it was to have a conversation on twitter and saying perhaps improvements were needed there >> kara kept asking for specifics. it's very hard to get them out of jack in written form. we'll see you back here tomorrow let's get back to the half and the judge. thanks so much i'm scott wapner is your biggest risk not being in the market? it's 12:00 noon. this is the halftime report. risk and reward. stocks yield higher again. the technicians say resistance is weakening we're set for a break out. see what the halftime report investment committee has to say. plus, star tech investor is with us live see which big names he's putting his money behind the mining stock morgan stanley digs. it's