♪ so don't be asking, why do i love you so ♪ ♪ that's all i need to know so don't be asking why ♪ ♪ i never felt so good before, kind of makes me wonder what i did before ♪ ♪ always wanting more, i never knew it could be like this ♪ ♪ good thursday morning, welcome to "squawk alley," i'm carl quintanilla, with morgan, the dow's gains erode just two points now we're going to start with facebook protesters expected at menlo park this afternoon ahead of the company's annual shareholder meeting with mark zuckerberg's influence over facebook and its recent misinformation failures in focus meantime, you've got presidential candidate elizabeth warren out with a billboard in the heart of san francisco calling for the breakup of tech giants like facebook business insiders, henry blod jet, paul holland are with us this morning to start off our 11:00 a.m. hour. i'm thinking to a national piece earlier in the week, facebook engagement is sinking with no

end in sight based off of some of these e marketer numbers we got earlier in the week, is this finally happening? >> this is a maturing platform it actually has an older audience for digital it's instagram and some of the others that are taking the younger audience that's not surprising. i do think probably this steady drum beat of misinformation and the company not doing what it needs to be doing and so forth can't help that. >> paul, certainly that runs afoul of the hard data we get every quarter? >> yeah, i think you've got two schools of thought around facebook, guys you've got broadly speaking investors who are fairly serene. you know, they're looking at the revenues and the earnings and the company that has actually performed at almost uniformly high level, and then you've got a whole collection of interest groups, and there are very legitimate interest utility groups, very legitimate point of views and focuses that have axes to grind i think you're going to see a me

laung of those things that get into the hair of facebook. i agree with henry this is a maturing platform. unfortunately i got caught making a joke in front of a friend that works at facebook that said it's a middle age photo sharing website, and i'm a middle aged person, i'm a middle aged person and i share my photos on facebook, so i'm doing what i'm supposed to do. how about you guys >> i deleted it six months ago so. >> come on >> henry, when it comes to the shareholder's meeting today, it seems to me there's nothing that's going to come out of it of substance because mark zuckerberg controls the votes and these issues that are up for vote that would basically reduce his power aren't going to pass, but the most interesting thing about it is to see how things might be changing in this environment because they do have to worry about what their employees think, they do have to worry about what governments, particularly ours think when those billboards are going up in

silicon valley. >> i think that's exactly right. i think there are two issues there's no legal recourse here to remove mark zuckerberg or reduce his power or what have you, but there is plenty of recourse in terms of public opinion and pr pressure and government getting involved, the threat of breakup. if that grows, that will influence change i do think this drum beat of facebook spreading misinformation is going to really cause facebook to step back and say, look, what we said yesterday, which is, hey, it doesn't have to be true and we'll share it all the way, i think they're going to have to rethink that over time because what has been made very clear is that people love fake news if it supports their political view or their team or what have you. they're happy to share it, and so many of the signals that facebook and the other platforms use to share stuff is that, are people sharing it. >> i'm glad you brought up misinformation paul, i want to get your thoughts on these comments from speaker of the house nancy

pelosi she responded to that doctored video that did stay up on facebook take a listen. >> facebook knows that this is false. they know that this is false, and yet they've decided to go. now, we have said all along, oh, poor facebook. they were unwittingly exploited by the russians. i think wittingly because right now they're willing to put something on that they know to be false. >> it seems like, paul, the guidelines or maybe the goal posts i should say keep changing in terms of what violates the rules on facebook and what -- what sort of is categorized as misinformation and what is wor t worthy of being taken down and what isn't. >> i think facebook has a massive challenge. we hosted one of the senior heads of engineering there who described the thousands of people that they have working in the background on things like content, on things like filtering and so forth, and i'm not trying to make excuses for

them i'm not a shareholder in facebook i respect the company, but you know, i think at some level what people are hoping to see is almost an impossible task. i was at a family reunion in clarksville, tennessee, over the weekend and i love my family, but you know for the most part my family doesn't hold the same political beliefs i do i come back here to san francisco where people do and, you know, you're just going to get violently different agreements or points of view around what should be taken down, what should be allowed what should not be allowed i think at some level they're almost in an impossible position from that point of view, but let me address the breakup point because i think that to me is the issue. i think the market's going to take care of this. i think you're going to get to a place where there will be new platforms, they'll go off and they'll find different things the as i've said before, if facebook hadn't acquired instagram they wouldn't even have an onramp into this generation my kids have got race the pup as the instagram page for our dog,

right? so you know, that's the modality that they're in. they're fighting and clawing like any other business to be as successful as they can they just happen to be perhaps the most public business in the world. >> paul, is there anything emerging in the market right now that could be that -- that could actually do that, that investors should be keeping an eye on? >> well, i think if you looked and i were, you know, at a firm that had a new company that was coming out with sort of another social platform they're trying to get people on, i'd be kind of touting that to you. i'd have no idea whether that was going to be successful facebook's been extraordinarily successful in not only growing to well over a billion users but managing until fairly recently to keep a high engagement level among those users and to keep advertisers happy. if you look at the next generation, my girls are all, you know, what 17, 18 and 20

none of them are on facebook for all intents and purposes it's instagram, it's snapchat. it's other platforms that they're going to be on i got news for you, if i'm the senior management of facebook, i'm a lot more worried about that than i am about elizabeth warren or any of this other side show. >> by that one last point, by that logic calls for a breakup don't make sense here, do they >> you could call for it all you want, but let's say everybody charges full speed ahead, it's going to take a decade so you break it up, shareholders do fine because they get the new company, so there's no big deal there, and i don't think it solves the key problem, which is this misinformation problem. and as paul said, full credit to facebook it is an incredibly challenging issue, but they have created the most powerful media and communications platform in the history of the world, and unfortunately this goes along with it, this responsibility they have to solve the problem >> guys, that's a good point to move on. to uber set to report first results as a public company after the bell tonight

deirdre bow is in san francisco on why dara khosrowshahi's honeymoon might be over. >> there is going to be a lot to unpack but really this is the story about the size of uber's massive losses and when if ever the company can get to profitability. this past quarter those losses are expected to have accelerated to a billion or more dollars revenue meanwhile likely to continue to slow essentially more of the same trend that has not impressed public so far. that leaves dara khosrowshahi on the first earnings call. when he took over two years ago he was seen as more agreeable leader, consensus builder. he settled major legal battles now the honeymoon is over and some are questioning whether the company can still innovate and deliver on its long-term vision under him. now early uber adviser bradley tusk recently wrote an op-ed saying while he may have fixed optics, uber has lost its mojo

under his tenure this quarter revenue is expected to have grown 20% year-over-year and just 5% from the previous quarter. so far, guys, public market investors remain unconvinced as well shares are trading below their ipo price and the company's market cap is about $67 billion. that's nearly $10 billion below its last private valuation so he and cfo nelson chai will be leading the call this afternoon and probably be facing tough questions about the ipo, continued spending on promotions and subsidies, the extremely competitive food delivery business and that ultimate question how and when, if ever, the ride share company will turn a profit back over to you. >> thank you, deirdre. henry, i would argue that uber doesn't have to do all that on this first earnings call what they need to do is start telling a consistent story about what metrics are actually important to what degree investors can expect those things to improve and just show that they've got it all under

control. >> absolutely. and if they've done their job right, there should be some positive surprise this quarter they had every method available to them to set expectations and hopefully they can come out ahead of it, and i do think they need to set that path to profitability, but dara should be able to do that one of the things that bothered people leading into the i p, o if you look at the last few quarters the fundamentals flat lined in terms of growth, but the actual gross revenue continued growing at a rapid rate most of what they were doing is discounting and offering promotio promotions if that starts to change the organic piece could go up very quickly, and i bet people will be looking for that. paul foundation capital is an early uber investor what's the key thing you're going to be looking for in the results tonight? >> i agree with henry's point. these days when companies take as long to organized themselves to go public as uber does generally speaking they really are going to try very hard to

make sure that they're -- you know, that they're not going to be in a position where they're going to have negative surprises when they come out in the early reports. t i think there's a bigger kind of metta trend here there's going to be sort of a war, we saw this 16 years ago when we took netflix out there's going to be a war between the people that are going to be fighting for show me the profits. show me the optimization around this business, show me that you don't have to discount show me you don't have to do the marketing. then there will be the other community around this stock. they're going to say look, i believe in the growth. i believe in the massive scale of this kind of take over the next generations of transportation, whether it's from down at the level of scooters all the way up to cars, all the way up to freight trucking, delivery, whatever it might happen to be easily a trillion dollars market around the world in combination, and so i think you're going to see this kind of the battle of the titans between the optimizers and the growth people, and that's going to go on for years in this stock

>> yeah, it reminds me of if you watch barclays research on tesla, they frame it like the movie the matrix, red pill, blue pill, which one are you? which one are you buying >> right. >> operatiing efficiencies today getting a model 3 out or robo taxis. >> as tesla ha showed at some point the reality distortion field gets cracked and that's where we are with tesla. folks have said enough >> we'll see what uber delivers tonight, guys. great discussion good to see you both henry and paul >> thanks. just ahead, fedex announcing seven-day residential delivery year round beginning in 2020 the response to amazon and walmart? we're going to ask raj subramaniam who's the new coo and president next meantime, take a look at an intraday of the dow, giving up the gains right back towards the flat line. we got a lot more "squawk alley" right teth bak ayitusafr isre

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and first on cnbc interview is fedex president and coo raj subramaniam. thanks for joining us today. >> thanks, morgan, great to be on the show. >> so this move to seven-day delivery seems to me variable costs are going to go up here, but fixed costs largely stay the say and you're going to be able to increase capacity when you look at this longer term over the coming years, how much incremental margin do you expect to i guess realize from this change? >> so morgan, i think this -- the real question really is about what this means for our customers. you know, customers are increasingly ordering online seven days a week, and our online e-commerce merchants are demanding seven-day service. we are now level rajjing oraginr existing infrastructure. combine that with the fact we're improving our density by bringing in more packages in

house, and thwhat that means is providing a premium service at a low cost for the last mile and then thirdly, you know, customers are increasingly ordering large packages online as well, and so we are definitely investing in that space as well. so this three things combined with the foundation of our e-commerce portfolio is really a game changer >> now, i know you specifically very pointedly on the last earnings call said amazon is not a long-term threat to fedex's business and actually pointed out that it's only 1.3% of overall revenue for fedex, but how much of this is an amazon effect in the sense that you see the shift by amazon and also walmart to one-day delivery and consumers are buying more online and just want it faster and faster >> well, you know, there is a lot more to e-commerce than any one company. you know, today the market space is 50 million parcels per day in the u.s. domestic parcel industry that is going to grow to 100 million, double in the next seven years.

so there's a lot of water in the river. you mentioned walmart, we are actually partnering with walmart to dell grat the overnight service. we have also launched the extra hours service with target. whether we are using -- you know, they are using their stores as distribution points, using our infrastructure to provide a completely new value-added service. it's about providing a, you know, new set of services to big, small, and you know, large retail companies >> and the shift for the smart -- smart post package, one of the things the postal service has always had is this density advantage which has made it coast efficient for some packages in the fedex network to be delivered that last mile through the postal service the fact that you're shifting those volumes back in-house and into the ground operations, how does it speak to changing economics there? >> well, you mentioned the right word it is called delivery density, and i think when we move those

packages into a fedex owned network -- by the way, we already moved about 20% of the packages into our network already, we're going to accelerate that change by the end of 2020, a substantial piece of that business will be delivered by our own fedex ground network what that does is reduce the cost and really what's growing in the e-commerce space, a big portion of that growth is run by local last mile, and so here we are. we can provide a premium fedex service at low cost for the last mile, again, that will be a game changer for e-commerce >> okay, i want to shift gears because fedex is really one of the first company last december to flag the deceleration in growth in europe, and since then also speak to the softness we've seen in china and asia more broadly. what are you seeing now in terms of the global economy? >> well, what we can say right now, the situation's very fluent and very dynamic it's going to be very hard for

me to talk about what the economy is going to be doing in the future at this point you know, perhaps we will talk a little bit more about it on june 25th in the earnings call, but i got to tell you one thing, it doesn't matter what the economy is doing what is growing is the e-commerce market, and like i said, the parcel business is growing substantially and driven by e-commerce, and our investments in this space are going to be what makes a difference >> when it comes to the trade talks between the u.s. and china, if these tariffs are here to stay, what does that do to freight flows? >> well, you know, again, this situation is also quite fluid. we believe that more investment in china and the u.s. is good for the global economy, and we hope that, you know, the authorities would come to a framework that comes to an agreement here we'll wait and see how that goes, but you know, we are -- we have a network, global network in place that's flexible and we can move in a very large network indeed that can adjust to the trading changes any which way we want. >> raj, hey, it's jon fortt, so

back to the seven-day ground delivery move, the labor market's tight how are you going o'to find all the people to do that? >> you know, this is -- we have a fantastic grounds delivery network. you know, we have a very, very strong business model with independent service providers for fedex ground, and we also investing in automation. so you combine those together, we have been very successful in this regard, and you know, we will -- we make calibrated changes here, and we're not worried on that count. >> raj, i also just have to get your thoughts on what was something of a peculiar story that emerged over the weekend, that is huawei reported its packages attempted to be diverted i know fedex saying it regrets this isolated number of huawei packages being inadvertently misrouted, how does that actually happen in terms of packages moving between two asian countries coming to a

totally different continent. >> we deliver more than 15 million pack annaages per day, s you said an isolated amount of packages were misrouted to the united states. those packages are in the process of being returned to the origin, and you know, this is in no way reflective of the great service that the 450,000 fedex team members around the world perform. we regret the inconvenience we've caused to huawei, and we have told them so. >> finally, you're new to the position of coo and president of fedex. you took the role on in march. you're seen at least by wall street as the -- for the company, what do investors need to know about you, and strategically what do you think is possible clooacross fedex's businesses >> i'm very excited to be a team player at fedex. we are very excited about the future of fedex, you know, as we

know as the market e involves, we are in a great position to succeed. we look at this long-term. we're making the right investments and we have a great team in fedex who makes the decisions and a great team of 450,000 team members around the world who deliver on that purple promise every single day >> raj subramaniam coo of fed ex, thanks for joining us today. >> thank you very much and still to come, citi slashing its iphone sales estimates over china concerns, the analyst behind that call joins us later this hour. the dow looking to avoid its fourth negative session in five. let's take a look at some of the sn names that aren't helping. chevron, walgreen's and verizon. a lot more "squawk alley" ahead, don't go anywhere. to your babysitter. for overtime. or pinacle, to tap into your organization in the office, on the go, or in the stop-and-go. pnc - make today the day.

. time now for a special santelli exchange. rick is not in chicago at the cme. he is in inglewood cliffs at cnbc headquarters. rick. >> it's kind of strange. i have this new electronic

gadget my white board is in chicago as well let's go to the boards and look at some charts today i had david wessel on. it was an interesting conversation at issue here is why interest rates in the states are going so far down, and of course the message it sepdnds, whether you want to talk inversions, three-month to ten-year, inverting the most it has since 2017, 2007, excuse me. but what's more fascinating is look at this chart here's boons we all know the all time low yield is july of 2016, and here we are somewhat again. the issue is when we look at our low interest rates, let's look at the relationship between this bund and the ten-year note, so they can switch the chart. i don't know, you clap your hands here see, it's magic. we will clear that now, let's go to july of '16, okay, so this is the same correspondence as the low yield we saw in the last chart, but the difference is if you look at where the spread relationship

is, we are now at 242, much higher the point is that the spread is hanging constant, and if the spread is hanging constant, as rates drop with the bunds, if 80% of that contributes to the downside in tens what is jay powell going to do about that? there is literally nothing the fed can do about it. david wessel said it isn't all doom and gloom, just a little bit of gloom there's no way equity traders or any investors in the states are going to be looking at a three-month bill yielding 235 and then think, hey, do i want to get involved in a ten-year at 225, and the relationship's going to keep compressing, and the flatter and more inverted the curve gets, the more nervous it makes the central bank. what can he do about it? i'll leave you with the answer, the final answer, what can he do about it call mario and say hey, mario, you should have started tightening a while ago you're gone in october that's about the only thing that's going to help us out as

we get ever closer to 2% >> rick from new jersey, thank you. european markets set to close momentarily. seema mo seema mody joins us with a break down. >> good setup from rick with a look at the german bund. here's what the situation is in europe, staging rebound across the board. italy is the exception amid this ongoing budget tussle with the eu axle springer, that is the best performer on the broader stock it is in talks with private equity firm kkr about a strategic investment stock up 22% for the month of may. european stocks are down over 4%, almost 5%, slightly better than the s&p 500 for the month of may again, this tariff backdrop, these economic concerns still permeating across the nation figures out of the u.k. show april car production plunging 44% year-over-year that's the largest annual drop since 2009, some movement in the british pound today, but still trading at the worst levels of

the year against the u.s. dollar let's also turn to the ipo market we have an ipo in europe, watches of switzerland, and it is up about 13% on its first day of trade in london after pricing at the highest end of its expected range this is europe's luxury watch retailer it has plans to further expand into the u.s private equity backers like apol apollo global management and unlike in the u.s. where we've had over 30 listings in 2019, keep in mind in europe there have been only ten ipos. two reasons there, one is the ongoing political uncertainty surrounding brexit and a weaker economic backdrop has made europe a less attractive destination for companies to go public we'll see carl if that changes in the second half of the year back to you. >> see ma, thank you. let's get to sue herera this morning and get a news update. good morning sue. >> good morning, carpal, good morning everyone here's what's happening at this hour, president trump talk to reporters on the white house lawn before heading to the air

force academy to deliver the commencement address reversing course, the president now says he didn't get election help from the russians after earlier tweeting that he had nothing to do with russia helping him get elected. >> did not help me get elected you know who got me elected? you know who got me elected? i got me elected russia didn't help me at all russia, if anything, i think helped the other side. >> israeli prime minister netanyahu meeting with jared kushner and u.s. special envoy jason greenblat to discuss the trump administration's long awaited mideast peace plan the meeting came hours after israel was thrust into political chaos when netanyahu failed to form a new government. iranian foreign minister describing the yet undisclosed mideast peace plan that the u.s. is trying to wrobroker as shamel he spoke at a meeting with muslim ambassadors to iran that's the news update, i'll

send it back downtown to you, carl. when we come back, the major indices trying to rebound in today's session. dow beliriefly went into the red still on pace for our worst month of the year. all set to break four-month win streaks. is a turn around ahead in the 'lta session and a half? wel lk to blackstone's byron wien right after this break.

alley. a slight upward revision in

first quarter economic growth helping sentiment. treasury yields rise the ten-year right there is at 2.25% yield right now. as we continue to watch the bond markets and what they are telling us, meantime the dow has now turned negative. it's down about 13 points. joining us is blackstone's vice chairman byron wien. thanks for being here today. >> it's always good to be here >> in terms of the markets, the recent selloff we've seen in stocks, historically speaking it's pretty -- it's pretty normal to see a 3 or 5% pullback in stocks in any given calendar year in terms of what we're seeing now, do you think this is just a normal part of market activity or that we're on the verge of a bigger steeper correction? >> at the beginning of the year, i thought the market would appreciate about 15% and get to 2850 or 2875 on the s&p 500.

it got ahead of that, and now it's corrected the overage i view this as a normal correction in an ongoing positive trend i think the chinese conflict on the trade issues is serious, and i think it's going to be pro lon - prolonged, but i don't think it's going to create a recession or a bear market i think the market is still in reasonably good shape, and the economy is in very good shape. so i think this is a normal correction it may go further, but it's not the end of the world >> what do you think the bond market is telling us right now, and do you think treasury yields have bottomed? >> i don't know whether they've bottomed or not, but one thing a lot of fuss is being made about the inverted yield curve usually the yield curve inverts

because the short end rises above the long end this time it's different the long end decreased, the yield on the long end decreased below the short end. that's a very different situation. it decreased because people -- >> hey, byron. >> it decreased because people think the economy is in real trouble, and i don't think it is >> but byron, you made some predictions for 2019 at the enof last year beginning of this one. i don't remember which, but a couple things you didn't quite see this pro tracted china trade issue coming you saw no brexit deal but thought theresa may would stay in power how do those two factors, china trade, and the continuing brexit issues influence the way you look at the market through the rest of the year >> well, i think both are negative, and both will keep the market from making any considerable progress, but i

think when there is a brexit deal, if there ever is one, it will be a soft deal because both europe and the u.k. are losing a lot by brexit. >> byron, it sounds like -- >> i spent a week in london the week before last, and i can tell you i was optimistic when i went over and much less optimistic when i came back >> as far as -- >> it sounds like you are south of the median year end target for the street, byron, which i think is now 2925. safe to say you do not see us getting there by the end of the year >> well, maybe we'll get there, but i don't know that it will stay there all i'm shooting for is 2850. >> 2850. >> that's as much as -- >> yeah. carl, that's as much as -- >> is the fed too tight? is the fed too tight for a trade war? >> no, i think -- >> and how do they game out the end game when nobody has an edge

on this showdown >> i think the fed is exactly the right place, and they should stay in neutral. >> byron, how closely are you watching transports and small cap stocks right now because what we've seen in the past is that they tend to be i guess the early indicators of broader weakness in the economy and thus pressure in the broader markets. >> well, yeah, but they have the most potential i'm watching them carefully for signs. i'm also watching the ipo market look, there are a lot of trouble spots out there, but i think it will -- you know, i think it's both in the interest of the united states and china to work out a deal eventually. it's going to take a lot longer going to carl's question, a lot longer than i originally thought, but eventually i think a deal will happen it's only costing the u.s. about

a half a percent of gdp, but it's costing china or potentially could cost china about 5% of gdp, and i think it will cost china about half that amount and china doesn't want to lose that amount of gdp. >> finally, byron, 11 trillion in negative yielding debt around the world. all these worries about the e.u. financial system being insolvent, concerns about ceos and leverage loans how does that all fit with your thesis >> well, those are all negative issues, but as long as the economy stays out of a recession, i think we can muddle through those. >> byron wien, always great to get your thoughts, thanks for joining us today. >> thanks for having me. and after the break, our julia boorstin might not be the next ray, but she did sit down

with the leader of the empire, what bob iger told her about disney's big bet on star wars is next. i'm here on the millennium falcon we are piloting this ship in the main attraction here at star wars, and we'll have more after the break. . ♪ so, every day, we put our latest technology and unrivaled network to work. ♪ the united states postal service makes more e-commerce deliveries to homes than anyone else in the country. ♪ because the future only happens with people who really know how to deliver it.

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...or trips to mars. $4.95. delivery drones or the latest phones. $4.95. no matter what you trade, at fidelity it's just $4.95 per online u.s. equity trade. i'm scott walker, here's what's coming up on the halftime report more caution from apple. >> how low could shares really fall, we'll debate that.

tom lee is here on the real message the bond market is sending as yields bounce today our call of today zeros this on one big financial stock. we'll find out whether our investment committee agrees with that we'll do it with more at noon. >> we love it when they disagree see you then. and disney unveiling its largest ever single themed park expansion, the 14-acre star wars themed galaxy's edge our julia boorstin is there in anaheim after sitting down with disney's ceo bob iger. julia. >> reporter: well, john, bob iger telling me that disney's billion dollars expansion in this galaxy's edge, they are opening a similar galaxy's edge in orlando coming up in august it will benefit not just the theme park's division but also the movie studio as well as the disney plus streaming subscription service launching this fall which will have a star wars live action series. >> star wars is an immensely

popular property, and giving people who visit our parks who have thought about visiting our parks a chance to immerse themselves in star wars on a grand scale in a much richer, deeper way is a big deal, and i think it will be extremely positive for the division for the company. and for star wars, too i think it will lift the entire franchise of star wars >> reporter: now, though there's only one ride now open at this land, disney aims to keep visitors entertained by recreating the world of the movies with themed star wars food and blue milk, and lots of little boutiques like this creature stall with stuffed animals. technology is incorporated throughout through the interactive millennium falcon flight to the ability for visitors to program destroyroid around the park as well as a mow gi bill game you can play throughout this space. >> we have been trying and actually succeeding for years at using technologies in a lot of

businesses but since we're here at disney land this is a good example, to make the experience better, more compelling to make it not only more memorable, just more fun. >> reporter: this is just one of a range of new attractions based on established franchises opening this year at other parks. lego movie world opened in florida in march, nickelodeon universe is opening in new jersey in the fall, and lion's gate entertainment world is set to launch this summer in china universal studio's wizarding worlds of harry potter lands have bolstered those parks for nbc universal and universal is adding another harry potter themed ride at its orlando park this summer. all of these companies are looking to get a bigger piece of the pie for the growing theme park business. in the u.s. alone the theme park business is expected to bring in $20 billion in revenue this year back over to you >> but is there a java the hut themed bar is what i want to know, julia boorstin, thank you so much. >> so there is a cantina

it's right over here, but we have not seen java the hut yet. >> okay. well, we'll keep an eye out. thank you. up next, citi cutting apple's china revenue and sales estimates in half. the analysts behind that call is wi us on the other side of this break, don't go anywhere. hey! i'm bill slowsky jr.,

i live on my own now! i've got xfinity, because i like to live life in the fast lane. unlike my parents. you rambling about xfinity again? you're so cute when you get excited... anyways... i've got their app right here, i can troubleshoot. i can schedule a time for them to call me back, it's great! you have our number programmed in? ya i don't even know your phone anymore... excuse me?! what? i don't know your phone number. aw well. he doesn't know our phone number! you have our fax number, obviously... today's xfinity service. simple. easy. awesome. i'll pass. wall street's got some conflicting views on its outlook for apple. it doesn't see any significant impact to china tensions, others see reason for concern

morgan stanley joins citi this morning in cutting its price target on those china tariff concerns citi slashed apple's china revenue and iphone sales estimates in half and took down its target to $205 that jim, how do you adjust to the fact some people see demand strong in china, some see it weakening. what convinces you that it is weakening? >> it's great to see you from san francisco live and as we say in china, ni-hoy we did a lot of local china checks where the local domestic resident in china is starting to feel the impact of these trade wars by shifting their preference to national brands. unfortunately, apple is not a national brand or domestic brand in china

and we see this impacted more towards the september quarter and further on so we don't expect a miss in june but we are seeing our first evidence of a trade war implication, or riplication for apple as likely the domestic residents in china choose some of the other brands. >> jim, you're going to talk about shmy and huawei. how can you parse how the premium responder versus the android consumer or the one who might have been inclined to buy apple in the first place is apple gossing to disproportionately hurt or fair better than say samsung? >> actually, what we are seeing, you mentioned a couple of the

brands xiamai, huawei, are getting a more favorable life. a, their screens, batteries and pros ceres improved over the years and b, they're the national brand so you're supporting your own country there. we know about the price brands apple is still held as a luxury brand. it's still held up as an esteemed, admired, want to brag about brag but the other brands are catching up. when we talk about the great general population where apple had to do price cuts, we are now seeing a recent shift in preference away from apples towards other brands likely to manifest itself more in september or fall time period >> jim, is apple going to have to come out with liar pricea lod phone in the future? >> we believe they do. usually what they do is come out with a newer phone and drop the

price of the last phone. so the se is not sold much in the u.s. or developed countries, we expect a follow-on to the apple se they will have a little better performance but priced lower we've seen apple take more aggressive, also known as lower prices, of its phone in asia and expect these prices are a reality of the increased competition. we expect a premium and lower price point. >> finally, jim, with so much at risk in china, kpwhat explains h market share gains over the past few months, is that sheer price cut? >> apple enabled price cuts on its products and those made it a lot more affordable. to give you share statistics, apple represents about 12% of the china market share and that was as of the december quarter

and compared to the full year it was 10%. you're right, they did see improvement in share gained as the year progressed, specifically as apple put in the price cuts we believe, however, share gains will slow down as the trade wars heat up. >> trade wars simply put are bad for technology companies and in demand. >> we will see how this pan out and affects stocks, jim suva from citi. >> great to see you. >> dow in the red, down 25 s&p back to atfl vix approaching 18 we will watch this back in three minutes. $4.95. delivery drones or the latest phones. $4.95. no matter what you trade, at fidelity it's just $4.95 per online u.s. equity trade.

no matter what you trade, at fidelity it's snowtime baby. [ screaming ] oh, it's just this weird little guy. ow! ow, ow, ow! ow, ow, ow! [ screaming ] not cool. we mentioned at the top of the hour facebook's annual shareholder meeting set to take place shortly. leslie picker is there with what to expect. hey, leslie. >> yes, that's right, in about two hours facebook's shareholder meeting will be held in hen low park, california they will share grievances against the company saying the lack of oversight created this regulatory and reputational

challenges the company has been facing recently as it relates to privacy, as it relates to foreign interference and other issues that have been in the press as of late the these issues keep trickling out yesterday as nancy pelosi mentioned the video that was doctored of her. >> facebook knows that this was false. they know this was false and left it up we said before poor facebook was unwittingly exploited by the russians i say wittingly. because right now they're willing to put something on they know to be false. >> investors have put several proposals on the ballot for today's meeting, including disposing of facebook's dual class share structure, appointing an independent chairman whose name is not zuckerberg and evaluating to break up the company as many have called for recently but these initiatives won't go far

because zuckerberg holds a majority of the voting power so any of these initiatives will likely be blocked because they would limit his control of the company. for facebook's part, they say the company has made many changes that are already in response to some of the recent accusations, and facebook says their corporate governance is in place to make moves that will help pivot the company for the long term, plus the stock is up 40% year to date still at least some investors and facebook users aren't satisfied. we are expecting to see some protests outside of the hotel here as the meeting gets under way, guys. >> leslie picker, thank you, we will watch outside facebook today. meantime we did loose the gain, session high 92 and s&p basically back to flat we saw oil inventories with the decline not as big as expected and oil is down more than $1 but nothing else to suggest why we had this midday sell-off.

>> yes facebook in particular will be an interesting one to watch not just today but ongoing leslie mentioned it up 39% year to date. it's about flat over the past 12 months at the same time. we will see which way that one goes. >> ub he let's get to the judge at the half. how much pain can be ahead for the most-loved stock in the market it's 12:00 noon and it's "the halftime report." >> top analyst cuts her price target on apple. if the fall gets worse for this stock, it could have a big impact on the rest of the market plus, why to follow liz ann sanders warning about cutting the sharpening of the recession. but is opportunity knocking for growth about a third of the stocks in one key growth index are now