good morning it is 8:00 a.m. at facebook headquarters in menlo park 11:00 a.m. on wall street and "squawk alley" is live ♪ ♪ good monday morning. welcome to "squawk alley." i'm carl quintanilla with morgan brennan. jon fortt is back at post nine >> the band's back together. >> we are getting some breaking news from facebook testimony from david calibra is

just out >> he says that we know we need to take the time to get this right. and he expects that the time between now and the launch period will be an open process and he acknowledges that it will be subject to regulatory oversight and review he also says that he agrees with the concerns of fed chairman jay powell, that reviewing libra needs to be a patient and thorough process rather than a sprint to implementation david marcus also calls economic empowerment one of facebook's core values. that's why they're participating in the development of this currency he says and emphasizes that libra will be a payment tool and not an investment. he likens it to cash rather than to boyitcoin but he also lays out the danger of failing to act.

he says that if the u.s. and facebook does not take the lead on this issue, we could soon see a digital currency controlled by others, whose values are dramatically different so there you see david marcus agreeing that the organization that will create this digital currency will be subject to regulatory review, acknowledging that there will be a long and involved process in putting this together and that's a testimony that we will hear from him tomorrow. we will see exactly how hard he gets pressed by lawmakers. we know they've been very skeptical and will have a lot of questions for him. back over to you >> ylan, we've been wondering what facebook's response would be to a week plus of criticism thank you, ylan mui joining us to talk about that is kara swisher good morning to you. >> hi. good morning >> some of these other headlines are interesting. marcus, if america does not lead

innovation in digital currency and payments, others with, quote, dramatically different values will. what do you think? >> mm-hmm. that's the china argument, right? that's the xi or me argument that's a big argument from silicon valley if we don't let them be bigger, if we don't let them to continue to be as big as possible, that we're not going to be ahead in innovation and in my mind, innovation comes from competition so the question is, how much competition is our government going to allow how much competition is going to be created when we have all of these large companies. it's -- i agree with david in that regard, in that we have to have great investments in ai, in cryptocurrency, all kinds of stuff, but facebook isn't necessarily the answer to that -- all of these questions >> kara, i don't know about you, but i am so sick of this china bogeyman argument. i mean, president trump used it with huawei. it turned out to be bs tech is using it you ought to let us do all of this stuff or else china's going

to do it when will we be able to focus on real policy, reasonable limitations and regulations and figure it out based on that instead of this fear stuff, right? >> well, exactly peter thiel used it today against google without any proof about chinese infiltration i would like to have investigations of all the infiltration at big companies like facebook and google and anywhere else. of course, we would. but at the same time, this argument that only these big companies can protect us is really just, i just -- it's just so much crap, i don't know how else to say it and so they just -- they just -- i get the idea and i think david is a really terrific executive but the fact of the matter is, innovation and competition will make us strong in this country, in the kind of internet we want to have. that's just -- that's my point of view. >> kara, do you think if it was another big tech company with lots of users that wasn't called facebook, that it would be getting as much scrutiny right

now, libra, i mean >> what do you mean? i'm sorry. what would it be if it wasn't called facebook? >> if it was another tech company that wasn't facebook that was looking to pioneer and launch this digital coin, do you think it would be getting as much scrutiny? >> no. no but facebook has got a record of stuff that is sloppy and problematic and troublesome. so they should have scrutiny you know, i think we might -- if we saw apple doing it, i don't know how i would feel about amazon doing it. i would like all of them to be doing it and i would like there to be a lot of start-ups doing it. so, again, i cannot stress how much competition is the most important and cleansing part of creating innovation. and big, giant companies wading into big, giant areas, which have all kinds of problems, should be scrutinized. it's the job of our governments to do that in governments around the world. and there's nothing wrong with them doing that. >> well, and here's -- as people continue to dig into the testimony, kara, marcus says facebook likely to realize greater ad revenue after the

libra launch, as users increasingly use them as a payment platform so is this a means to another end? or are payments so large that it will supplant social that's the big debate right now >> like a lot of other companies, they've had to find other things google has this amazing search business, but they moved into other businesses because there were worries about what would happen now amazon into search and search advertising, facebook's there. it's a typical thing to do, but just say it's a business move, which is fine, which is fine to do that. but, again, pretending that scrutiny is not important is just a fallacious argument it just is there should be scrutiny, especially around finance. there should have been scrutiny of social media and we see where that went. there should be scrutiny around health care, around ai, around robotics and that doesn't mean heavy regulation that means proper government scrutiny and we've gotten to a point where we're pretending that these companies should operate like nation states and they should not.

it's just typical. i mean, jon knows, what he was saying earlier >> to that point, kara, let's turn to peter thiel and some of his comments today, making remarks at the national conservatism conference over weekend, saying that the fbi and the cia should launch a probe into google, saying the company's work in china is, quote, seemingly treasonous. do you have any background for us on this >> i do not. i do not know where he's making these allegations from and again, these are allegations without any proof, which is sort of, he's learned very well from the guy he invests in, which is trump, is to make allegations without any proof. i think, obviously, infiltration by russians or chinese or any malevolent government towards the united states should be taken seriously. but this is a guy who's on the board of facebook, which has plenty of its own similar problems and also is an investor in pall pallentier, which had links to cambridge analytica and on and on and on.

and of course we want to study and look and investigate infiltration at the same time, it's sort of pot calling kettle black it's not a surprise, but it's certainly amazing that someone would do this. without proof, of course >> part of the problem i have with this anti-google argument is a lot of people on that side also argue that china has compromised its own companies, huawei, alibaba, ten cent, et cetera and of course, china's model is such that they can grab facial recognition data, not necessarily respect civil liberties. they should be a lot better at ai than u.s. companies are right? so what do they really need google for google's whole argument for being in china is that there are great ai researchers in china and they're making a talent argument i think it's important in this that we figure out, what are we really talking about on the one hand, we talk about, china's way better at ai than we are. but on the other hand, somehow, they need to steal google's ai

secrets. which is it? >> i think it's just a lot of hand waving. look over here by the way, did you notice on friday, there's this ftc fine of facebook over here it's hand waving, as far as i can see. at the same time, corporate infiltration has happened since the beginning of time. the question is, how do you protect against it what's the real issues, and again, i don't mean to say china is not a problematic country in terms of how it's developing the internet we don't want the surveillance economy internet that china has. and at the same time, to pull out these names as china, spies, infiltration, without any proof seems irresponsible to me. and that's the reason it was done, to cause headlines zm and this is exactly what's happening. >> kara, we don't have the details or any kind of proof, but i do think it sort of speaks to a larger debate that does seem to be brewing, at least between the u.s. and china, or the u.s. and other countries in the world. tom siebel touched on this on

our show last week, this idea that whoever -- at least a country perspective, whoever leads in ai basically leads in terms of the future of global dominance. >> well, it depends on what kind of internet you want there can be two kinds of internet and again, let me get back to this, the reason the u.s. has dominated here is because we have competition and innovation at the same time this is a government-sanctioned internet and that's what's going on in china. so the way we win is we have a very vibrant start-up economy of companies, of all kinds of companies competing with each other. and it's not that it's not a concern. it's just this hand waving without any proof is just a distraction. and that's precisely the point that peter thiel is making he's not trying to make a bigger point about our country. he's trying to say, look over there when there's all kinds of problems that companies he's involved with. it's just -- it's pure trump, as far as i can tell. and it's disturbing to do that and at the same time, we should be investigating any of these

things, which again are not uncommon for countries to do that it went on -- it's gone on for so long, this kind of thing. and all of these companies should be wary of that and i agree, there should be investigations i just don't agree as to the person saying it and his motivations for doing so >> all right well, we got this -- we got marcus responding. we'll see if google responds to thiel later on >> we'll see we'll see. >> kara, we'll see you soon. >> all right thanks and meanwhile, we are just over eight hours into amazon's two-day prime event. our courtney reagan has the latest on that from hq courtney >> hey, john so today, like you said, just the beginning of amazon's fifth prime day, which has become this annual shopping event. and it'snot just amazon that's participating, but hundreds of other sites, too so while estimates will variy for the exact revenue that prime day actually generates for amazon, core site research estimates it will hit $5.1 billion this year, that's about 1.4% of amazon's annual sales.

while the event is in 18 countries, around 60% of the sales will be generated right here in the u.s. from an estimated 63 million prime members, because you've got to be a member to take part in the deal the event is a recognititention vehicle, so it reinforces the benefit of the program, but also a key recruitment event for new prime members. last year, amazon added more prime members during the day than any other day in its history. didn't tell us exactly how many, though a cowen and company survey suggested that 10% of non-prime households would consider signing up to access the deals that's a big number. but there are deals abound beyond amazon. it's now a shopping event across retail, retailmenot counts more than 250 retailers offering deals around prime day, 40% more than did so last year. sales force says total ecommerce will see sales grow 51% this prime day compared to last year. adobe, a bit more bullish, for the largest u.s. retailers forecasting 49% sales growth on this prime day and if amazon's site goes down

again this year as it did last year, it just opens up more opportunity for competitors, though jim shabai, the vp of amazon prime says there won't be a problem this year. >> we've worked really hard this year to make sure we've ironed out all of those technical glitches now 48 hours, over a million deals, deals being released every five minutes we're confident all of our members will have a great experience >> at least so far, no glitches on amazon or other websites have been reported, but we're watching it. we've got many, many hours left to go still. more kb moregan? >> yes, we do. i'm sure it's going to keep the package delivery companies pretty busy over the next couple of days too, courtney. we should also mention that amazon is broadcasting live on their website. it's an almost qvc-type fashion, highlighting some of the deals that users can get today you can see that video right there. as we head to break, the dow and s&p and nasdaq all again setting record highs earlier, all moving around the

fat line, trading around the flat line. coming off their fifth positive week in six. tech also coming off a record close. here are the names powering the nasdaq to those levels this morning. we're back in a moment

welcome back to "squawk alley. nasdaq hitting another record high earlier in today's session. but with big tech names such as ibm, netflix, and microsoft due out with quarterly results later this week is an earnings recession coming that was the thesis of our next

guest in his prior appearance with us. wedgwood partners chief investment officer david rolfe joins us here at post nine good morning to you. >> good morning. >> are we destined for an earnings recession this season >> i think we've been in a little bit of a soft one for the past couple of quarters. if you look where estimatixpect or estimates were even last year, they've slowly come down and even with tech, all through the second quarter, estimates have been declining. so it's a -- it's an interesting set up to where the stocks have done so well, but maybe expectations are muted i think it's an easy setup, at least for tech this quarter. we'll see if things get worse, if things roll over. i think maybe the one area that is still a harbinger of potential risk is the volatility of credit spreads. plenty of economic indicators have been weak, but i think that's what really got the fed

powell's attention late last year and it's been pretty benign so far this year so soft landing thus far for corporate earnings and -- but i think the story continues to be the fed, with stocks at everyday all-time highs >> so do you think the fed cuts at the end of the month? and if so, by how much and i guess the read through there, what does that ultimately mean for equities? >> yeah, i don't think it's one and done it's probably not 50 basis points >> well, that's not good >> not for expectations. >> yeah. >> and i think even through this earnings season, i think earnings are probably going to take somewhat of a backseat. what i mean by that is, if earnings results are exceptionally good or forecast or guidance is exceptionally good, stocks are going to move on the other hand, if it's exceptionally poor, like alphabet last quarter, the stock is going to react and it's going to be a bad outcome. but i still think the fed is the

gale force wind in the market. and i mean, tech's up from the christmas eve lows from last year i think nasdaq is up 33, 34% and so a lot of open field running for big cab tech, if the fed doesn't disappoint >> you think there's any liability on netflix, because of the price hike because of the content that's being removed? or have they flooded the market with so much new stuff that we're going to see subs hang in? >> i think they're going to struggle i mean, when you look at the metrics, there has to be somewhat of a combination of how much are they spending to keep existing subs? and that figure is going up. and we are just in the early innings of this -- of these streaming wars you know, a few companies like disney and others have a couple of dollars to throw at this war. i would be a little bit worried on that front. >> so are you feeling good about, let's just say, enterprise cloud tech right now?

based on where we are? >> well, we had a slowdown in some capex spending late last year i think in terms of specifically the cloud, all ears are going to be on. if there's been a resumption of spending from the likes of the big players. and that has obviously a related effect to nvidia -- >> adobe and oracle seem fine, the early belaerearly bellwethee season so just based on that and at least some moderation of those negative trends we saw last quarter, are you feeling -- i'm having trouble parsing whether you're feeling, yeah, there's a soft earnings recession. is that okay is that not okay >> well, okay, let's go all the way back to the beginning of this earnings recession. the fed was tightening a bit even if you look at the qe side of things with qt and tightening, the fed tightened a

lot. and obviously, in the industrial sector, we've had a significant slowdown but again, once the fed blinked, it was off to the races and tech has been such the dominant leader over the past number of years. but we are starting to get a point on some of these individual stories that you mentioned that -- i mean, adobe is up what, 50, 60% year-to-date at a certain point, you're going to have to justify that multiple with some really darned good earnings forecast. and so, again, tech isn't a monoli monolith, but it sure has acted like it given how much some of these big tech caps have ripped. >> so key question for you, whether it's tech or another area of the broader market, is there anything you would be investing or selling right now >> we've actually reduced our positions in some of the more industrial cyclical names and for the first time in many, many years, we notably reduced our waiting in berkshire hathaway, because of cyclical reasons and as well as the lack of buybacks

and putting that cash to work. >> david rolfe, thanks for joining us today >> thank you and when we return, from the president to powell. the criticism for crypto continues to ramp out. we'll ask ron paul if he remains bullish on bitcoin and the rest. that's next. stay with us

that broadcom/symantec deal, well, it is off. our david faber broke that story earlier and is back at post nine with more. david? >> it happens sometimes, jon, unexpected as it was, because as recently as late last week, there was an expectation that this deal was going to get done, broadcom would buy symantec. the thought was, perhaps adeal would be announced as soon as tomorrow not going to be the case the two sides, as we reported, no longer talking about a transaction that would have been more than some $15 billion or so, all in cash, of course the very active ceo of broadcom,

which has been a serial acquirer moving to potentially acquire symantec, but now muoving on, it would appear what happened, typically in situations like this, you do have a, sort of an indication of interest, that is set out when talks really begin or fairly early. in this case, i am told by people familiar with the situation, that was $28.25 that would seemingly have met the price expectations of interim ceo of symantec, rick hill but that was subject to due diligence and when they actually did their diligence, broadcom came back skpand said, we're no there. we can't get to $28. the difference was not that large, but large enough that symantec was unwilling to accept the number that broadcom brought to them after due diligence. in fact, i'm told that by other people they may have gone above $28.25 in their own

expectations suffice it to say, they were unable to get there. and oftentimes you may hear, shareholders may get upset at symantec, go back to the table, perhaps it happens, but we are dealing with a somewhat unique individual in hauk tan he's usually willing to pay what is certainly seem oftentimes as fair value but if it's not going to work out, he's moving on. and it does appear he may very well be moving on. >> but doesn't it seem like he must have not have wanted it that bad that's not a huge amount of money, like $1.50 a share. a lot of times, people justify this, if they really want something, they'll pay a little bit -- >> with as retail as after 6%, 7% gap in terms of what they wanted and what they're willing to offer you're right, but at the same time, you need to show some price discipline particularly, you know symantec, you know it better than i, but they've been having some issues. there's no doubt about it. there's concerns about the current quarter and how much they've invested in the business

and whether they've underinvested and their loss of market share perhaps that gave them more pause than normal. >> apparently hauk tan not impulse buying on prime day. european markets set to close momentarily. seema mody joins us with a breakdown of today's action overseas >> a chopping trading session in europe following the latest economic figures out of china, although all five major averages, as you can see here, set to close in positive territory. now, as budget concerns have eased, italian stocks have been out-performers as of late. the country's benchmark index today hitting a 52-week high it's now rallied more than 2 fact since its lows hit back in late december. now, meanwhile, in geopolitics, relations between turkey and the eu are set to hit a new low today. european foreign ministers are preparing a slate of actions designed to ramp up pressure on turkey first, suspending most high-level contacts with the turkish government, cutting financial aid, halting negotiations on an aviation deal

and threatening sanctions on turkish companies involved in offshore drilling in the mediterranean sea. that's certainly something the market is watching finally, the stock of the day in europe is biotech giant galapagos. gilead planning to invest more than $5 billion. gilead is betting that galapagos in its pipeline could help fill the gap left by sliding sales of its hepatitis "c" business shares of galapagos set to close at an all-time high, up about 18% on the day morgan, sending it back to you >> let's get over to rahel solomon for a news update. >> here's what's happening at this hour. jeffrey epstein has been brought to his new york city hearing from a nearby federal jail he's been held there since his arrest for sexual trafficking. his lawyers are asking a judge to grant him house arrest, but prosecutors say he's a flight risk attorney general william barr speaking out against anti-semitism. this in opening remarks to the department of justice summit fighting violence against jewish

people >> as attorney general and a fellow citizen, i want to assure the jewish community that the department of justice and the entire federal government stands with you and will not tolerate these attacks. >> and st. louis cardinals hall of fame pitch eer bob gibson is fighting pancreatic cancer he received the diagnoses several weeks ago and has been hospitalized in his hometown of omaha, nebraska, where he will begin chemotherapy today he is 83 years old we wish him the best now let's back to "squawk alley" with carl >> tonight, do not miss the premiere of after new cnbc documentary. it's called "vaporized america's e cigaret-cigarette addiction. dow's down 13. we're back after a breakran, or you're in a military family, please stand.

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it's a market expected to hit $9 billion by the end of this year, but is it a cure or is it a curse? tonight at 10:00, cnbc looks into the rapidly growing and controversial e-cigarette industry with some unprecedented access to juul labs in the hopes of answering that question >> carl, is this nicotine-laced smoke candy, in effect i mean, it doesn't really have

the same negative impacts as cigarettes, you know, these juul pods and what not, but really, for kids, it's smoke candy >> certainly, the flavors did drive youth use. juul's argument would be, if you're going to get somebody, an adult smoker to give up cigarettes, you've got to keep them interested in the flavor. and that's why you ended up with things like creme brulee and mint and pineapple and mango we did talk to some smokers who said, yeah, the flavors matter to me. if i burn out on one, i can switch to another. but some of them were so clearly marketed to kids, they don't look like the thing that an adult would actually want to buy. and that's where a lot of the criticism has come from. >> you've spent months working on this documentary. i guess, what were the things that were most startling or most surprising to you in the process? >> i think the different ways governments around the world are sort of looking at the problem we have an entire block where we went to london where british officials are going whole hog on

vaping they think it's a solution to cigarettes their smoking rates have come way down we interview all of these manufacturing workers in the uk who have been spoking for 30 years, tried to quit a hundred times. this is what helped them, right? but they don't have the teen epidemic that we have in this country. and that's why juul is facing so much of a firestorm here >> really looking forward to seeing this. it reminds me of the old bottles and james, like wine coolers and the controversy was in the '80s and '90s, kids were grabbing these things but you can't sneak around with a bottle as easily as you can sneak around with a little ecigarette >> that's right. very concealable tonight, 10:00 p.m. eastern time, vaporized, america's e-cigarette addiction. we hope you'll tune in right here on cnbc and cnbc.com, fire tv, roku and even available on itunes and amazon just one more sign of the changing streaming environment >> you are on all the platforms, carl

love it. meantime, criticism of crypto continues to ramp up from congress to the fed to the president over twitter is there a reason to remain bullish or is a bubble ahead and what should investors make of facebook's libra former texas congressman and presidential candidate ron paul joins us this morning. congressman, good to have you back good morning >> thank you nice to be with you. >> it seems like everybody has an opinion about crypto and libra, especially in the past two weeks. how do you think the needle has moved, if at all >> well, i have a very strong opinion that i don't know what's going to happen. but, no, there is a lot of talk. i'm all for cryptocurrencies and block chain technology, because i like competing currencies, but i don't know the technology, but it bothers me when you hear about a government, whether they are local governments or countries, and saying, you're not allowed too this and not allowed to do that, because historically governments always have to have a monopoly control over money and credit. obviously, that's why we have a federal reserve instead of allowing the market to operate,

so it's this -- this desire to regulate and find out, but i think that's always because, governments are afraid they're going to lose some tax revenues if they're not careful but i'm nor the least amount of regulation i don't know what's going to happen to cryptocurrencies i think it's a great idea. and i only had one rule, no fraud. if you're going to compete with the government but governments aren't very tolerant of competition and they're not even tolerant with using the constitution to compete with the fiat dollar because gold and silver, you can't use it so i'm very competition and we'll have to wait and see what the market decides along with overcoming government regulations, to see what will happen to crypto >> how much faith do you have that some of these platforms can weed out bad actors? bad actors in this country, but more importantly, from outside >> well, i think they can, but if there's a blatant fraud, i

think the government has to get involved but i think the market probably has weeded out some already. and i think they're capable of doing it, but what the problem is is you never have a truly free market. there's always something the government says or does or introduces a regulation. but they did with that with gold, too. just think, gold was confiscated, they were talking about taxing gold and regulatin it so they'll do that with crypto as well. but no, no, if the market is allowed to operate, the bad guys get weeded out in all forms of economic activity. but it's hard to find that anymore. there used to be a day when you had more competition and i think in the last couple of years, we've moved in the right direction with a little less regulation, but we're a long way off from true competition. >> it seems like you need some kind of regulatory structure to even determine if there is fraud. and of course, there are concerns about money laundering and the rest with cryptocurrency so what is, you think, that

minimum amount of regulation that's necessary or acceptable >> i don't think you go looking. i mean, we just went through a lot of activity here over the presidential election, because they said there is and we're going to find it and prove it. no, you have to have a charge made somebody has to say, you know, somebody did this. but to go look and say, well, we want to prevent it, it's sort of like prior restraint in the media. you don't go looking for somebody saying something wrong. you have to allow something happen to have a reason. otherwise, you just go like crazy with regulations, which is essentially what the world has done and our country has done it so, no, i think that the government has a role and somebody has a case that there is fraud i think it should be investigated but to go looking and then they'll say, just think of all the regulations since the 1930s in order to prevent the ups and downs of the business cycle. and every time we have a bad one, congress goes in and writes

even more regulations, but it never presents the problem, which is the manipulation of the interest rates by the federal reserve. >> congressman, i think this sort of gets right at the point where i wonder whether you think that an actual free market where cryptocurrencies could actually be established and maintained, because at the heart of crypto, i mean, you're talking about establishing currencies or coins that could essentially dilute or compete with the very central banks and their monetary policies that are basically running markets right now. >> well, i don't think anybody knows the answer i have me questions about it, but what i want to do is legalize the freedom of choice, absent blatant fraud, people committing fraud and i also -- you know, i have paul hayek who talked about currency choices and talked about different ways of doing this, a basket of currencies and different things, but i'm pretty old fashioned, too, about what

history shows about money. and they want a precise definition of the money. and the big question is, can a cryptocurrency fulfill that requirement that you have a precise definition of the unit of account and that it's consistent and right now, when you look at all the different cryptocurrencies available, you say, well, which one is going to survive? what happens if one goes down, the other goes up. so there's a lot of question, but i don't know enough about the technology all i know is i'm interested in that technology. i think block chain technology is what we should be talking about, not crypto as money, because that's a question that's going to be solved by the marketplace and it has to contend with government regulation so that's no easy task >> i wonder what you think, crypto enthusiasts liken bitcoin and torre cryptocurrenhe other to gold. they call it digital gold. do you agree

>> i think there are some similarities, but things that aren't very similar. because the unit of account is an ounce of gold, you know, you can put it in your hand. the crypto, you can't quite do this, though, the people who like crypto will say so. but i still am locked in with thinking about the regression theorem, which says you have to go back to that unit that was once called money. like, our dollar originally started as a silver dollar and it was connected to it just think of the difficulty of the sdr. they were going to create money out of thin air and get people to use it back in the '70s nobody paid any attention to that and i think that's one of the problems with the euro right now. it did not start off with somebody knowing what a euro is. so it's having problems. but all currencies are fiat now. and that's why people are -- some of the central banks, many are buying gold and looking at alternatives and looking at crypto and i think that's good, but

sorting this all out is a real challenge. >> finally, congressman, treasury on friday said that government could run out of cash by september mnuchin urging congress to raise the debt ceiling before the august recess. do you think we're going to have fireworks on the debt ceiling later this year? >> well, political fireworks, a lot of talk, but it is in the interest of republican and democratic leadership never to not pay the bills. that is not going to happen. the only way that would stop is if they ran out of electricity or something where they couldn't run the printing presses and run to computers no, they'll do the fussing and they will try to agitate and the democrats want to remove some of the limitations on spending. but the republicans aren't hesitant they need the spending, too. infrastructure and militaryism and empire no, both sides really need it. there is no way that it will be just a political football.

it happens quite frequently, but it's not going to put any restraint on the spending or the expansion of the deficit, which is the real problem we have to face up to >> numbers this year have not been good. that's for sure. congressman ron paul, good to see you again. thanks for the time. >> thank you joe lasdwnale is with us in just a few moments don't go anywhere. dow is down 11 points.

here's what's coming up on the halftime report. the biggest manin bonds, guggenheim stocks hitting new highs, but he says there's a lot more to come if the fed doesn't screw it up and the bullish call on one industrial name that's getting a lot of attention and tropical storm barry may have spared louisiana this time, but we'll lay out why every driver on the east coast may have to now be more worried about storms in the gulf of mexico think $10 a gallon gas all that and much more is coming up at noon on the halftime report but jon fortt, i'll send it back to you right now >> thank you, i'll take it still to come here on "squawk alley," tech investor, entrepreneur, and the cofounder of palantir, joe lonsdale joins us on the other side of this break. what you think of his partner peter thiel's comments on google nus. teeext in less thanhr mite

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seemingly treasonous that's how peter thiel described google over the weekend. saying the fbi and cia should be investigating the alphabet subsidiary to see if google has been infiltrated by chinese intelligence currently the founding partner of investment firm 8vc good morning

>> good morning. >> you share that take on google >> well, google is in a tough situation because there's a lot of people at google. we're from a culture that's not very nationalist china is in nationalist place. i think that google probably needs to re-evaluate what it's doing. google is not a patriotic company. not >> not a patriotic company that's kind of dangerous and alarming language to my ear. who is american enough what's unpatriotic about google? >> they come from a culture that comes from an academic culture deans from top schools are worried about this too there's a culture where people in the universities they want to be open and share with the whole world and there's nationalists in china coming and taking whatever they can learn and t e taking it back and using it for their own nationalist purposes that's not how we think about the world. when you work with china you

have to be gnanationalists you have to help the government. >> joe, is there reason to believe that, for example, foreign intelligence agencies have infiltrated google? >> every one in the valley knows the chinese government is very involved there when you talk to people at google, the reason they departments want to didn't want to go into china is they knew everything would be stolen. it was stolen any way. this is just a regularly known thing in silicon valley. it's clear what peter is something we're saying but not discussed. >> how much of this is aimed >> i don't think so. i think there's two different sides of this. the one thing it's important to say is america is great country

because of immigration, migrants and because people want to come here i think there's a political correctness background which is an unthinking thing when people try to talk about these complex issues you try to make it about racism and horrible things all should agree that america is great because we're a country that welcomes everybody. there's a separate issue that's also true at the same time which is there's a serious problem right now with the chinese government >> let me try to understand what it is you're saying here google is not working on its search algorithm in china and exposing that, the crown jewels over there, from what i understand this is a.i. researchers from google who are in china which is a hot bed of a.i. research it's not clear what intellectual property of high value is being exposed of google over there versus caking advantage of a work force that's highly trained in ai. what do you mean about google's

intellectual property getting compromised? which intellectual property? >> i think we're talking about treason, we're talk about patriotism google refused to work with the u.s. government on defense when google made the choice we're not going to help the u.s. but we're going to continue to work in china, it was very clear. working in china, you have to work with the government everything in china is the government you work in a.i., you're doing things to help the government. the government has control of what you're doing. google made it clear we're willing to help china. we're not willing to help the u.s. that is what peter is reacting to i can't speak for him but it's a clear distinction. they have a very confident government that runs their business world >> is this u.s. in an arms race with china or other countries? if we are, what's at stake here? >> i think overall, we're in a

very positive situation where both sides are creating a lot of value for each other i like the world to be this harmonious place where everything is globalized there's a reality we're a nation that has very different values in china and it's pushing forward in the world very different values as much as we are nation with our own values it's important we stay ahead of them in defense and ahead of them in a.i. and the world is a better place if america is stronger. there's two sides that are built through. there's this nationalist side. yes, there's definitely some sort of arms race on the defense side where it's important america does not fall behind >> do you expect to get more specific on this in the coming days >> i can't speak for peter i'm very proud that we built a company together which is an awesome company. it's probably the most patriotic in the valley. it's done amazing work for the u.s. government and its allieals

i think in sdwren we need more people in silicon valley thinking about what it means to being an american citizen. >> i'm not sure doing work for the government makes you patr t patriotic or not doing work makes you unpatriotic, i wonder what the work should be to get ahead of china if china is not willing to respect civil liberties the way america on things like facial recognition, on things like the use of data, are they not destined to out perform in training its a.i.? >> i think right now we're lucky to measure where the very top papers are coming from we still dominant the top 1% these things are well documented you're right, there's things in china that are legal that are not legal to do here even though our a.i. research is well ahead of them, there's

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tight range today. dow is down 19 points. rest up for tomorrow when we're going to get goldman, jpmorgan and wells. let's get to sully and the half. thank you all very much. welcome to the halftime report your top trade this hour, the next test nfor the market with stocks sitting at record highs, what can keep us going higher it is 12 noon and this is the halftime report. >> a new all time high for the major indices. our investment committee debates the next stop for stocks the man who says the fed could be making a mistake. scott minerd joins the halftime desk