welcome to "street signs." i'm joumanna bercetche these are your headlines bp shares drive the ftse higher as the oil major shrugs off lower crude prices to deliver a strong second quarter. bob dudley tells cnbc the company's dividend is ealthy we'll have a progressive dividend policy. a 6% yield is really healthy hard to find that in a bank. it's well underpinned here >> that's the key. >> very well underpinned the restedges

lower. president trump continues his attack on the central bank saying a small cut is not enough airlines li s slide as lufta delivers a sharp drop in second quarter net profit and warns the market will be challenging for the rest of the year. and bayer warns its 2019 targets are becoming ambitious due to a challenging environment for its crop sciences business as it is linked to thousands of lawsuits here you have behind me a lot of earnings going on today in europe. let's run you through some of the highlights on this super

tuesday. we're in the thick of earnings season a number of blue chips have been directing markets, bp right there is trading near the top of the stoxx 600 after posting a beat on the bottom line. up 3.2% this morning in germany bayer described its full-year targets as increasingly ambitious in the face of challenging conditions and legal action bayer stock is down 3% lufthansa has posted a sharp drop in second quarter net profit amid tough competition in the european markets lufthansa stock is down 5.5% it was down 7% at the open and reflects some commentary we've had out of other airlines, namely ryanair yesterday much more about the reports. we'll talk about them more on the show let's branch out and talk more broadly about the price action we've had over the 24 hours. we're getting closer to that all-important fed meeting.

the market is priced in at a 25 basis point cut, but will they go more? yesterday we had wall street trade a bit in the negative territory. very low trading volumes about 10% lower than usual s&p ended the session about 0.2% weaker dow slightly in the green. the main event is that fed meeting. we have the resumption of the trade talks between the u.s. and china. this afternoon we also get the core pce numbers and a continuation of the earnings season some big names reporting today in the u.s we'll talk about apple more with elizabeth in a bit and procter & gamble, mastercard and pfizer to name a few in asia, we had a slightly better session nikkei, we had the bank of japan meeting. the index ending the session about a half percentage point higher not the case for europe. only one hour into the trading session. the broad composite index is

down a half percentage point we're in a negative zone this morning. all the focus yesterday was on the ftse ftse 100 yet again bucking the trend. we had that big plunge in the currency yesterday sterling down 1.5 percentage points. that gives somewhat of a boost to the ftse 100. today the results are the index is being lifted a bit by those bp results we were talking about. that we also have bank of england on thursday xetra dax trading a bit weak we talked about bayer and lufthansa dragging it down and we had the cac 40, second quarter gdp numbers came out slightly weaker than expectations the ftse mib down 1% now

actually we're a good 50 poin0 s lower than where we were when we went into the ecb meeting last week switching to for keign exchange. all the focus yesterday was on the pound. cable 1.2160 we dropped four big figures in four days. a lot of damage is going on in that space looking at cftc positioning, the market is short in this currency weakness persisting in asia as well we are about 0.4% weaker the market is coming to terms with the no-deal possibility on october 31st given the latest cabinet formation and the rhetoric out of the european government euro is still flattish the yen is firmer.

the big focus is on the dollar because the fed is widely expected to lower interest rates by 25 basis points at its two-day policy meeting this week now, the move would mark the central bank's first cut to borrowing costs in a decaddecade president trump called on the fed to make more than a quarter point reduction to interest rates. he said a small rate cut is not enough adding that the central bank has made all the wrong moves. i want to bring in the global bond portfolio manager from janius henderson who joins us on the line i want to ask you to pick up on some of those comments out of the president there. he's criticizing the fed for raising interest rates way too early and way too much perhaps he's right they raised too much otherwise we wouldn't be talking about an interest rate cut tomorrow.

>> he has a point and he's happy to make that point, but now they moved to a rate cutting bias you don't need that political interference or that cheerleading going on in the background it complicates the message that the fed wants to send is that they're focused on the economy and less about the politics. >> we had economic data on friday second quarter gdp data came in showing consumption still strong in the u.s growing at 4%. why do they have to cut? are they being forced to cut by the markets and by the president? >> i think there's a bit of both going on here. in the first quarter the consumer is weak a bounce back in q2 was not surprising the important part was the business investment side that's the justification they're

looking for. they also got low inflation, but there's no doubt the market has been much ahead of the fed so far this year. it feels very much like the fed has been dragged into play much quicker than they would have got there if they wereleft to thei own devices. there's bits of both going on. >> it feels like the market pivoted a bit in the last week and less and less people are calling for a 50 basis cut tomorrow a few people are punting on a bigger cut than that one interesting aspect to watch out for will be the number of dissenters are you expecting to see dissenters if they go for a 25 basis point cut tomorrow >> i think there's a risk of that but it's probably quite unlikely they were clear after wayward comments made to the press, they had a press spokesman for the new york fed come out and rebuff basically what he was saying, saying he was speaking more from an academic perspective.

the question is which way will the dissenters be, will they be to the down side or for further cuts, given that gdp is stronger my best case is we'll get a unanimous fed decision here. >> you're a bond guy i'll take it back to bonds ultimately what the fed is wanting to do or trying to do is to resteepen the curve if they go for the 25 basis point cut and signal they'll be evaluating the data going forward, is that enough to give confidence to traders like yourself that they are indeed going ahead of the inflation curve and will allow the treasury yield curve to resteepen again? >> i think if the fed comes out on 25 basis points, it will be tough for the market to take that in a positive light i would expect a flatter curve in that environment which would be negative for risky assets and strengthen the dollar. if they want to steepen the

curve. if they want the markets to remain buoyed by the fed, they need to stay on the front food >> where are you on duration you have the ten-year yield at 2.05, it is struggling to break through and do you think if the fed sound dovish we could break cleanly through the 2% >> you could see a quick move through 2 if they are dovish if they cut 50, that's a done deal i think probably more likely it will be a slow grind from here where the long duration position -- and we support a long duration position within our portfolio, the taili risks favor that position given that the fed doesn't have a justifiable reason other than to be on the dovish side of neutral

if they're going to be -- >> all right we'll pick up the conversation shortly in our second segment. we h what do you think is going to happen with the fed? let us know. tweet us at streetsignseurope@cnbc or tweet me directly. a big 24 hours coming up coming up on our show, bp reports better than expected second quarter net income. the ceo tells cnbc the energy giant is working to address environmental concerns >> i don't think it helps to demonize companies or groups it gets society polarized and it is important to move through big complex problems when you set that up. the reality is it will take all forms of energy to solve this.

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welcome back bp posted second quarter underlying replacement cost profit of 2$2.8 billion beating

expectations the measure of net income was unchanged from the previous year amid lower oil prices. bp expects third quarter reported production to be lower than the second quarter due to maintenance activities and the impact of a hurricane in the gulf of mexico the ceo, bob dudley, told cnbc that despite volatility the demand for oil is still there. >> it's not been so volatile in the last month or so you have the tensions with iran. we started the year at 50. lots of geopolitical issues, venezuela and iran we don't see destruction of demand happening trade tensions, people ask me all the time are trade tensions bringing down energy demand? a little bit in the first half but it's coming back we're planning the company on $55 a barrel these prices are just fine for bp >> interesting comments there from bob dudley.

before we pick up on system of his broader commentary about oil and the oil markets, i want to ask about bp results today the market is reacting quite well to it the stock is up 3% they reaffirmed their dividend yield of 6%, which is juicy in this environment where it's almost impossible to get yield what was your take away from the report card? >> i think it was a good strong set of results i think they beat analyst consensus strongly the cash flow, which i think the market is focused on given the strong yield, was also very, very promises. about $8 billion of cash flow generated this quarter so i think overall they're doing a pretty good job. they followed on from total last week, who had not as good a set of results so expectations were probably lower coming into bp results

i think also that in terms of the share price movement today helped by sterling >> indeed. actually before you came on, you and i were chatting off camera, you said oil companies are out of favor, which is interesting really because in light of these results, you have a company, a huge monolith company who is not only making the results but also generating the free cash flow and offering a 6% dividend yield. why for an investor is this not an attractive proposal then? >> i think the dividend yield does make the stock very attractive it's got a 6% yield. i think it's shown over the last few quarters and going forward that it can quite easily pay that dividend. it's got cash left over for acquisitions, for share buybacks so i don't think there's too much worry around bp being able

to pay that dividend i think the concerns of investors surround the oil industry in general, longer term demand for oil, whether it's right to invest in oil companies anymore. i think bob dudley earlier was talking about that and the role in the energy transition that's the worry about the -- the worry that investors have is whether they'll be allowed to invest in oil and gas companies going forward. >> indeed. you're seeing a good amount of pressure from companies pressing for more esg standards, sustainable investment bob dudley was saying they factors in a price of $55 into their forecast, lower than where it is now. would you say that based on fundamentals oil should be trading a little bit lower but the reason we're higher is due to geopolitical risk premium >> i think certainly at the moment if you look at the fundamentals,

the supply demand, demand is probably in general weaker than expected most commentators lowered their demand forecast as the years have gone on i see further downside in terms of demand. on the supply side of things, i think the market has been bolstered by the iran situation. but that's also what's kept the oil price high where it is at the moment just the go eopolitical tension going on in the middle east. overall it feels like the market is a little bit weak from a fundamental perspective. >> you talk about the iran situation and what's interesting about the iran situation is iran continues to export oil to china. that doesn't appear to be changing there doesn't seem to be any willingness on the u.s. side either to go down that or to incorporate the china/iran part

of the equation into the china/u.s. trade deal. do you think that's purely posturing on part of the u.s. because they do not want to see higher oil prices here even if it means iran will continue to ship oil to china? >> the u.s. is in a slightly trekky s tricky nation. it's clamping down on iran, venezuela, big oil producers the u.s. sanctions have had a big impact on both of those countries. if you had not seen those sanctions, you would probably see oil prices lower than where they are it's a bit of a balancing act. there's a lot of rhetoric that comes out of trump about oil prices being good for the country, but the u.s. is exporting a lot of oil as well the message for the u.s. consumers, he wants to get oil

prices down. the overall impact on the economy is not as great as it once was in the past i think in terms of the china issue, i think china do want to import more oil from iran. they are used to doing that. if they can get around some of the sanctions, they'll continue to do so >> definitely appears to be the case one thing i want to point out as well, the context of opec, they introduced the production cuts and we've have seen overcompliance on the saudi side you point out what's more important is what's in storage, not just what's produced in your view, is there still a lot of oil sitting on the sidelines here creating some downward pressure? >> yeah. i think in terms of when looking at the fundamentals of the market, it's important to look at where storage is, where the coffko cover is in terms of storage

like at data one of the providers i use is oil x. what they show is that you're well supplied at the moment. the market is coming down. so you are starting to see some draws in the market with saudi cutting production and other opec members but you're coming from a lhigh base demand is weak at the moment that's why i pointed at the fundamentals being overall pretty weak. >> i guess reading between the lines you see oil headed lower >> i think in the absence of any ramp up in the geopolitical tensions, i think oil prices will probably head lower >> we'll leave it there. the pound has tumbled to a 20-month low versus the dollar amid heightened concerns of a no-deal brexit michael gove earlier said the government is working on the

assumption that the scenario is the likeliest outcome. prime minister boris johnson denied the claim on a trip to scotland saying the government still wanted an agreement. however he wanted his predecessors withdrawal deal was finished >> i want us to engage, to hold out the hand, to go the extra mile, extra thousand miles what we wanted to do is to make it absolutely clear that the backstop is no good. it's dead. it's got to go the withdrawal agreement is dead it's got to go but there's scope to do a new deal >> the withdrawal deal is dead and we've seen some big movement in uk assets in the last 24 hours. most notably in the pound. that's the p ek chicture for st. 1.2150 overnight in asia we got to about 1.2130 this is the left the sterling

has been since february of 2017. big movement there to the do downside let's look at gilt today you are seeing a rally that's been supported. we have the bank of england meeting coming up on thursday. two-year gilts trading at 46 basis points here. ten-year is unchanged at 64 basis points, about 1 basis point firmer still low. less than 65 basis points for ten-year gilts our global bonds portfolio manager is still with us on the line andrew, your take on the uk developments the last 24 hours a lot of damage in the pound here >> yeah. it's probably to be expected to a certain extent certainly boris johnson's new cabinet and the messages we're receiving are towards no-deal brexit being the best case

whether that's delivered or not, that remains to be the case and remains to be seen it will be difficult parliament doesn't want to approve a no-deal brexit or allow one. markets tend to shoot first and ask questions later. >> we have the bank of england meeting on thursday. for whatever reason the bank have been guiding towards limited and gradual rate hikes it seems out of fashion now given to where other banks are guiding. do you feel they have to change their language and sound more dovish the market is pricing in interest rate cuts out of the bank of england. >> there's no question we're seeing a softening of the rhetoric from certain members over the last month or two, which means they will go towards a gradual buy sis. the credibility of the bank is already called into question i think it's a matter of time. we're expecting a neutral bias >> when you say the credibility

of the bank has been called into question, this is a serious issue, right you have the mpc of one of the most important central banks in the world, you say their credibility is being questioned, how do you trade that? is there any way as a pm, you know involved in the fixed income space, that you can take them at their word in the future >> i think, you know, the central banks, they are run predominantly by economists. they're prone to look at models. the u.s. is an interesting consolation of data. markets are still strong, wages are growing at a reasonable clip those tend to be the data points central bankers look at. it's not surprising they maintained a more optimistic tone as a market participant we look at the sentiment surveys and that's painting a darker picture for the uk economy for us it's just taking in all the fundamentals, being willing

to take a position that may be counter to the bank's current view but which we expect the bank will come around to providing those surveys and forward looking indicators are confirmed in the hard data >> you talk about the potential for weaker growth out of the uk, but also we had this plunge in the pound. the last time that happened there was a pass through on to inflation. we saw those cpi prints come in higher in subsequent months after the referendum do you think now is the time for investors to start thinking about buying >> the link market in the uk is interesting. there's a lot of structural demand from the pension funds at the long end at the shorter end, i think you can make that argument, but a lot is priced in you know, we already see -- we need to see the pound trading significantly weaker than it is now to justify the pricing we see in the break even market

i think linkers here look expensive. it's not a great investment. certainly something we don't see as attractive at these points. we have to watch the pound if it were to devalue towards the parity with the dollar, that would call into question that there will be a pass through, but it's the sort of inflation that central banks don't want to be pushing against, it's all price increases rather than wage-led it's bad inflation >> all right we'll leave it there thank you very much for taking the time to speak with us today. also coming up on "street signs," lufthansa's second quarter profits take a sharp dive following a turbulent year. more on that after the break for your heart... your joints... or your digestion... so why wouldn't you take something

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ceo bob dudley tells cnbc the company's dividend is healthy. we'll have a progressive dividend policy. a 6% yield is really healthy hard to find that in a bank. it's well underpinned here >> that's the key. >> very well underpinned the rest of europe edges lower as markets price in a 25 basis cut in the fed a president trump continues his attack on the central bank saying a small cut is not enough airlines slide as lufthansa delivers a sharp drop in second quarter net profit and warns the market will be challenging for the rest of the year. and huawei revenue jumps but the ceo says the blacklisting could affect the company it is a big earnings day in europe

let us take you to some price action the one index trading in the green is the ftse 100 yet again for the second session in a row. ftse up 1.8% in yesterday's session. that was the biggest gain since last august. today we are up 0.2% the weaker pound is aiding some of the export oriented companies. xetra dax down 1%. heavy trading this morning two names in particular we're focused on, lufthansa and bayer. we'll talk about bayer shortly with annette in germany and who can tell us more about the company results. cac 40 down 0.6% the italian index, heavy trading, deep in negative territory, down 1.5% the political situation is heating up there the banks are also coming under

pressure as well as interest rates continue to move lower switching to fx, yesterday all of the focus was on cable. now that currency pair is at 1.2150 we dropped a half percentage point in the asian session volumes have been high we moved four big figures in the last trading sessions. we seem to be holding in at 1.2150 euro is still trading at around 1.1140 that's the level we were at as we went into the ecb meeting last week. the dollar/yen, we have a bounce the bank of japan meeting overnight. no change in monetary policy, but they signaled a willingness to act if things get worse we have plenty to digest the fed meeting coming up

tomorrow where they're expecting to cut 25 basis points we're in the heart of earnings season some big names to watch out for including apple, procter & gamble, mastercard and pfizer. we also get personal income and core pce data as well. this is the picture for the three indices. all of them are called lower i want to bring you some developments from goldman sachs who raised their year-end target for the s&p 500 to 3,100 the investment bank lowered its earning forecast for the index predicting a 3% increase in 2019 which represents a 3% cut. goldman cited economic weakness and the margin outlook for the move a bit above where the s&p is now. bayer has backed its full-year outlook despite describing the target as increasingly ambitious

the german chemicals firm cited challenging conditions for its crops sciences unit which saw sales fall over 3% in the second quarter. the firm also revealed it's facing lawsuits from over 18,000 plaintiffs related to the round-up weed killer let's get out to annette the headline grabber is 18,000 lawsuits have been filed agai b how is the underlying business doing? >> that's a key question they're saying that clearly the key areas of business are also under pressure this because of low demand by u.s. farmers farmers are hit by bad weather and also the try cheese trachin tensions are not helping farmers sell their products. to be fair the biggest worry for

shareholders of bayer is the potential costs to settle that round-up case in the united states in the last three months, 5,000 new lawsuits came up that gives you a potential -- it kind of tells you how big the problem for bayer could be the key question is whether there is an out of court settlement sooner rather than later. the longer they wait, the more expensive this could get for bayer. we have no clue how big the settlement could be. we know bayer could afford to settle each of these cases individually we have seen a recent settlement at 86 million euros. if you multiply that with 18,400

people, this is not possible for a company as big as bayer is but the shares are down also today. they're down 40% on the concerns those legal problems for bayer are not going away easily and it will cost them a lot of money. >> it's just over a year since they acquired monsanto, and they've been met with lawsuit after lawsuit. the stock is down 40%. i want to ask you about another company. let's talk about lufthansa here. they posted a second quarter profit sharply lower than a year ago. the company warned that the european market will remain challenging until the end of 2019 fuel costs were higher compared to 2018, the airliner warned on overcapacity and price pressures. the german company confirmed its full-year outlook. lufthansa are echoing what we

heard from ryanair yesterday in that there's over capacity to the market and increasing competition as well as higher fuel costs doesn't look that pretty on the outlook here >> yes the key difference between ryanair and lufthansa is that the brands they compete with is euro rings, which is making a huge loss. they're dipping deeper into the red. the key question is how can lufthansa turn around its low-cast carrier business euro rings because the price is hitting them in the short area of flights, out of german and austria. that's where there's a lot of competition from ryanair, easyjet. everybody was hoping when air berlin was ceding and falling out of business two years ago that lufthansa could tap more

flights and steady their position in the market, make it more stable, this didn't happen. that's the negative outlook for lufthansa, the euro rings business they need to turn it around. it was reported that they are looking into a holding structure along the lines of aig this probably would make sense then you have more management expertise in the individual brands and that could have euro rings going forward. when you look at the data set about the earnings per share number, analysts had expected 1.40 euros, and we got 48 cents. that's the reason why the shares are down so much on a positive note, there will be no strike action and algoing

forward there shouldn't be a looming strike action for lufthansa. >> no industrial action for lufthansa, but a huge miss on those eps numbers. annette, thank you for breaking down two of the big movers on the xetra dax. on to the uk, where reckitt benckiser has reported worse than expected second quarter sales and cut its 2019 rev flew o revenue outlook. they blamed the drop on demand for infant formula in the u.s. and china. the company expects the second half of the year to return to normal growth. dialog semiconductor saw a stronger second quarter. dialog expects revenue between 360 million and 4$400 million

dialog up 1.3% and huawei says its first half revenue rose by more than 23% compared to the previous year as the chinese tech firm shrugged off a u.s. trade ban. the company added that smartphone shipment volume jumped by 24%, but huawei's chairman says u.s. restrictions will hit the company's full-year results. to talk about this more i have dexter tillian joining us. thanks for coming on i want to start off by reminding viewers that huawei is a private company. it's not a private company they don't have to release results. clearly they want to release results to show that the company is doing well. >> yes it's not surprising it's been doing well the last six months the trade war, if you want to call it that, the tech war started in may so the first 4 1/2 months were business as usual. th they did the necessary planning

to make sure there was the necessary components through the rest of the year the rest of the year might be difficult. it's still not clear what they can do in terms of u.s. supplies >> they said they signed 50 5g contracts to date. so they already have a decent pipeline >> the 5g market is good you have ericsson, nokia they signed between 40 and 50 contracts worldwide with different operators. it's a competition it's a market. they're doing well in the medium to long-term opportunities, there's a need to have components from the u.s because they spent $11 billion with u.s. suppliers last year, about 35%, 40% of the entire operation of expenses.

if they can't replace those components, they might have an issue. >> the issue with europe and the way it's approaching the huawei situation, it has not been unanimous. each country has been adopting their own method of dealing with it some countries are saying we're banning the use of huawei equipment. some people are saying the uk nonnational security equipment, we're happy to deal with how -- the question is how easy is it for any companies or countries not wanting to cooperate with huawei to offset that hole by going to other telecom providers and i'm talking about the ericsson's and nokias of the world. >> the european commission has said we'll have greater scrutiny but a full ban the french have done the same thing. the uk we think will go that way. we have a new prime minister who might go in a different direction. if you're using huawei for

previous generation of equipment or 4g, you need to get them for 4g and 5g as well. obviously that's a big expense if you're an operator. we're talking billions of dollars. that will take time. it's costly. it takes a lot of time it's difficult for operators which are already using huawei for some equipment to be able to fully replace it >> huawei know that as well. i want to talk about that smartphone volumes shipment volumes are up 24% in contrast to analyst expectations of apple numbers apple doesn't publish their smartphone numbers anymore but they have been dropping every quarter. the china market share is 38%. none of this bodes well for apple who are set to be relea releasing earnings later today

>> yes in terms of the huawei smartphone, you have the chi nee market where they don't need the u.s. components. you have the rest of the world in the rest of the world it might be more difficult if they can't use google and android even though they can replace and have an operating system, the issue is not so much the operating system but the systems where that will operate. we've seen microsoft and other companies trying to create that ecosystem. in terms of apple, they're not giving numbers for a reason. you need to look at expectations with apple the iphone has been the most successful consumer product of all time we're talking 1.5 billion in sails. 1 trillion in revenue. >> but the market is forward looking. >> if you look at apple in terms of they need to do the same thing, it's difficult to do so we're still talking about a company that will make 15 billion to 20 billion in the

next quarter they're doing fairly well but not as well as before. the forward looking, very difficult for them to find a new ifsh iphone replacement but still a company that will do well. >> regulation in the space has become topical, even though you look at the stock performances of big tech, all of them are up more than 20% year to date, brushing off the concern from the regulatory side of things. the department of justice has said they're going to start looking into practices of these big tech companies how serious of a threat is that? how much of the european model do you expect the u.s. to undertake when examining these big tech companies >> the europeans did it first. then the americans in the last six months are starting to it's one of the few things where you have bhave bipartisan consen the u.s. we've seen a change of view in

terms of what it should be, not looking purely at the price but consumer choice, whether these companies are monopolies, even though they can be free. what is interesting with the department of justice investigation, they have not given much detail to what they're looking at you can look at it in terms of they're trying to scare those companies, trying to change them a bit like they did with microsoft 20 years ago, or they'll regulate them strongly what the u.s. company can say, and i think will say, is that if you break us up or if you have a radical plan, then the chinese will take over but we're also seeing in europe that european regulators are looking at data as an issue. not looking too much in terms of finding companies or in terms of breaking them up, but not using data so in germany like in february and march the regulators said to

facebook, you can't use data from whatsapp and facebook and instagram and combine it you have to give the option to your user. i think that's a far bigger risk to facebook. >> it's a crackdown on the usage of data and privacy concerns rather than the company structure. all right. dexter, we'll leave it there thank you very much. interesting chat u.s. and chinese negotiators hold their first high level talks today since president trump and president xi agreed to a trade truce last month the vice premiere, liu he, will be there as well ongoing discussions and something the market will keep an eye on. also coming up on the show, beyond meat shares get burned after hours by surprise stock offerings. the details coming up next

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england's cricketers might be flying high after the world cup win against new zealand but they will be facing a different challenge as they take on australia in the first test of the ashes at baston on thursday. australia will look to force a first home series loss in 18 years. england will be hope their bowling attack of anderson and archer will swing the contest in their favor. austral and shares in beyond meat plunged 14% in extended trading after the company announced unexpectedly a 3.25 million stock offering three months after its ipo. most of the share also come from shareholders including the ceo and the cfo. this despite a quadrupling of net revenue in the second

quarter. the latest share sale is expected to help the company expand its manufacturing facilities so from meat to apple. it's the biggest week of earnings stateside with 152 s&p 500 companies and seven dow components set to report apple is front and center today after third quarter results are set to be released after wall street closes. the tech giant's numbers from china will be closely watched. and new data suggests apple shipped fewer smartphones to china the second quarter while huawei saw its market share jump 10 percentage points to 38%. overall smartphone shipments to the country fell 6%, the ninth quarterly decline in a row elizabeth joins us with more you and i were talking about the revenue competition, still about 50% of apple's revenue comes

from the smartphone market doesn't look positive if you look at it from the china angle. >> there's a couple of key things to watch today, specifically that china market and sales there. don't get the iphone revenue breakdown in china, we will see revenue in the region as a whole. we know the company warned on sales earlier this year. it will be important to watch how that's playing out in the quarter and the guidance for the following quarters a couple other things to watch, looking at the effective price cuts on iphone to see whether that spurs demand. we're at the end of replacement cycle for these phones services growth, we talked about that a lot as a key driver in apple. it's a higher margin business, apple wants to propel that growth because of slowing smartphone sales and we have to keep listening for regulatory concerns on the call in light of the news we've had. >> apple acquired a majority of intel's modem business for $1 billion. how much upside does that present? >> this is an important 5g play.

we know apple is developing 5g devices, but it's likely not going to be out until 2020 we heard research yesterday that they'll be releasing three 5g phones in 2020 this acquisition is a huge part of bringing that production into apple, making its own chips like huawei and samsung do >> it was lagging versus the competition, but this acquisition allows them to start ramping up innovation. we'll keep an eye on the apple earnings later thanks for breaking that down. u.s. futures, one day before that all-important fed meeting all the three indices are called in the red watch out for core pce numbers later today. that's it for our show "worldwide exchange" is coming up next.

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it is 5:00 a.m. at cnbc. it is jay powell versus the busiest week of earnings season. apple, under armour, mastercard, merck and more on tap today as the fed prepares for what could be the first rate cut in more than a decade. ground up. beyond meat sinking after its second quarter public report -- yeah, they reported earnings people didn't like them. the stock is down. we'll find out why what's in your wallet. how about a massive data beach this is one of the country'sbi