Transcripts For CNBC Squawk Alley 20240714

The same this year what were hoping for, as you go into 2020, is that perhaps 5g starts to be a catalyst for the shares, but youve got to get through the cycle first. What happened to the last half year we spent talking about how services and wearables will make up for whatever weakness there may be in the classic cycle . Yeah, and that hasnt been our call and the problem with the services is that its just too small as a percentage of the total. So services, as one of the examples, you would have to add, for the video service, about the equivalent of ten netflix to offset what the loss you know, the decline in revenue from iphone over the last year so it just gives you a sense of large numbers, because iphone is so large that puts a little context around it. Mike, i mean, apple is trading lower today, but so are the other f. A. A. N. G. Names, as well is this one of those scenarios where we need to be talking about more about the impact that f. A. A. N. G. Has on the Broader Market to some degree, yeah, morgan. Obviously, the more the story about the market is, lets just buy Big Companies with stable clothes and longterm growth profiles, because bond yields are low. In other words, if its just about that kind of quality and defensive trade, a stock like apple will do fine and thats been the story of the recovery the more its about what are the earnings catalysts, exactly whats the pace of growth from the next few quarters and it becomes a little bit more like, im not sure we can get past these valuations right now and i think for apple, and to a lesser degree, the rest of f. A. A. N. G. And the overall market, sentiment is kind of cautious right now you only have half of apple analysts recommending it at the moment you can see a lot of the Big Tech Companies going to this apple with the apple goldman card is the market taking that into account . Do you think theres so much focus on services, but perhaps finance services could be sort of an an attractive point for apple apple . And it is and i think thats an attractive business for them. But its a large long numbers problem and its a piece of the services business. So our view on apple is, if you fix iphone, get iphone backs to growth, then services becomes you know, kind of the cherry on top to kind of keep the stock moving but nothing works unless iphone works, because its just so large. So what meeds needs to happe5 and what additional features could you build on to a phone through 5g that would reignite enthusiasm its a good question. One of the questions generally is why 5g . Why am i going to want a 5g phone . And first i think theyre going to market it very strongly, because the whole industry kind of needs a catalyst right now. I think that will be part of it. Part of it will be coverage, just being able to get bandwidth in a sports stadium, Something Like that, that youll want one. But i think whats important, and one of the things that gave a glimmer of hope to us a month or two ago was the agreement they had the qualcomm. The agreement with qualcomm gave them the ability to use qualcomm modems the intel modem wasnt working, so they wouldnt have had a 5g phone. And the other thing is getting it to all price points thats one of the issues, the phone is a bit too expensive to draw product cycles. What do you make of the chatter around johnny ive leaving and whats left of the company . Can apple survive on services or does it need this next innovate product . I think the conversation has gone back and forth between, is his leaving a symptom of where apple is at right now . In other words, is the cutting edge design and the productcentric focus is not really where the company is, or was it just they werent utilizing him correctly and hes offer to other things . I think obviously apple can survive it, but the question is, can the market pay up for that services business, when it isnt really purely a distinct edge that apple has, except for the fact that it can harvest from this ecosystem the same kind of things that people are getting from theirs, it just happens to have a bigger one. Chris, the same question to you, your reaction to johnny ive making his departure last week and to play devils advocate on the heels of that wall street journal report last week and some of the other coverage weve seen, could it actually potentially be a positive catalyst for this company . Possibly. T johnny ive is legend in the industry, so its hard to replace him, but with that, apple needs another hit, right and there hasnt since i mean, the apple watch was a legitimate hit, but again, just small relative the iphone. But they really need a home run with this next iphone. And im sure whatevers been planned for 2020, johnny ive has certainly been involved in that. They certainly need that but whatever the new team is working on now is probably 21, 22 the argument against the idea that he just wasnt cutting it anymore. The Product Design wasnt cutting it is, who else is what has outflanked apple in terms of pure design samsung had this foldable phone that went away because it was a bust maybe thats where the technology is at, because theyre at a point where its as good as its going to be you could argue some of the chinese firms are arguing about that direct innovation so what do you think about whats going on in china that was going to be my answer to your question. Huawei has actually arguably been the most effective handset vendor over the last year or so. There are very good phones coming out right now and with all the trade stuff coming out, that adds another interesting element to this. Huawei does not have that chip piece, right . American chips are still seen as the gold standard. Do you think that now they can actually get there, now that theres sort of been a fire under them to start doing it themselves, if they have limited supply to u. S. Suppliers i think its very difficult for huawei to exist as they do now without access to u. S. Semiconductors Going Forward huawei actually, like apple, does make some of their own chips. The processor is done by them. They actually make their own modem, they dont use qualcomm for the modem. But they still need u. S. Semiconductors there are certain pieces that you still cant get from anywhere but a couple of u. S. Manufacturers. One last thing. I know its all retrospect, but did they pivot to service too late did they let this basket of phone reliance go on too long . I dont know. If you went back to last time apple had, you know, a weak product cycle and it you know, this is going back five years ago, thats one of the things they spoke about, too, was about a pivot to services. And that pivot was successful. Interestingly, one of the pieces of services that has grown the most according to our analysis is actually apple care and the ability to get another 100 out of us on top of the phone and that goes into the services bucket, which is good but actually, thats one of the issues Going Forward, that apple care now, because theyve raised the price on that, theyre probably limited in their ability to raise price on that and youre only going to sell the 100 coverage if youre selling them a 1,000 phone. So what youve had over the last couple of years is apple care pricing has gone up pretty substantially and theyve seen the benefit from that, but again, now that phone sales are starting to decline year on year, thats going into service as well. Chris, myselike, thanks, guy. Fascinating, well watch that and see how much resilience this rosenblatt call has. Lets turn to wework the Company Looking at a plan to sell its debt according to a source familiar with the deal. The journal reported over the weekend, it could be as much as 3 to 4 billion worth of debt to fund its growth ahead of an ipo. This is about wework trying to shore up some confidence here. It has had a rough last six tight months it was supposed to get billions of dollars more from softbank. That investment was scaled down. We also saw recently in the last few months wheremutual funds mag down what softbank had valued a 47 billion valuation. Its very interesting. The source i spoke to called this a bridge to profitability and it really echoed what we heard from the lyft and uber ii ipos so it seems like wework wants to get closer before they go into that ipo the key question here is, does raising more debt shore up Investor Confidence . Especially for a company that has not weathered, like many startups weve seen, that has not weathered an economic downturn absolutely. And i think our ipo reporter, leslie picker, was chatting about this too and mentioned, make it more attractive in ipo, if theyre going to have more debt on the books. But yo but, you know, what ive heard is theyre just changing their capital structure. Theyre a hugely capital intensive business they have some of the most expensive property around the world. So it will be an interesting one. Well see when they get there, to that actual ipo im hearing the end of this year, perhaps the beginning of next year, but i think there are still a lot of unknowns. I wonder if any Debt Offering or any raising of debt allows them to move that date up or not . Right and remember, they did raise debt last year, 702 million obviously, that is a much smaller amount but weve seen their financials. And the big question, is this more of an uber or lyft . Yes, probably, because it had 1. 9 billion in losses last year or is it more of these the ipo market has done very well save for those two names i think wework wants to differentiate itselvf before it tops the public markets. We certainly will see coming up, what bill gaetz sa said this weekend about steve jobs and why wizardry was involved and later, chinas play to unseat Silicon Valley. Hannah nada joins us right here at post nine next. Were back after a quick break dows down 125 i want it that way. I cant believe it. That karl brought his karaoke machine . Aint nothing but a heartache. No, i cant believe how easy it was to save hundreds of dollars on my Car Insurance with geico. I never wanna hear you say. No, kevin. No, kevin believe it geico could save you fifteen percent or more on Car Insurance. What do you look for i want free access to research. Yep, td ameritrades got that. Free access to every platform. Yeah, that too. I dont want any trade minimums. Yeah, i totally agree, they dont have any of those. I want to know what im paying upfront. Yes, absolutely. Do you just say yes to everything . Hm. Well i say no to kale. Mm. Yeah, they say if you blanch it its better, but that seems like a lot of work. No hidden fees. No platform fees. No trade minimums. And yes, its all at one low price. Td ameritrade. Welcome back to squawk alley. Stocks selling off this morning with the dow down triple digits. Investors still uncertain over china and trade. The president spoke an that issue yesterday. Take a listen. Reporter right now chinas not very happy, because thousands of companies are leaving china and theyre going to other places, including the United States because they dont want to pay tariffs. And the other thing is china is paying the tariffs they are devaluing their currency and theyre pumping money in thats paying for the tariffs. Our people have not been paying for the tariffs. Joining us now to discuss, ben harbor, managing partner at msa capital and haney nada, both here at post nine. Haney, ill start with you, because the last time you were on squawk alley back at the end of may, one of the things you mentioned is that you see the u. S. china trade fatalks moe of an ideological issue rather than an economic issue do you still see that as the case and if its ideological, how crucial is tech to that . I think tech is probably the center of where the ideologies clash. Think about china as the young silverback going after the older, dominant silverback theres going to be a lot of jostling and wars happening between u. S. And china i mean, not real wars, but like wars around trade, wars around policy, wars around like how you think about democracy and where democracy fits you know, the things the stuff thats happening in hong kong, the protests that are happening in hong kong if youre in china, youre not hearing anything about that. That is completely blacked out that is the biggest fear of the Chinese Government right now and they dont want to import that kind of democracy or political power to the people in china. I definitely want to get into more on that in just a second. But ben, first are we in a cold war a tech cold war with china im worried that whats been done is irreparable. Why i think that using tariffs or using these recent bans, adding huawei to the entities list, cte a year ago, as bargaining chips in a trade war have now opened chinese eyes to the uncertainties that they face in working with u. S. Suppliers and the unpredictability of this government and how it regulates technology and as a result, theres a deep urgency and speed to develop selfsufficiency, expand it to new, emerging technology markets, and wean themselves off dependence on the United States. But same question i just asked chris there, right do they i think theres always been that drive, maybe its a little more urgent now that theres sort of access to american suppliers has been threatened how do they actually get there qualcomm, intel, theyre still the gold standard. Is huawei really going to be able to have the capacity to develop chips on that level . Its a great question right now, actually people like qualcomm and silex, theyre cutting their investment into r d right now, reducing the number of engineers as theyre dependent on stock price and appealing to public markets. Whereas on the chinese side, theres massive amounts of talent and capital being down at this theres now demand locally whether there wasnt before, because they could always fall back on u. S. Supply. So at the end of the day, we think its five to ten years out from being on par with the u. S. , but that drive now is on overdrive. As i recall, your stance has been that we sort of need to put them in their place to some degree, yem yous . Im a hardliner on china in that they need to open up their economy for our tech did you see any of that out of g20 . Back to more soybeans soybeans wont win elections, but longterm prospects around chips and semiconductors and technology, thats not going to win the election and i cant help but think that when you do see things like these celebrated, ratcheting up protests in hong kong, that thats only going to hinder any kind of argument for tech to come in there more dominantly. Exactly thats going to be the stalemate. Ben absolutely correct they now have the capital and resources to invest in infrastructure, technology, and science, and develop technology that we dont have today do it on their own, not copy our blueprints, right . On chips, with on airplanes, on Mobility Companies have done this throughout the century they copy one another, build on top of one anothers technology. Thats been lahappening. You look at the highspeed train issues and the Amd Technology transfer now china has the capital and means to do it and they probably are doing it within the gray lines, but theyre still doing it well. Ben, are you investing in china right now . Absolutely. I think in the longterm, this is all to chinas benefit. I think the next couple of years are going to be difficult as companies faced uncertainty. But in the lerongterm, as nati industries are developed, thats where the growth is going to be. And chinas Building Product for the next billion consumers better than i think u. S. Businesses today when we look at trade talks and the china market right now, five years from now, do you think that google and facebook and some of the companies that dont have access right now will have access then is that what were working towards . The Trump Administration is working towards . I doubt that theyll ever get access to chinese consumers. Unless they change their policies unless they change their policies and change their terms of use for the users they have to give the Chinese Government the on off switch do google and facebook know this oh, they definitely know this i dont think its at the top of the agenda list, though, for the Trump Administration, either i think this is a trade war about whos buying one and how we kind of balance out foreign demand and things like that. Thanks for joining us today getting a market flash this morning on symantec. For that, lets turn to dom chu. I want to call your attention to whats happening with those shares they are up 3 the move is following a bloomberg report that the big chip maker has secured financing to acquire that firm in an allcash deal. Broadcom sees cost savings of around 1. 5 billion a year. Sources told cnbc last week that those discussions between the companies were underway. Broadcom for its part, guys, is down more than 2. 5 so far today. Well watch both of those as the deal chatter intensifies between those two companies. Back over to you guys. We certainly will thanks for bringing that to us taking a look at the major indices, all breaking multiday win streaks friday, again, lower this morning here are the names dragging the dow lower in todays session you see apple leading down nearly 4. 5 on the back of that rosenblatt securities downgrade. Youve also got pfizer and boeing as some of the biggest laggards in that index a lot more squawk alley still ahead. Dont go anywhere. Welcome back to squawk alley. European markets set to close momentarily. Seema mody joins us now with a breakdown of todays action. And stocks in europe driven lower by european banks following deutsch banks announcement that it will pull out of the Global Equities business and cut 18,000 jobs by 2022 the bank says its aiming to reduce adjusted cost to around 19 billion over the next several years. Shares are down over 5 . In greece, a sell on the news response to mitsotakis getting elected. Shares in greece have increased on hopes that he would win now the focus will be on the budget that he puts together over the course of the next month. Finally, emerging Market Investors waking up to a tumbling lira after president erdogan unexpectedly fired the Central Banks governor for not lowering interest rates. The decision comes weeks before turkeys next Monetary Policy meeting and is yet another sign of erdogans intention to undermine Central Banks. The timing is notable. It comes as turkey is in the process of receiving a major Russian Defense system that could trigger a review by the National Security council and u. S. Treasury over possible sanctions. All of this uncertainty weighing on the currency. Its now down about 25 against the dollar over the past year. Guys, sending it back to you incredible. Thanks, seema. Lets get to sue herrera and get a news update as well. Hi, sue. Hello, carl hello, everyone. Heres whats happening at this hour the state department launching an Advisory Commission on human rights secretary of state mike pompeo making the formal announcement this morning in washington the commission is composed of human rights experts, philosophers and activists, republicans, democrats, and independents that very backgrounds and beliefs inl provide me with the values in a state tv interview, a spokesman for Irans Nuclear agency hinting that that country might consider going to 20 uranium enrichment 20 is a short technical step away from reaching weapons grade levels of 90 . He also suggested using new or more centrifuges which are limited by the deal. And spanish Officials Say four people were injured in the second day of the running of the bulls. Eight bull runs are held in p p pamplona every year. Why eight, i dont know. One would seem to be enough. But thats the news update this hour, guys ill send it back downtown to you. Morgan sue herrera, thank you. Skbltill to come, more on todays move in apple. Rosenblatt downgrading the stock. Our next guest says, well get the news apples at 235 were going to ask him why hes so bullish next. Stay with us thats what happens in golf nothiand in life. Ily. Im very fortunate i can lean on people, and that for me is what teamwork is all about. You cant do everything yourself. You need someone to guide you and help you make those tough decisions, thats Morgan Stanley. Theyre industry leaders, but the most important thing is they want to do it the right way. Im really excited to be part of the Morgan Stanley team. Im justin rose. We are Morgan Stanley. Or trips to mars. 4. 95. Delivery drones or the latest phones. 4. 95. No matter what you trade, at fidelity its just 4. 95 per online u. S. Equity trade. Welcome back to squawk alley. Turning to apple shares still in the red this morning, but our next guest remains establish on the stock, saying that worries over china numbers are just noise thats Wedbush Securities analyst as well as tom fort who also has a buy on the stock. Gentlemen, its nice to see you in person this morning dan, youve been conducting checks, your team has, component makers on the ground in asia so looking at the note this morning, which shares are reacting from rosenblatt securities, why do you think that fears may be overblown . In terms of all of our checks, we see a slight tickup in terms of units, 180 million for the year and in terms of china, weapon continue to have 60 to 70 million iphones in the next 12 to 18 months for us, even though theres a lot of noise, i think the china overhang is about a 20 overhang on the stock and were not seeing it in terms of fundamentally, in terms of any kind of cracks in the armor. Tom, looking at the broader picture in the trajectory that weve seen, iphones go in, surpassed earlier this year by huawei, to become the number three smartphone provider, where is this all going . And we talked about this earlier, can investors rely on services to keep growth going . The answer on services is definitely yes, but the way i would think about the iphone is, really, i think theres going to be a lot of pentup demand for 2020, because the 2020 iphone should have 5g so i think expectations this year should be pretty modest and then on the services front, the big opportunity for apple is to diversify their revenue away from the 60 that their generating in smartphones today, and youre seeing that in Financial Services with payments, advertising, while protecting consumer privacy, health care, proprietary content with appletv plus. So im less concerned about how the iphone is going to do this year as they diversify away from the iphone but next year is the bigger story on 5g. Is apple behind the ball on 5g, a. And b, do consumers care that much about having a 5g phone they will care, because it is materially faster, the speed but for 2019, the expectations in general for 5g devices is pretty modest. So i definitely think its going to be a big news fornext year and does make a difference in material and speed to consumer rosenblatt in their call said its not a short in their view because of, in part, the cash balance in buybacks. Has the conversation changed much weve talked about this for years, what are they going to do with the cash. What could they do with their cash are people talking about it differently than they were i think definitely talking about it more significantly than they were. Because fundamentally, they definitely need to pivot on the services side. The question is, do they finally especially with ivy in the background, do they make an acquisition on the content side, which we continue to believe is something that could be on the horizon. I think thats the question. Look at the buybacks, thats been something where the investor is getting long in the tooth. They want to see more m a and more significant investment of capital. I definitely agree with dan on that point. I think as they diversify away from the iphone, it may be an opportunity for them to leverage their Balance Sheet to make some smart acquisitions to do so. In content or in another area in content, Financial Services i think theres a lot of different areas, a lot of opportunities for apple there. So car is still a little bit fanciful in your view . Yes, car is fanciful. That continues to be a fantasy i think on the car side. I think the nail in the coffin in terms of project titan, even though there continues to be some talk there, for all its all about content services, the streaming, and an iphone montage. If they are making acquisitions tied to autos and tied to the car and theyve been, you know, making hires, et cetera, based on the reports weve seen, why is it fanciful why is it a fantasy, the car nunu initiative i think there were a number of years ago where they maybe looked at that strategy. But fundamentally, weve in terms of m a candidates. Apple has also made a big bet on privacy theyre sort of differentiating themselves from the other Big Tech Companies does that actually affect their bottom line . What does that mean for the company at large, especially when you see some of the other big tech names and the f. A. A. N. G. S . Its actually a big opportunity. And apple could go to the consumer and say, like theyre doing with news plus, pay us 9. 99 a month and well give you either an adfree content experience or a true opt in advertising experience we wont sell your data, your data not how youre paying for the service. So i think its a huge opportunity for apple. When do we start to see that show up in the bottom line i think its about the streaming service, for them to launch in terms of bundle thats where right now the terminal has been when they formally launch the tv service and what the bundle strategy we continue to think, that serve as 100 Million Consumers in the next three years in terms of what they can get. Youre both pretty bullish on apple. What do you see as the potential risks for the company . Antitrust or Something Else its definitely china if you look at the government basically easing restrictions on huawei is good for apple to the extent that its a thawing of the relationshipi between china and the u. S. 20 of their sales, thats the big risk for apple is the thawing of trade talks and whatever huawei is going through, is that better for samsung than apple its the number one smartphone maker and theyve got things like 5g and chips that apple doesnt. I think its most beneficial to apple and we agree wholeheartedly there, in terms of the trade talks. It continues to be a china story for apple. Thats why we think a 20 to 25 overhang on the china trade situation on apple but it does come down to the 20 thats coming from the demand side, 60 to 70 million iphones in china guys, with thanks so much for being with us this morning dan ives and tom fort. Well, a weak Summer Season for the box office tempered by spidermans debut this weekend. Julia boorstin has more from l. A. Julia . Reporter hey, morgan well, Marvel Studios spiderman released by sony was another superhero setting, another box office record. The film bringing in 185 million in its first six days in north america. Thats second only to the Independence Day record set by the transformers sequel back in 2011 and globally, the film has brought in over 580 million in ten days this is a win for sony and marvel parent disney, putting the film on track to profit from the reported 160 million budget but even with this win, the yeartodate box office is still down over 8 from the same period a year earlier. A number of sequels including men in black and xmen dark phoenix have fallen short about expectations, sparking concerns about franchise fatigue. Yet, superheros continue to rule with the biggest film of the year, disneys avengers end game closing in on avatar for the highest grossing film of all time avatars number is 2. 7 billion worldwide. This comes after last weekend marvel rereleased avengers end game with a deleted scene to draw moviegoers back again. With spidermans massive showing, there is hope for the box office to close its gap with last year, with the lion king live action remake coming out next week and a fast furious spin off in the beginning of august, but its superheros that are fighting offfranchise fatigue. And theres only one more comic book movie Warner Brothers the joker due out around thanksgiving. Well have to see how all of these other franchise films fare guys, back over to you julia, morgan and i were just laughing because it doesnt feel like theres any more movies anymore. But my husband cannot resist a marvel or a superhero movie. Seriously, whats new this year . Is anything going to make a dent at the box office . Well, theres a new brad pitt movie thats coming out that i think its called once upon a time in hollywood, thats expected to be really big, a summer movie, but could get awards attention and i think theres a lot of excitement about the star wars movie coming out in december its been a while since weve had a really big Star Wars Film and i think theres a lot of anticipation there. And well just have to see about these other franchise films like lion king. Theres been so much anticipation for this movie. The digital animation is so seems so realistic, that well have to see if it draws a broader audience than Something Like dumbo, which was also a live action remake that didnt fare so well earlier this year we want back to star wars and lion king, the movie i want to see is the beatles one yesterday. Yeah, at least a new concept there, at least. Later on in the show, dont miss former mlb commissioner bud selig later this afternoon on the exchange. The Santelli Exchange is up next dont go anywhere. When you consider that more than half of american households are invested through mutual funds or Pension Funds in this market, i dont want the fed to pull the rug out from under them by taking a position that is not conducive to further pvingrodi the liquidity for this growing economy. Im scott wapner heres a look at whats coming up on the halftime report. Today is a day to dramatically reduce your exposure to stocks as one wall street firm suggests today. Well debate where your money will work best in the months ahead. Plus, were trading the downgrade parade today apple, verizon, american airlines, the regional banks and more all getting the axe well find out whether you should get out of those stocks as well. Pepsi, best buy, and delta all slated to report and well see you at noon on the half. Carl, a little less than 20 away well see you then scott, thanks in the meantime, lets get over to the cme and get the Santelli Exchange. Hey, rick. Good morning, carl. You know, right before we came to this portion of the show, you heard dr. Judy shelton i interviewed her on friday. And she brought up to very interesting points the markets fully do expect an easy, to matter what part of the marketplace you look at, whether its fed fund futures, the yield curve, the stock market, investors, it seems pretty much everyone is in one voice, they expect an ease dr. Judy shelton pointed out should we not get an ease, it would be like pulling the rug out from underneath the markets. Lets start with that. Because i do you saunderstand t. And it isnt easy being a fed official or a central banker back before we had several large crisisinvolved policy chapters, it was all about nudging lets look at the pillars of our fed. Price stability and maximum deployment well, it has become so much more the notion of pulling out the rug makes sense insofar as how many of you out there, as investors, have bought stocks or held on to them longer than maybe you would have, given the global weakness that seems to be spreading if it wasnt for the notion that theres been an Advertising Campaign that the fed is going to ease im not sure i completely buy into that, but there certainly have been some phrases, some changes in the statement, some questions and answers where it seems as though an insurance ease is kind of out there. The problem is, why should the fed or any central bank be put in the role of the psychologist for the stock market you know, before the last crisis, especially, when the central bank looked up at the boards and tried to divine what investors were looking at, investors moved many of the markets based on the fundamentals now its really all about the Central Banks. And when i look overseas, sigh plenty of liquidity, plenty of stimulus, plenty of negative rates. Can you get anymore stimulative than that . But yet i dont see that the issues that these policies are meant to address are going away. There is no substitute for real organic growth or structural changes that lead to better organic growth i thought one thing that dr. Judy shelton hit on early was so important, that good policies we the government and good policies throughout the economy yield good economic results. Well, im not sure that a liquidity jolt is exactly what the economy needs from a fundamental aspect if its gotten to the point that needs and wants of the stock market overwhelm the real notion of what Central Banks are supposed to do with regard to the fundamentals of the economy, then were really not trading in the stock market anymore were trading a government utility of investment. Morgan, back to you. Rick santelli, thank you. The nfls 100th season is only a few weeks away. Can you believe it but with a major Union Negotiation hanging in the balance, eric chemi is back with hq with the details of that story. Morgan, thats right. Nfl owners are reportedly planning to ramp up talks in hopes of reaching a new collective bargaining agreement. The current agreement lasts two more seasons, but there are several reasons to get a deal done as soon as possible for one, this Upcoming Season like you mentioned is the nfls 100th season and the following year will be the 100th Anniversary Season its two years of positive Marketing Momentum that the league doesnt want clouded with ongoing labor drama. Getting a deal sooner would give the League Strength in the next round of negotiating its multibillion television contracts. Think about cbs, disney, fox, nbc with a lot players with money to spend there are a lot of sensitive issues at stake. First, its the simple split of money between players and owners right now the players get about 48 of growthshared revenue but there are a lot of ways to split that money, including deductions that owners can take off the top line before the revenues are split, as opposed to deducting it from the bottom line after the revenues are split. That being said, theres certainly no guarantee of a deal getting done soon. Many coaches contracts now have clauses protecting them in case of a work stoppage and the head of the Players Union recently sent out a note to all players, advising them to save as much money as possible to get them through an entire year of no work. Back to you, morgan. Wow, one to watch eric chemi, thank you. When we return, Silicon Valley legend john sebold joins us the era of mass extwinincten thats how john sebold is describing this. Its in his new book, digital transformati transformation. Goes into stores tomorrow. Which companies are most vulnerable to this new wave of destruction and which are posed for big opportunities. Tom sebold, founder of sebold systems sold to oracle in 06 is with us here at post nine. Good morning, carl. Congratulations on the book thank you youre putting together some big thoughts, right . How do you simplify it for the reader well, Digital Transformation is kind of on the forefront of the agendas of boards and ceos and what seeit seems to be aboui that were going through a mass extinction of that toys r us, westinghouse,years. Toys r us, westinghouse, kodak. Theyre gone you know, ge is off the list now. In their place, we have companies that you talk about every day with new dna that are all about Cloud Computing, ai, like amazon going after retail we have, what, 8,000 retail outlets closed in the United States last year or airbnb, you know no buildings, no facilities. And, you know, theyre dominating the Hospitality Industry with the market cap greater than the sum of all Hospitality Companies in the world. Again, its all about ai, Cloud Computing. Tesla, ai. Iot and Cloud Computing on wheels disrupting the Auto Industry so we have a new generation of technology and i think the ceos of cat and 3m and boeing and Royal Dutch Shell are adopting this technology so that they can survive and thrive in the new economy. You mentioned a number of industrial heavyweights there and certainly i have seen this in the fact that the industrial internet of things and many of the companies are essentially becoming the other tech companies. I would argue that honeywell probably belongs in the bucket too. When you look across Corporate America who is adopting this technology and maybe getting it right and who isnt . Jpmorgan, bank of America International services in health care and in manufacturing, 3m. Caterpillar, shell baker hughes is huge in digtization of oil and gas worldwide. So you mentioned jpmorgan, what about Goldman Sachs . David solomon has said that it isnt valued like a tech company but maybe it should be. I have to talk with david about this, but you cant count goldman out. They understand technology i would be amazed if theyre not at the leading edge of this trend. Another company, a great ship, which is ibm they have been trying to complete this transformation for many, many years first it was ai and watson, now theyre shifting to the hybrid cloud not kind of, but theyre shifting to the hybrid cloud. Are they doing it right . Are they able to complete this transformation candidly, i think theres reason to be concerned about ibm. Ibm is a Great National treasure they missed the cloud. Im not sure how you miss the cloud but they missed it, okay they seemed to have missed ai advertising aside where they do a lot of good advertising around watson but there doesnt seem to be much there i think theres reason to be concerned about ibm and, you know, im hopeful they figure it out because if i were if ibm were to disappear from the planet it would be a sad day. They made the huge acquisition of red hot, is that too little, too late well, its certainly a lot of money right now. Whether that, you know, tends turns out to be the salvation for ibm i think ask is left to speculation. You mentioned ge. Which for a number of years under immelt talked about the industrial internet, right being able to read metrics from the machine through digital means. How do we know whether companies are doing this for real or Just Marketing and it ge i believe spent 7 billion on this ge digital effort and they have i think not one production customer in the world. So it was something of a disaster you know, this idea that, you know, Large Industrial corporations can develop these technologies themselves doesnt seem to be working out the fact that we are seeing this mass adoption of technology, this sort of reordering of the corporate world in the midst of all this technology when you talk about Something Like ai or facial recognition for example was in the news again this weekend, some of the new technologies, are there enough rules in the road in place or is pandoras box being opened in terms of the unintended consequences . There are enough rules in place particularly as it relates to facial recognition. This is a technology thats easily gamed and so i think, you know, thats a very Scary Technology that we need to keep our eye on. I think the rules as it relates to privacy and security and social media i mean whats going on there is truly scary. And governments need to regulate before we have enormous problems given the convergence of all the issues youre talking about, iot and ai wouldnt it have been more fun to start siebel than when you you did it was the professional experience of a lifetime it was a professional experience of a lifetime. It worked out for you. We built one of the worlds Great Companies but c 3, is even greater. We can take advantage of it for great social and economic benefit. The problems are extraordinarily difficult and it is truly fun. Quickly, how does this play out between the u. S. And china given that technology is a key part of the talks. I think were at war with china as it relates to ai. Full game on warfare i think that this is not a war well want to lose you know, it was Vladimir Putin says whoever wins the battle on ai dominates the world. I think the chinese are taking a traditional authoritarian topdown totalitarian approach to it and the United States is very messy, free market, people doing things in garages. Well see which system works lets hope we dont lose. Tom, you always give it to us straight congratulations again on the book Digital Transformation, survive and thrive in the a erof mass extinction out tomorrow were back in less than three minutes. We were right in front of him. Dead center. Front row. cause actually, zarmina, you touched shawn mendes. Yeah, i touched him she touched shawn mendes he like held my hand for a while. And then we got to meet him after, which was like. Another surprise. Yeah. We love verizon even more now. Ill never forget that day. Ever. vo the network more people rely on, gives you more. Like thousands of tickets to concerts, festivals and private shows. And big savings on our best phones when you switch. Thats verizon. I felt completely helpless. Trashed online. 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Com tv and never go to the post office again well, steve, thats a good example of dont do this at home that is its really easy to imitate the bad parts of steve, of at times being a [ bleep ] and it is i have yet to meet any person who in terms of picking talent, hyper motivating that talent and having a sense of design of oh, this is good, this is not good so he brought some incredibly positive things along with that toughness. I always said that i was like a minor wizard because he would be casting spells and i would see people mesmerized, but because the spells did not work on me i could not cast the spells. But i see them and i would say, hey, wait, dont dont. Youre going to work even more than i would ask you to. This is no, this is crazy. A master at casting spells, that was bill gates on steve jobs over the weekend. I dont think i have ever seen gates as animated in the 30 second bite. Some microsoft billionaires have a thing for basketball like paul allen but gates has a thing for magic. For harry potter maybe . But i love the back handed compliments, sort of flattering him and at the same time calling him a bleep. Even as we say goodbye a fascinating interview. A big afternoon ahead. Lets get to the judge in the half. Carl thanks im scott wapner why one wall street firm said its cutting the exposure to equities to the lowest level in five years so is it time for you to reassess where you stand on stocks its 12 00 noon, this is the halftime report. Morgan stanley is downgrading Global Equities as powell gets tough for questions from congress plus, a day of several big downgrades, apple, verizon and the regional banks and