Good wednesday morning, welcome to squawk alley, im Carl Quintanilla and morgan brennan. Retail is a big story this morning. Well start with tech stocks on the rise including facebook and alphabet two tech names in the top five of goldmans most important positions for hedge funds. Our next guest notes that to see acceleration in online ad growth in facebook and alphabet is no surprise to see it in snap, twitter, and pinterest is notable joining us this morning on where goldman sees buy opportunities is goldmans lead analyst, keith terry. Good to see you. Thanks for having me. One dynamic has been reacceleration in revenue revenue in some of these names i think it is the most important thing. To see all five of the major online ad platforms show accelerating Revenue Growth tells you something bigger is going on this is coming amid all of this uncertainty, right weve had a lot of concerns about brand safety, antitrust, lots of reasons for advertisers to pull back on that front, and to see this actually accelerate and go the other way i think tells you something about the power of those platforms. You cover amazon, you cover ebay looking at ecommerce, target, Digital Sales were up 34 . Walmart, u. S. Ecommerce was up 37 . Sh shopify revenue up 48 are we going to rook balook bact this period as a significant sea change this is another step on the path weve seen these things where you get ebbs and flow. Amazons retail growth accelerated in the u. S. In the Second Quarter driven a lot by that oneday shipping that they put into place so i dont know if i would say sea change anymore so than the last ten years have been a big part of that change. Going back to Online Advertising growth in the Second Quarter and the fact that it wasnt just sort of the entrenched giants facebook and alphabet that saw the growth and saw the growth accelerate as quickly as you pointed out, how does that fit into these broader antitrust regulatory scrutiny discussions that were seeing right now in general when you look at these numbers, do you see there is actually more competition out there than maybe is being discussed i think thats exactly what the big tech platforms want people to see in this, right they want to see that there are companies out there that are growing successful in two out of the three of those cases actually growing faster than facebook and google are growing. Every one of those companies this you talked about on the ecommerce side of things growing faster than amazon is, so for them to be able to turn to d. C. And say, look, how can we be a monopoly if walmarts four times bigger and growing four times faster than we are in ecommerce whether or not thats enough to carry weight with d. C. Is a whole other question. Comments out of delrahim, obviously the ftc, these state ags, whats the most concerning thing youve heard regarding policy risk . I think its all of that in aggregate. Its the fact youre hearing this from so many different people if you had a single point of presence in terms of policy here, thats something that these companies could deal with. If theyre dealing with 50 ajs, if theyre dealing with dozens of different federal agencies that are looking at this and then multiply that for every single country out there, you look at whats going on in france in terms of the digital taxes theyre dealing with, thats a nightmare scenario for these Companies Just in terms of being able to manage this. I think thats the real risk its not that any one of these is necessarily going to be a big problem. Its what it all means together. Its not enough to get you to change your ratings on any of these. At the end of the day, it hasnt done anything to change our behavior, right . We the consumers are all around us, were still using these platforms. Were still engaged with them. Were still using facebook were still using amazon until you change the underlying consumer behavior, thats what matters to us. What matters to these companies as far as their financials go. Lets talk about content a little bit you cover netflix. Which matters more to netflix in the streaming game as we get towards the end of the year, apple tv plus or disney plus i think certainly disney plus is going to matter more just because its the bigger of the two platforms. Youve got a lot more content there in terms of what netflix is going to have to deal with. But i think actually what matters more to all three of those is the other 80 plus of consumers time thats still being spent on cable, on broadcast, on all of the video consumption thats happening outside of these ecosystems. Its not about netflix versus disney its about netflix, disney, amazon prime, cbs, all access versus the ad supported ecosystem that consumers are increasingly figuring out 22 minutes an hour worth of advertisements probably really not a great tradeoff for me, not when i can go out and spend 7. 99 or 8. 99 to odometpt out of that you did a deep dive on ipo activity and how this recent round have fared versus historical norms what is your take away from that, how does it apply to some of the big tech unicorns that we havent even seen come public yet . What weve seen so far, and youve seen this in the most recent deals done at that scale with uber and lifyft is a lot o that Value Creation is happening outside the Public Markets, no surprise we all know this weve talked about it over the last few years increasingly thats showing up in the performance of these stocks after they go public. You look at the performance of uber and lyft just as examples, but you know, really there are lots of others out there it just means investors have to be more selective. Bidding up everything in the private market and then expecting that theyre still outside in the Public Market as well, its certainly going to work for some of these companies that have that kind of growth path in front of hthem you cant just take it on blind faith. Reports that alibaba is going to delay this hong kong listing. Try again in october how much unrest in hong kong specifically or general global anxiety is going to affect the way they raise capital well, you know, i think you look at whats going on in china broadly and the Venture Capital market is sort of a good gauge of the daytoday of this. We saw Venture Capital funding down 7 yearoveryear in q2 its a flag on the kind of uncertainty thats being created at Different Levels thats impacting those kind of daytoday decisions like alibaba. Michael moore at sequoia had this column in the ft saying the ipo is dead arguing that you can look atspotify, others who hav gone a different route and that its actually better does it matter to the investor, the public investor who ends up with the shares from the other end . I think, againings its going to come down to sort of the individual company some of these companies have to raise money as part of a Public Offering slack, spotify, obviously werent in a position where they needed to do that. We were involved in the spotify direct listing and you look at how that stock has performed, and its hard to argue that that was a bad decision for them. I dont think anybody would, and so i think increasingly youll see companies that have the right set of characteristics to take that path, take that path, and at the end of the day, you know, its an individual security decision for Public Market investors who have to decide whether or not the valuation versus the growth profile, profitability profile makes sense. The mechanism behind it doesnt really mean a lot. One of the other things you point out is that vc trends, youre seeing shifts away from seed and sirius, why do you think thats happening if we do see more broader regulation across the tech sector in general, which yes, i realize that can dent the Big Tech Companies but also really kind of endrench their dominance as well because they can counter that how does that trend continue to play out the mix were seeing away from series a and seed rounds, it kind of does suggest we havent found the next big thing yet. We go back a couple of years where you were seeing a lot of seed and series a rounds going into Artificial Intelligence and cloud related Enterprise Software and all these other areas that drew a lot of that kind of investment nobody really knows what the next big thing behind those are going to be. Were still waiting for those to pay off, and so were seeing a little bit of a gap here weve seen it before, not to suggest that we wont see something. Its the amazing creation of Silicon Valley that theres always something next coming skmr, so were just in an in between period. Just to touch on netflix again, saying its going to drop to 87 from about 90 a few years ago, no surprise, disney plus, hulu and so forth. Stocks trying to hang onto 300 how much do we need to worry about that market share is not going to mean a whole lot in all hoof th ultimately its how fast netflix is growing in this if disney is successful, theres still that 80 pool both of those companies draw out of. Disneys going to have a great offering from everything weve seen so far. Its not going to be a level where somebody says i dont need netflix anybody. Good stuff, heath you cover the world. See you next time. And the Congressional Budget Office just releasing its update to the budget and Economic Outlook moments ago. Ylan mui is in washington. The cbo is now forecasting that the deficit will hit 960 billion this year thats 63 billion more than previously forecast, and starting next year, deficits will average more than a trillion dollars a year over the rest of the decade now, one of the main reasons for that is the recently passed budget deal, which the cbo estimates costs about 1. 7 trillion. On the flip side, that budget deal and the fiscal stimulus it provides is expected to boost Economic Growth in the shortterm the cbo is now forecasting average growth of 1. 8 between 2020 and 2023. Thats above their previous projection the forecast for this year remains unchanged at 2. 3 . The cbo is lowering its forecast for Interest Rates it now puts the tenyear treasury at 2. 9 over the decade thats down from its previous forecast of 3. 7 , and it results in a reduction of 1. 1 trillion in Interest Rate costs over the decade finally, on tariffs, the cbo has updated its estimate of the impact that tariffs are having on the u. S. Economy. It now expects tariffs to reduce real gdp by 0. 3 by 2020 guys, we will be diving into all of these numbers during a conversation with the new cbo director phil swagel in just a little bit back to you. We certainly will were looking forward to that. As you just heard, cbo director Phillip Swagel is going to join us and later an Old Fashioned bl ar debate on apple squawk alley is going to continue in less than three minutes. Stand up if you are First Generation College student. Stand up if youre a mother. If you are actively deployed, a veteran, or youre in a military family, please stand. I will tell you this, Southern New Hampshire university can change the whole trajectory of your life. Welcome back to squawk alley. Lets head back down to washington, d. C. Now and ylan mui who is with the cbo director phil swagel. Thank you so much director swagel for joining us this morning and making the time. Thank you, its a pleasure. So i wanted to ask you about your updated forecast. There has been a lot of talk in the markets amongst economists about the potential for another recession. You guys have actually upgraded your estimates of Economic Growth why . So yes, we slightly upgraded our estimate of growth as compared to the forecast we made at the beginning of this year, and that was based on data showing pretty strong spending, especially by consumers. At the same time, we see risks in the economy, and our forecast has growth slowing in the second half of the year, Consumer Spending we expect that to subside a little bit in terms of its growth, and then Business Investment as well and in a sense, thats the main risk to the outlook right now is Business Investment. So in the current economic environment, under our current fiscal policy, you dont see the possibility of recession so we dont have a recession at any particular point in our forecast we recognize theres a chance of a recession. At the same time theres a possibility that growth will be stronger than we forecast as well you mentioned that Business Investment has been particularly weak and potentially worrisome one of the things that you mention in your report is that tariffs are weighing on businesses, increasing uncertainty, talk about how you guys see tariffs impacting the economy. Yes, of course. So we have a twopage box in the report that was published today on exactly that, the effect of tariffs on the economy we see the direct effects affecting American Families and businesses that tariffs raise the prices they pay, and in effect decrease their purchasing power. Businesses are uncertain about future trade policies and that appears to be dampening Business Investment. I believe morgan has a question for you. Sure. Hi director swagel, thanks for joining us today in this report, Interest Rates tenyear treasury at an average of 2. 9 over the decade. Right now the tenyearyearold is about 1. 5 right now. We have increased talk that you could potentially see negative Interest Rates have you factored in what that would like if Interest Rates continue to drop in this country . We see some effect of lower Interest Rates in our projections as compared to where we had Interest Rates at the beginning of the year in the last just date from cbo, right, we have longterm Interest Rates about 60 basis points lower than before, and that has a pretty big impact on the deficit projection now, it doesnt entirely offset the increased spending as a result of the bipartisan budget act, but it does have an effect if as you said, Interest Rates went yet lower one is the direct effect of lower Interest Payment for the federal government of course if Interest Rates were lower, we have to look at the economy and say why are they lower. Probably growth would be slower than we project, and that of course would have effects on the deficit as well. And why do you think that the tenyear is going to be so much lower than you previously forecast are you guys also looking at additional fed rate cuts is it just because of a slowing economy . Is it some combination of both its a mix, right we certainly took on board the fed rate cut earlier this summer, and then we looked at markets, and we said we have a pretty conventional view of the effect of Interest Rates, the effect of budget deficits on Interest Rates in the future, so the fiscal situation is challenging. I think thats a polite way of putting it, and over the longterm that will feed into higher Interest Rates. In the nearterm Market Participants are clearly speaking that they dont see the effect of those and we took those on board in our forecast. John has a question for you also hi director, cant help but notice 20 years ago when we had a sustained period of economic strength, the u. S. Was running a surplus. Now weve had this period of economic strength still running deficits in your projecting that the total deficit is going to continue to grow whats the impact then when we eventually do hit a recession, how do you expect that to affect the debt and policy . No, well, of course cbo doesnt make policy recommendations, where we provide analysis to support the congress, so i cant say what the policy will be, but i can talk about the effect on the economy on deficits if the economy were to go into a recession. Again, we dont have that at any point in our forecast. We see the chance of it, but if it were to happen, that would mean lower lower revenues and higher spending. Theres lots of spending that depends on the state of the economy, the safety net spending, and of course there could be policy action that the congress would take in that you know, in that eventuality. There certainly would be an impact you know, look, right now Interest Rates are low, and the treasury is financing itself at pretty low Interest Rates. It doesnt seem to be a concern of markets right now. One of the reasons that folks have pointed to for lower than expected revenues this year is that perhaps the recently enacted taps law is having larger than expected impact on revenue. Can you talk a little bit about what youve been seeing and how thats playing out so weve seen different effects on the corporate side, corporate revenues have been a bit weaker than we expected. Its hard to parcel out how much is a result of the 2017 tax act and how much is other effects. The changes in the data suggest that some of the revenues that might have been coming from the Corporate Tax are now showing up on the individual side, certainly pass through businesses are gaining income rather than corporate. So thats part of it and thats and thats sort of the sorts of things were trying to figure out whats going on with revenues. And final question for you, do you think there is any appetite on capitol hill for addressing what you politely called a challenging fiscal picture, or do you think were in an environment where folks are going to be pursuing either tax cuts or major new spending programs so of course this is the part where, you know, the role of the cbo is to support the congress whatever the congress looks to do, we will support them we will provide the cost estimates. We will provide any analysis thats helpful for them. But also a warning that the picture could be dire. Theyre not going to be hearing policy recommendations from me. Were here to support them. Thank you so much director swagel, we appreciate your time. I will send it back to you guys down at the new york stock exchange. The dow coming off its first negative day in four, but back in the green this morning, up some 260 points. Here are the names leading the index so far in todays session, boeing, nike, and merck amg emon wel be right back. The resignation of italys Prime Minister dominating the headlines today in europe as markets are set to close there in about four minutes. Good morning, carl, ive spent a bit of time here the last couple of years, theres very rarely a moment where politics in italy is simple or indeed boring. One analyst ive spoken to the last couple of days called this the craziest and most inconvenient crisis in italian history and thats really to do with the arithmetic in the building behind me thats the lower house here in rome, and of course also the differences in opinions amongst amongst the many fiscal policies that are jockeying for policy. President is the man tasked for trying to find a way out of the Current Crisis hes talking to some of the smaller parties today and some of the larger parties tomorrow to see whether they can form a new Coalition Government here. All eyes amongst the investment commune on the relationship between rome and brussels and whether a new government will bring a new approach to the european commission, what happens one th perhaps one ths slightly less confrontational. The impact that will have on italian bond yields is going to be center for many people watching this closely. The ftse 100 being the lone example, the lone underperformer i should say lets get over to sue her rare a herrara. The Trump Administration is rolling out a plan that it says will allow the government to detain families crossing the southern border indefinitely rather than the Current Practice of releasing them within 20 days it would effectively suppress a decades old Court Settlement which governs the treatment of immigrant children in government care in sweden, Iranian Foreign minister zarif accusing the u. S. Of committing economic terrorism. He is referring to the u. K. s seiz seize ing an iranian tanker off gibraltar at the request of the u. S. Was clearly an act on behalf of the United States engaging in economic terrorism against iran. And as i said, International Law must be respected by all a small plane crashed into the pacific ocean, and it was caught on tape. The plane skidding along the water off Half Moon Bay in california take a look at that. The two people in the ditched plane grabbed two flotation devices. They bobbed in the water for about 90 minutes before being rescued by the coast forward, and they are lucky indeed. That is the news update this hour ill send it back downtown to you guys, carl. What a story, sue, thank you. Sue herera still to come this morning, shares of apple are high, up 3 since monday what comes next . Were going to debate that with a bull and a bear in a moment. bang good luck with that one. Yes thats why i wear skechers slipons. Theyre effortless. Just slip them right on and off. Skechers slipons, with aircooled memory foam. I felt completely helpless. Trashed online. My entire career and business were in jeopardy. I called reputation defender. They were able to restore my good name. If you are under attack, i recommend calling reputation defender. Vo theres more negativity online than ever. Reputation defender ensures that when people check you out, theyll find more of the truth, not trash. If you have search results that are wrong or unfair, visit reputationdefender. Com or call 18778668555. We believe in education built for all people. , [woman] snhu was the best experience of my life. [man] without snhu, i wouldnt be the leader i am today. [woman] i graduated high school 19 years ago. I still finished. [man] in the military, you feel that sense of accomplishment. Thats what snhu is. You will march from this arena and say to the world. I did it. [woman] you did it. I love you. [graduate] i love you too. Welcome back apple trading up more than 5 in the last week helping to lead the tech sector higher whats next for the stock . Were going to debate it, both a bull and a bear joining us now krish, were getting kind of close to your price target on apple. Kind of. Closer than we are to junes. Youre at 250 on apple junes up 150. What gives you the confidence that apple continues to go higher how much of it has to do with services sure, thanks for having me and i would argue that, you know, the upside is almost close to 20 points to the price target, which is a pretty good upside for a megacap stock clearly services is a big piece of the pie when you look forward to the upside. Down maybe 10, 15 or so, so i dont think theres going to be any Much Negative price on that side the positive comes from services, and it will be very interesting to see how they price the offering for the next few months i do think that will be a very important catalyst for the name. Youre right, youre right, 20 is quite a bit you said on july 31st you expect apple to guide down in q4, i believe. The day after that the president announced these tariffs that made things look bad since then the president has pulled back on those tariffs does any of that affect your expectation . Yeah, sure, there are two reasons we downgrade apple one is we accept for the december quarter because continued weakness in sales. The second, apple behind the 5g cycle, so china going to be the large supply, believe apple will continue losing shares in china. I dont think apple 5g story will be next year. So i think in terms of tariffs, we dont think apple the reason we downgrade apple is because tariffs. I dont think it matters too much for our business, so we continue to even without tariffs, apple the iphone sales will continue to be weak if the tariffs increase. Krish, a lot of focus on this upcoming apple tv plus launch in the fall, and getting reports now that theres been a big boost to content spending, 6 bl billion dollars, how much should apple be spending on content if the Company Wants to make a meaningful push into this arena . Yeah, i mean, clearly the numbers are in the billions of dollars. Right . The question is what magnitude are you talking about. There were press reports about 6 billion. Reading an analysis, came up with about 2. 8 billion we also done like a standard matrix approach base on how much they need to spend, and you know, you can even think of like netflix kind of numbers running close to 15 billion the real question at that point, you know, what is the big opportunity cost for them . How many subs are you going to get . I think as the cost goes higher, the break even level for that business also goes higher. Need more subs to basically break even, but the bottom line is that content costs are going up, but at the end of the day, consumers are willing to adopt or pay if the content is interesting from their vantage point, and therefore we have it at 2. 8 billion can we reach the netflix level of 15 billion, i think it is possible and jun, i know they get mentioned today in this journal piece on the softer pace of buybacks we realize their cash position is huge, but is there any tie between buying back fewer shares than you did a year ago or a quarter ago and the projections for the money theyre going to have to spend on content in the future yeah, i think looking at apple tv, i think the base its very small i think theyre trying to monetize, you know, continue growth of apple tv theyre trying to monetize that base i think its going to take multiple years for them to increase their tv Installation Base and also spend more money still have huge caps right now so i think they probably will continue i think there will be. And finally, krish, jun makes an interesting point when it comes to 5g. We had gene munster on yesterday, he thinks while the Holiday Season this year for iphone will be good, right after that people will be thinking about 5g coming the next year and iphone sales could be really disappointing. Why isnt he right yeah, at this point the expectation is that the 5g phone is going to come sometime next year i would also argue if you look at the cadence of apples phone releases it happens in the october time frame, and october is actually fiscal year 21 for apple, not fiscal year 20. Realistically its not an fy 20 upside realistically into calendar 21 another part of the equation is that its still very early in the cycle, especially in the u. S. If you own an iphone and i come and tell you that, you know, a 5g phone is going to be delayed by nine months to 12 months, chances are of the consumer switching over to android is de minimis, i would say theres a little bit of stickiness in the u. S. , so i dont see 5g really as a big risk. I just wonder, i take your point. I just wonder do people hold off on buying any new phone at all, even if they dont switch, but the debate will continue, krish, jun, thanks. Thanks. Up next, two retailers with two big beats on earnings. A breakdown target and lowes quarters after the break frsz jj, will you break it down for this gentleman . Hey, ian. You know, at Td Ameritrade, we can walk you through your options trades step by step until youre comfortable. I could be up for that. Thats taking options trading from wall st. To main st. Hey guys, wanna play some pool . Eh, im not really a pool guy. Whats the hesitation . Its just complicated. Stepbystep options trading support from Td Ameritrade in the last year, of cybercrime every second. When a criminal has your personal information, they can do all sorts of things in your name. 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Com tv heres whats coming up at the top of the hour, the Great American consumer still going strong plus, hedge funds rotating out of tech. Which stocks the money is moving into now one Major Airline get k whackeds on a double downgrade. Thats all at noon top of the hour on the Halftime Report. Looking forward to it thank you. Lets get over to cme now, rick santelli. Today of course the minutes of the last fed meeting which resulted in a quarter point ease, and i have to say that its as though pretty much every corner especially those really big institutions with leveraged positions want more easing shocking, isnt it but in the end, theres a variety of reasons why lower Interest Rates are desired, and were going to get to one different one at the end of this spot the latest cbo forecast, i think its somewhat of a mixed bag and remember, i like the cbo as an organization, as an entity because its supposed to be and for the most part it is bipartisan bipartisan actually is at the heart of the recent cbo report because the only bipartisan activity we ever seem to get lately is when they spend taxpayer money, and of course the reason that the new cbo forecast is resulting in a 63 billion addition to the budget deficit now fast approaching 1 trillion of course is the bipartisan budget deal but the number would have actually been much bigger. They did say, and it is true, that it added some growth, that aspects of this budget will add some growth, but they also said something i found really fascinating, that their tenyear projection for tenyear note yields moved from 3. 7 all the way down to 2. 9. Now, if you do a fast ciphering, thats, what, a down grade of about 27 , which really gets to the heart of what i want to talk about, and that is assumptions, whether its econometric model like the fed uses or the cbo and how they result and come to their forecast numbers, there are some big assumptions, like what tenyear note yields are going to be. And i understand many didnt see this latest move coming. This isnt about pointing a finger saying you had it wrong, its about how much do you trust inputs in and output if one isnt accurate going in, its just going to multiply in terms of the negativity of your results with regard to accuracy coming out but the real issue is is that this will result and the growth in a savings of about 1. 1 trillion, which makes sense because the original number was like 1. 7 trillion. When you factor the longterm horizon. The point of this is one reason that i never hear as to why lower Interest Rates may be good, because the Treasury Department would have to pay so much more to service the debt. That may be cynical, but such a glaring reason, dont you find it sort of ironic nobody ever says it out loud carl, back to you. Good stuff, rick. As ricks talking, dows up almost 300 here, two of todays biggest movers in retail target and lows surging after earnin earnings beats theres plenty to look at here, court. These were strong quarters from target and lowes for sure, but the share reaction is almost startlingly strong target on its track for its best day ever target beat expectations for earnings by 0. 20 on stronger revenues and raised its fullyear forecast range by 0. 15. That guidance weighs the strong first half of the year and the marketplace volatility and uncertainty Going Forward including at least tliariffs as they stand i asked the c oh, o on a media call as ive said for some time now we continue to see a healthy consumer environment theres been a reduction in fuel prices which we think is important for consumers. Unemployment remains low and wages are growing. Like walmart, target compaf 3. 4 with strong store traffic and web sales up 34 its same day Order Fulfillment centers, those are the order pickup, driveup and shipt options made up 40 of the comped sales growth. Lowes also beating on all major efforts reaffirming its outlook that a day after home depot cut its forecast for the years, total comp sales grew 2. 3 u. S. Comparable sales grew 3. 2 . This is 1 10 of a percent above home depots u. S. Comps. This is only the Third Quarter thats happened in five years. Lowes called out strength in paint and pros sectors i spoke to lowess ceo briefly who said, look, the retailer had quote fallen behind on some retail fundamentals so the focus now is on building the foundation and building Strategic Initiatives at the same time that will allow us to take market share. Jon. All right, courtney, thank you. One company in the commerce space going the other way this morning is, that stock getting crushed in todays trace, 12. 5 . The ceo is going to join us on the other side of this break stay with us nts. At fidelity those zeros really add up. Maybe ill win saved by zero currently down about 12 right now. Joining us now to discuss is ceo sasha ponyak thanks for being with us today. The reason the stock is down as much as it is, a number of analysts saying is that you identified instances of improper orders being placed on the platform and then canceled walk us through the review that youre implementing around this right now and what it means for your previously stated financials of course, and thanks for having me and i was just talking earlier and we see also about the results. But of course i will answer your question, right . So we identified when we became aware of the potentially sales practices, you know, we started a review which was before the ipo, and then and we stopped the review, and here we identified this risk, we did the analysis, put corrective action in place, and as we do all the time, and here we have as we aspire to be very transparent and we have put into place a number of remediation actions to avoid such issues in the future. This first came up back in may. Citron accused jumia of being a fraud and pointed out this specific issue at the time you said according to market watch, we completely stand by our prospectus well not be distracted by those who seek to create doubt now youre saying hes right why did you stand by the perspepe prospectus in the first place. No, i didnt say that you didnt say that no. I didnt say the end of your question when we became aware of allegations about those potential improper sales practices in our jforce program, we started a review this was before the ipo, and i will emphasize that our review started complete independentcy from citrons allegations. We became aware of those before and even put that in our prospectus so we identified this ourself. Im told thats a quote from the Earnings Call that you did say that entire quote, but investors can go no, i did say that quote but you said in your question, you said that citron identified that we identified that and we disclosed it in our prospectus, right . Youre saying the issue of fraudulent audit orders being placed you identified in your prospectus im saying that when we became aware of the allegations about the proper the potential improper sales practice, we started a review and this was before the ipo, and we included that in our and we started this completely independently from those allegations from citron. So sacha, looking at the rest of the numbers from your earnings today, talk us through the growth and the investments youre making where africa is concerned and what that means in terms of build out of logistics and a path to profitability. Of course, as you can see, you know, we are focusing our Financial Strategy on growing the top line drivers, both the users, the active consumers and the gmv. And as we are doing this and you can see that we have grown those numbers quite significantly this quarter, we are able to drive an increase in money taxation you can see our gross profits grew by 94 , year over year, and we are doing this while driving a number of cost efficiency in our p l on sales and advertising and the gna and as a result, we are seeing improvement of our relative to the gmv we have engaged in a strategy which is a very strong balance between the growth and the and this is what we continue to do as well as the development of our payment platform which is a core part of our strategy as well china, of course, has been making a lot of investments in africa as well a lot of focus on the trade dynamics between the u. S. And china and how its affecting the rest of the world. How is this playing out for you in terms of potential risks but also opportunities where your business and where potential sellers are concerned for jumia. Yeah, its a good question. I think were seeing a lot of dynamism in africa in general from a consumer perspective. We have some goods which are produced locally, and we have some goods which are imported in china and in the u. S and jumia is a reflection of the Consumer Habits of the african consumers. And here we, you know, we are watching very carefully we see what happens in this dynamic we are also really trying to the african sellers to also produce in africa so consumers can buy some products which are made locally and, yeah, i think so far, you know, were still seeing a lot of dynamism in the marketplace. And ecommerce is still in the early days in africa so in africa, the online sales are about 1 of the retail when in china, its 20 so were still in this phase where a lot of growth and penetration of online sales are ahead of us. And i think, you know, were watching very carefully but were still, to some extent, protected from that. Sacha, thank you for joining us by phone today. Shares of jumia are down about 15 right now. Market is holding on to these gains. Nice action in light of what we heard fr tgeomart and lowes today. Squawk alley is back in a moment one of the questions of today, are buybacks starting to dry up bob pisani is here at post 9 to talk more about this piece in the journal. I think the answer is yes but it may not be such a big deal. 166 billion for the Second Quarter of 2019. If you look at the Second Quarter of 2018, 190 billion. Yes a 13 drop the reason im not that concerned about it is the numbers of 2018 were so off the charts, so much higher than weve ever seen before that were moving closer to normalcy. 2015 was the prior record. 572 billion 2018, 806 billion this is due to the tax cuts that were talking 40 higher my guess is were going to do 740 billion this year thats going to be the second highest number ever. Remember something, may was a really rocky month a lot of volatility. Generally the market was down. A lot of the buybacks are somewhat discretionary they dont have to do it every day. Companies can say, wait a minute, i want to hold back and see whats going on here thats quite possibly what happened and the likelihood the cash hoard went up for the companies. Doesnt evaporate the money. Just sitting in cash or they could deploy it elsewhere. Id like to see more quarters where its clearly going down dramatically, but i dont think Corporate America has lost its appetite for buybacks. They believe it works. How much does this speak to the uncertainty we see on a broader level. Those tax cuts and the impact it had in the markets but how much a fact theres just question marks about the future its easy to step back in a month like may and say well try to figure out whats going on. A month like may is not a bad time to buy low. When youre not quite sure where the bottom is, you can just hold back i want to see more evidence. Even at 600 billion, 700 billion, youre talking about less than 2 of the value of the stock market yes, buybacks are an important participant of the rally weve seen i believe that but theres a heck of a lot more other people also buying out there right now. Theyre not the only ones. Good perspective, bob, thanks overall today, action pretty good dow up 300 vix getting closer to 15 you see yields on the rise that does it for us. Lets get to melissa lee and the half welcome to the Halftime Report im melissa lee in for scott wapner stocks in rally mood the stocks firing on all cylinders. Its 12 00 noon and this is the Halftime Report. Retail roars. Target and lowes soaring on strong earnings. Should you keep betting on the American Consumer . With spending still strong, are recession fears overblown . And what does it mean for the fed and the chance of more rate cuts shares of Hawaii Holdings clipped on a big downgrade what its signalling about the airlines its the call of the day the Investment Committee is ready to go. The