Street, which he must avoid a damaging no deal divorce at all costs. Shery later in Bloomberg Technology global link, we will talk about the Justice Department investigation into whether big tech has been stifling competition. First, thats get you started with a quick check of how the markets closed tuesday session in the u. S. The s p 500 closed at the highest level in more than a week, up 7 10 of 1 . Rising for a second consecutive session. We have some strong earnings coming from the likes of cocacola, united technologies. Not to mention lockheed martin. We also had Investor Confidence that a deal would be struck when it comes to suspending the u. S. Debt ceiling. In the afternoon session, we got news that ambassador lighthizer could be going to china next week for the first highlevel trade negotiations since may so that really spurred Investor Confidence. The dow gaining 7 10 of 1 . Almost every sector in the green in the s p 500 and hit higher by industrials and materials. The nasdaq gained 6 10 of 1 . Although in the after hours session, u. S. Futures down 1 10 of 1 so we will see how we are setting up her asia. Sophie asian stocks are eyeing a mixed start, while initial currencies will have a stronger dollar to contend with. Cost speed resilience will be tested amid a murky outlook for the tech heavy economy. Cracks in the iron ore rally, surging oil and the imf cutting its Global Growth forecast. Highlights include canon, lg and advances for the japanese equipment maker after texas delivered better than forecast results. We have Mitsubishi Motors which will offer more clues on the health of the Tech Industry amid reports that nissan plans to cut more jobs globally. Paul thanks very much. Lets chicken on the first word news. Ritika big tech faces more investigation with the u. S. Justice department looking at whether companies are harming competition. The antitrust division will address concerns that consumers and businesses have expressed about search, social media and on slight online retails. The latest sign of official scrutiny by washington. Facebook, amazon and google parent alphabet fell. Suggesting policy missteps on trade talks and brexit could derail a projected rebound. The fund expects the World Economy to expand 3. 2 this year, slightly more next year. About 1 10 of a percent down from its forecast in april. That lowers expectations from what what already the lowest since the financial crisis. The bank of japan is likely to lower its forecast for the year. They also downgrade some of its growth projections when policymakers meet next week. The bank will cut its out inflation outlook to 1. 1 for the year through march to reflect the impact of lower mobile phone charges. Growth forecast may be ranging due to global uncertainties. British business is morning incoming Prime MinisterBoris Johnson that he must avoid leaving the European Union without a deal. Johnson goes to downing street reiterating his pledge to leave the eu by the end of october, whether or not an agreement is in place. The confederation of british industry says that would be hugely worrying and threatens investment and jobs. Momenty, at this pivotal in our history, we again have to reconcile two steps of incidents oftween deep desire friendship and free trade and mutual support, and our european partners. And the simultaneous desire, equally deep and heartfelt, for democratic selfgovernment. Ritika global news 24 hours a day on air and on tictoc on twitter, powered by more than 2700 journalists and analysts. This is bloomberg. All right, thank you very much. Senior u. S. Trade officials on a flight to china on monday for the first time for facetoface talks since may. Robert lighthizer and his team will be in shanghai through wednesday. Talks are excited to be a broad review of the issues dividing the u. S. And china. Joe. Go to washington with any reason for cautious optimism . Joe it would have to be very cautious. This is the first breakthrough since President Trump and president xi announced this temporary truce from the trade war last month of the g20 meetings. But the Administration Officials have been really cautioning not to expect a whole lot. Commerce secretary wilbur ross told bloomberg today that it could take some time to get to some of the issues the issues one dealt with. Previous talks have dealt with some of the issues such as dealing with huawei, agricultural purchases but they have not really addressed some of the structural issues that are the biggest things on the u. S. List of demands to get a fuller trade deal with china. There has been very Little Movement up until now and any sign of, tangible signs of how the truce is going to play out. This is something of a breakthrough but it is one that does not have any quick resolution. Shery when it comes to the ip theft front, we had more clarity coming from the fbi director christopher wray, speaking to the Senate Judiciary committee, saying that china is trying to steal its way to economic dominance. Take a listen. When i say china, want to be clear, this is not about the Chinese People as a whole and not about chineseamericans in this country. Countryis about is a that is in a variety of ways through the chinese government, not just government officials but private sector entities, nontraditional collectors to steal their way up the economic ladder at our expense. Shery how is he backing his claims . Joe he set about 1000 counterintelligence investigations with intellectual theft. Both of those lead back to china. Onlyid this includes not the usual espionage tactics but hacking, as well as the use of chinese scholars delivering a pipeline of information back to china. Called it the biggest counterintelligence threat the u. S. Currently faces that is ongoing and also something at the root of that is be between the u. S. And china on trade. President trump has called for china to curtail intellectual property theft when it deals with u. S. Companies. And what the fbi director is saying that this goes beyond Just Companies operating in china and having to turn over some information about their proprietary software or other intellectual property that there is actual a fuller and more theft going on that the u. S. Wants to address. Paul Silicon Valley does not have too many friends in washington these days and that does not look like it is going to change anytime soon. The doj hosting a new antitrust review into those big Tech Companies. What do we know about it . Joe right now, this is announced as a review to examine whether or not they are antitrust issues that need to be addressed. This mostly affects google, facebook, amazon and to some extent, apple. All four of those companies have come under fire from both parties in washington. There are concerns about the misuse of user data, the collection of data. Failure in some cases in terms of facebook monitoring material on their website. That affects google as well. Amongis also some concern lawmakers in both parties about whether they are anticompetitive. Elizabeth warren, a candidate for the democratic residential nomination, has called for breaking the companies up and unwinding some of the deals they have had in the past such as amazons purchase of whole foods, that they are anticompetitive. Paul Bloomberg Congress editor joe sobczyk. Thank you for joining us. We will have more on the doj probe with emily chang in about 10 minutes. Shery next, we will discuss the latest hope for a trade deal that gives Wealth Management president aaron gibbs. This is bloomberg. Shery back to the u. S. Markets. Earnings help drive the s p 500 back above 3000 by the latest news on trade talks extended those gains. After hours, stocks continue to make big moves on earnings. The antitrust probe into tech. Su keenan joins us with more. There was a session in the morning but we got the trade news in the afternoon, we just kept moving higher. Su one to punch for the bulls with strong earnings and this optimistic news on the trade talks. Lets go to the market snapshot. What you will notice is bonds fell, the dollar rose but look at material stocks. That was the strongest part of the s p 500 that also is the part that have been the bullseye of these tariffs. Take a look at some of the big movers and you will notice really big moves here. Hasbro flowing it away on earnings. Cocacola hitting the highest level since we have seen, since the 1960s since we started records. A real turnaround for the company and very strong sales in china. Pulte is a disappointment. Reality Holdings Deal with amazon to sell with its interstate internet marketplace affecting the rivals as well. Lets go to the bloomberg. Cocacola doing really well in its sales. Even the ceo says he came into the quarter concerned, and even he was impressed at some of the results. Again, chinas strength drove the Quarterly Earnings as well the los sugar drinks. After hours, we talked about this report of an antitrust department of justice probe and that is hitting these tech giants hard. Twitter was down significantly more. Amazon, facebook, apple were also seeing some other stocks down. Shery thank you so much with a snapshot of the markets. Now lets get investors take on the development. Aaron gibbs joins us here in new york. Great to have you with us. We have seen the move higher after the trade news that bloomberg reported. Still, it was not a spectacular move. Is there some trade war complacency now . Has everything already been priced in . Erin i think the idea there are more talks. Until we actually get a final result, i think wall street is still a little hesitant so i dont see any real big moves unless there is a really, really significant announcement of either a collapse of any talks or final resolution. Right now, think the positive very ongoing talks, yes, much baked into the market. Shery you say you like small caps and midcaps. This chart showing that so far, small caps have lacked the broader s p 500, the most in 10 years. What about specific sectors when it comes to the u. S. Because most saw the concerns after hours with these tech giants as well . Are there parts of the market you should be more cautious about . Erin any of these mega caps are really the ones with the highgrowth names which are very highly valued. As we have seen with some of the tech stocks, if there is any negative news, they tend to get hit. I advise investors to focus more on your core stocks that have both growth and Value Components that can participate in the upside, but really are not priced for production. With the smaller midcaps, the reason i like them is they have underperformed. It says we are on sale, buy us. This is looking more one year out. This is like a oneweek trade but this is where we see some value in the market out there. Paul when the clock struck 2 00 today in new york, we saw quite a risk on rally with some optimism around trade. Do you share that optimism or are you a little bit cautious . Erin im little more cautious. I am happy about the positive Earnings Report we have seen this week. That is making me a lot happier, but any news around the trade smaller going to have a intraday move. I think overall, as long as we are heading in the right direction. Nobody wants 25 tariffs. That is a positive in the right direction. Paul in terms of earnings, to what degree so far do you feel like things have been outperforming . Expectations were not that high heading in. Are you encouraged by what you have been seeing so far and what do you see for the second half . Erin just in the Second Quarter, we actually had 2 expectations. We are now about zero. We are in the positive territory. That is a big move in just three weeks. Normally, you see revisions going upwards. You dont normally see 2 , 3 change this early in the earnings season. This is very positive for me. The guidance is definitely Getting Better for the second half and pushing forward to even 2020. Not quite as strong as what we have seen in the Second Quarter. Backwards looking. I would like to see Bigger Movement forward but it is definitely reassuring that Second Quarter is not the disaster, the profit contraction we thought it is going to be. It is going to be your mediocre, low growth environment. Shery one of those earnings results, Texas Instruments seems to be pretty well received. When it comes to the broader chipmakers, this chart on the bloomberg showing help the Philadelphia Semiconductor index is at the highest level when it comes the valuation in 10 years. Given how much you like value. What do you think of chips . Erin semis have a massive exposure to trade deals. They are one of the highest exposures. They really trade on how the trade talks are going daytoday. We still know that demand has been somewhat depressed and we are looking at earnings contractions but it looks like they have come out of the bottom when it comes to demand. They are recovering from the bitcoin climate. And, we are seeing improved global outlook. For me, i think as long as the trade talks are positive, they are in a good place. I like the semis. They are really what i consider more of a forward indicator of Global Growth because they are such global companies. Shery and potentially what will happen with those trade tensions as well. When it comes to banks, most of the big banks are already done, but there seems to be a cohesive narrative when it came to the consumer story. Whether citigroup or jp morgan. Do you buy into those calls about being the health of the American Consumer to invest there . Erin you certainly saw a big difference between the investment banks and consumer banks. That was a similar story to what we had in the first quarter. I think it is about consumer confidence. Consumers are willing to borrow. I dont necessarily see it is a huge indicator. It is more of a confirmation of the trend we have seen the last two quarters. Its obviously more challenging environment for those banks that are really focused on interest and margins versus lending consumers. Shery especially with those fed rate cuts potentially coming as early as this month. Erin, thank you so much for that. Erin gibbs, president and cio of gibbs Wealth Management. You can get a roundup of the stories you need to know in todays edition of daybreak. Bloomberg subscribers, go to your terminals. It is also available on mobile. You can customize your settings so you only get the news on the industries and assets that you care about. This is bloomberg. Paul this is Bloomberg Technology global link. I am paul allen in sydney alongside shery ahn in new york and Bloomberg Technology anchor emily chang in san francisco. Lets take a look at the top global tech stories of the day. Emily apple is asking President Trump to waive tariffs on components in the upcoming mac pro desktop and plans to relocate production from texas to china. Apple does not specifically mention the mac pro, but the parts and dimensions referenced resemble it. The president will show relief if duties would cause severe economic harm. Accelerating Revenue Growth despite the ban in the u. S. Up 30 in the first half after managing to maintain critical supplies to maintain production. Revenue growth debt is down from 38 in the first quarter. Sources say huawei is relieved the situation is not worse. Softbank is said to be close to be nancy a second tech Investment Fund, modeled on the 100 100 billion vision fund. It could be launched this week. The uaes Investment Fund among to be the backers. Softbank working with Goldman Sachs and Cantor Fitzgerald to raise money and support. Those are the top global tech stories we are watching. Shery more trouble for big tex. As we told you earlier, the u. S. Justice department is investigating whether Technology Giants such as facebook, amazon, alphabet are harming competition. Techtening the scrutiny on companies in washington. Ben covers the tech lobby in washington. How was this a change from how washington has been approaching tech antitrust so far . Ben there have been a series of probes big tech is already facing. The federal trade commission, which has some antitrust authority, is also doing its own broad task force. There is that but also doj and ftc have split up specific company probes. Doj is looking at google and apple. Ftc is looking at facebook and amazon. You are showing footage now from the house antitrust probe. The companies faced those. What is most interesting here and what it means for facebook and amazon. They thought they were under the authority of the ftc. It is a question for them, are they facing a probe from the doj . It looks like the answer may be in a highlevel way, yes. That is a two agency probe, congressional probe and a lot of pressure from the white house. Emily that said, president have has been you lawmakers on both sides of the aisle not happy with tech. You have federal agencies across the board looking at big tech. What does the rest of the scrutiny signal . Ben i think it signals the days in which these Tech Companies are the darlings of washington, those are long gone. I think the other thing these companies are looking over their shoulder for is where is the next