Obviously, a nice gain here as we rebound from yesterdays selloff the dow is up 265. Best day here since about the middle of june for the s p all sectors higher for july, boosted by names like twitter and micron on the past month the feds rate cut and earnings at qualcomm, though, top of mind for investors as we go into the first trading day of august. Still, our next guest says, remain overweight in tech until the next bear market jim paulison joins us along with our own mike santoli good morning, guys good to see you. Good morning, carl. Jim, youve been pretty constructive here. Obviously, youre not thrown by numbers like what ism gave us today. I actually think the data has by and large here been pretty good for the united states, carl you know, personal consumption, real personal consumption growth in the First Six Months of this year was up over 4 annualized pace its just bizarre to be talking about a weak economy with one of the strongest sixmonth consumption periods of the entire recovery overall. But theres enough weak data manufacturing, for sure. And enough to warrant the cut yesterday . Well, i think the goal of the cut to me was not really to stimulate growth so much as it was to take fear out of the market and it didnt do that. I mean, it needed to take the curve inversion out. Didnt do that i want needed to at least steepen the yield curve, which hasnt happened. It needed to restore some confidence in the future of the recovery, which hasnt really occurred and maybe worst of all, inflation expectations, rather than going up, after the cut, have come down so with the tenyear yield now below 2 this morning, its just continuing to make the inversion worse. And it just keeps the market in the driver seat, almost begging for another rate cut, unfortunately. Yeah, mike, the dow is up 271 points right now the read through here seems to be that we got some softer than expected manufacturing data. So maybe perhaps that would incentivize the fed to cut again. Is that why markets are higher today . And if so, is this a case of bad news becoming good news . It seems like were kind of on the verge of Something Like that, morgan or at least, i think that there was a reassessment this morning that even though there was a lack of desired clarity from jay powell yesterday, the situation isnt that much different, right . The short rates are a quarter point lower. We have the same kind of deal where we have a 2 economy across the board, 2 growth, roughly, 2 treasury yields, almost 2 inflation. And guess what what worked in that environment all year big growth stocks. So its sort of a back into growth and away from value and in terms of the bond market, i agree with jim the bond market is effectively saying to the fed, we can do this the easy way or the hard way. The easy way is, you guys could have laid out a path, a few easing moves or the hard way, which is that were going to keep compression on this curve, take longer term trends down and youre going to follow us anyway i think its an inherently ambiguous situation and powell gave an ambiguous message because there are conflicting signals here jim, interesting dynamic showed up in qualcomm earnings last night, and thats this shadow of 5g, seeing a big slowdown in purchases of lge equipment. Thats going to affect more than just qualcomm and i wonder if people have been factoring that into the numbers overall, because these Wireless Networks are a global phenomenon. I cant comment specifically on qualcomm, but jon, i think that i still really like the tech space you know, youve got an economy thats all recovery long have said growing around 2 to 2. 5 . And theres just so much growth, even if theyre slower there, which is less cyclical and more sustainable wing, until the next recession. I think the leadership there thats been enforced probably continues until we do have another recession. Now, it might ebb and flow on reports like this, but i think overall, if theres weakness in that space, i would be adding to it, although i would be adding more to the small cap s p 600 tech names than i would to the 500 names. Hey, mike, a little season seasonality here august is the weakest month for the past ten years, but largely because of what happened in 15, when we lost six and in 11, when we lost almost six. We lost the aaa rating here. I just wonder if you think were headed for some choppy water the numbers suggest you might be due for some backing off of the market as you mentioned, you have a couple of years that swung, and in august of 2015, it was at the very end of the month. If nothing else, you are losing some seasonal tail winds here. And i think youre looking at things like losses of momentum within the market, fewer new highs, and it just seems like there wasnt a very strong push beyond this 3,000 level in the s p 5500 so i think its time i also see some shorter term sentiment stuff getting a little bit stretched. It would make all the sense in the world to have another kind of pullback. But people should remember that we had a, i guess, a 6. 5 pullback back in may and it had nothing to do with whether the fed made a mistake or wasnt too generous it was because the market was ready for Something Like that. We might have had another period right now where we have to decide if thats where were at. So, jim, i guess looking at the market more broadly right now, if you think that growth is stronger and more resilient that the consensus seems to believe that it could pick up and strengthen more into the end of the year, where do you think they finish 2019 i think its a fair amount higher yet i think the bigger issue than the fed. The fed cut rates 25 basis points, is the amount of stimulus weve dumped on this system for the last six to nine months the real money supply has exploded since year end, the bond year, the tenyear yield is down 1. 25 to 1. 69 fiscal juice is up a percent more than it was in early 2018 and i think the issue thats going to determine the rest of this year is not going to be what the fed does or what trade negotiations do. It will be, will that stimulus work or will it not . Weve got reasonable values. Weve got very cautious sentiment. Weve got positive financial liquidity growth and we get a pick up in the economy in earnings that calms recession fears, i think the upside here could be quite a bit more than people think i certainly wouldnt be surprised by 3300, 3,400 or something, rather than fall in the second half, maybe this thing finally catches fire to the upside a little more, if, if the economy does respond to policy stimulus. If youre betting against that, youre betting against, you know, not just the fed, but youre betting against the fed, the treasury, bond vigilantes and the pboc and the eoj and the ecb. Everyone has been adding support and if that fails, were not going to have recession fears, well have depression fears. I think the good bet is its going to work. Just to be clear on that, though, jim, youre talking a p\e story, not an earnings story, i assume . Both, i think, carl because i expect that the stimulus will revive the economy to some extent maybe theres elements of that already happening. And if it does, i think earnings pick up, as well so i think we get a little mixed bag Going Forward here all right, guys, good way to kick off the hour. Appreciate that, jim always good to see you mike, well see you in a bit you too, carl well, squawk alley is your home for ipos. Canadian Cannabis Company sun dial growers going public at the nasdaq the ceo will join us after the break. And later, the ceo of Enterprise Cloud cpaomny d dynatrace will be with us right here as well weve got a big show straight ahead. Dont go anywhere. Xfinity mobile is a Wireless Network designed to save you money. Whether you use your phone to get fit. Or to find the perfect gift. Youll use less data with a network that auto connects to millions of wifi hotspots and the best lte everywhere else. Saving you hundreds of dollars a year. The best network. Best devices. Best value. And now get 250 dollars back when you buy an eligible phone. Its simple. Easy. Awesome. Click, call or visit a store today. Social game developer zynga reporting higher than expected quarterly bookings, crediting newly acquired Live Services game like merge dragons and puzzles as catalysts while sigh mobile revenue rising more than 50 during the quarter joining us now, frank ivo, the ceo of zynga frank, good morning. Good morning. So there used to be this relationship between smartphone sales and app activity smartphone sales are down, yet you surprised to the up side so whats the dynamic now and what drives usage . Well, i think first off, you have to look at the Global Smartphone market. And theres explosive growth in emerging markets and new markets where High Performance in expensive devices are going. So youre starting to see audiences pop up in parts of the world where there hasnt been markets before so, in the west, Smart Devices are largely replacement business in many cases. But youre still seeing explosive growth in asia and a company like zynga, we make games that provide entertainment for the Global Market and one other aspect that youre seeing is people are spending more times playing games theyre spending more time in their games, theyre playing more games so youre seeing engagement levels reach record highs. So is that where youre seeing the most growth in those markets where you have lower cost, and yet more powerful an detroit devices than in the past . Well, were seeing a lot of growth in the west and in parts of europe on an detroit, certainly at zynga our games, empires and puzzles and merge dragons performed very well in those markets. But overall, the ios market is still very robust for apps the majority of the revenue that the app store generate comes from games and so youre still seeing very strong growth in a mobile Gaming Market thats very large this year, there is about 2. 4 billion people playing mobile games globally and thats just not slowing down its continuing to grow. Frank, when i think about zynga ten years ago, i think about farmville that everybody was playing on deskstop, via facebook certainly, its come a long way over the past ten years. Theres been a turnaround strategy that has been implemented that youve overseen for the last couple of years thats now playing out in Earnings Results when you look out over the next decade, especially with the rise of esports, the proliferation of all of these different types of streaming services, what does the industry look like to you and how do you continue to engage users i think one of the things thats really exciting about the Gaming Business is it reinvents itself all the time, especially the mobile ecosystem there are profound Technology Shifts coming into the ecosystem thats going to continue to drive growth for many, many years. And i think it starts with 5g infrastructure, you know, if you start to look around the 2020 time frame, youre going to get to be very High Performance networks, where were going to be able to move a lot of content very quickly and youre going to see a lot of very highperformance Game Experiences being possible that combined with very smart streaming technologies, its going to lead to a lot of disruption and innovation in how we distribute games. Youre going to be able to build games that will be able to be play right off the advertisement you see. You might not be able to go down to the store to download it. Therell be a lot less user friction in addition to that, youre seeing crossplatform play really become a thing with games like fortnite and pubg, where people on playstations and pcs and phones are all playing together so as the market comes how do you take advantage of that youbuild intellectual properties from our perspective, we do crossword board games and things like that, too or do you reach into some other medium besides because you become very mobile focused. Well, were very mobile focused, because thats the largest market out there right now and if you look at the growth rates on console and pc, theyre a lot less than mobile but if you can build a game like csr racing is peesa potential platform we have it starts with the Game Experience and it starts with something thats fun to play across multiple platforms. Killer apps are what make platforms happen and thats been the industhistof the industry so when you think about crossplatform play, it wasnt until fortnite established itself as a killer app that it established crossplatform play. So zynga is looking for that opportunity for the brands that we have. We have harry potter, star wars, farmville, a long history of brands and partners that we believe will appeal to that audience hey, frank, when you first started out, obviously, facebook was a huge tailwind. I wonder if you were to construct a model from scratch today, if you would ride that train in quite the same way . I think what we have to do at zynga is be platform agnostic. We have to look at where the audiences are, where we can make great Game Experiences and how we bring those two things together so as you look out into the market place, being held to one platform only can be very risky. Because if theres a platform transition and you get it wrong, you end up going out in the wilderness and having to get turned around. From our perspective, we want to be constantly looking at new platforms and new places to reach audiences. I think a good example of that is in this last quarter, we launched a game on snapchats new gaming platform. So well be experimenting with Game Experiences on pc, on mobile, on chat clients, opening up new markets like this quarter, we launched empires and puzzles into korean japan for the first time and selfpublished it. Well be very accurate and flexible and nimble to make sure that when theres a platform transition like facebook to mobile, that we dont get caught out. Gotcha. Well, frank gibeau, ceo of zy a zynga, thanks for being with us. That twoyear chart especially looks like the inverse of some of the gaming competitors like activision, blizzard, and ea very interesting thanks for being with us thank you very much a big hour of squawk alley still ahead. Virgin orbits ceo dan hart joins us later this hour w u25potsus doisp 4 in when i see adversity, i find a way. When i hear never, i say now. [announcer] Southern New Hampshire university is education made to fit your goals with over 200 degree programs, flexible class schedules, and some of the lowest online tuition rates in the nation. cheering so when i face barriers, i can break through. [announcer] breakthrough at snhu. Edu. European markets are going to close seema mody, whats the story on markets . Heres the story, jon with the exception of the uk, we are seeing gains across europe its a combination of strong earnings from Standard Charter and rising expectations that the European Central bank will follow the fed in cutting rates in september meantime, the bank of england held its Monetary Policy meeting today, where it left rates unchanged at 0. 75 but it did warn of the risks related to the uk, leaving the eu without a deal and the negative impact of rising global tensions the boe cutting its growth forecast to 1. 3 , from its initial forecast of 1. 5 now, when asked whether gary cohn, the former chief economic adviser to President Trump was right to reportedly say that a Nodeal Brexit would be preferable to end the economic uncertainty, carney replying, nope, hes wrong we are seeing a notable reaction in global currencies today the pound is at a fresh two and a halfyear low. The euro and even the chinese yuan falling against the u. S. Dollar carl, sending it back to you seema, thank you very much. It is the first trading day of august were watching the averages here dow is up 270. We did get an open on dynatrace. Price is at 16, opens at 25, up 56 . Were back in a minute s. 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, everyone im sue herrera. Heres your cnbc news update at this hour. A car, a bus, and three motorcycles laden with explosives targeted a Police Station in aidan, yemen, kill g ing at least 11 and injuring 29 more four suicide bombers were involved in that attack. Charred remains of the attackers vehicles were seen at the sight. The father of u. S. Teenager finnegan lee elder who has been detained in italy for his suspected involvement in the fatal stabbing of an Italian Police officer left the prison where his son was being held elder is in custody alongside his former high school classmate. Darrell juvenile group is recalling 24,000 infant sleepers due to safety concerns associated with incline sleep products the recall involves the eddie bauer slumber and soothe bassinet and the disney baby doze and dream bassinet. They were sold between november of 2014 and february of 2017 and there will not be a woodstock music concert to mark the 50th anniversary a series of misfortunes and obstacles have derailed plans for the massive concert this summer maybe next year. Thats the news update this hour back downtown to you guys on squawk alley. Morgan, back to you. Sue herrera, thank you. Mmhmm. Well, i just want to take a look at shares of dynatrace, just opened for trade here at the new york stock exchange. Up 57 after pricing at 16 a share. Were going to be talking to the ceo in just a few moments, so stay tuned for that. Meantime, call it the race to space. Richard branson has Virgin Galactic, but also another virgin spinoff, virgin orbit, which may be a few weeks away for provide iing launches joining us now, virgin orbits president and ceo, dan hart, whos live at the companys california factory, where they are currently working on six new rockets. Dan, thanks for joining us today. Well, good morning. Its great to be here. Lets talk a little bit about that rocket behind you 70 feet tall or long, i guess i should say, called launcher one. What is it going