Losing month for 2019, first may decline for 2012 this morning you see modest green arrows s p futures up by 2 points and the nasdaq up by about 9 points. Overnight in asia markets slightly stronger. President trump coming back from japan. You see the nikkei closed up by a third of a percentage point. Similar gains for the hang seng and the shanghai deposit up about 0. 6 in europe its a mixed picture. The ftse up by about a tenth of a percent. Stocks are weaker in it will i and in spain as well if you talk a look at whats been happening in the treasury market in the United States, youll see the tenyear is yeeling, wow, 2. 89 , so below 3 . This morning alibaba deba debating whether to offer new public shares in a second offering, this time to hong kong reported will i they could raise up to 20 billion. Theyre currently working with financial vuzers to offer the listing as early as this year. The Company Initially listed in new york in 2014 raising a record 25 billion shares of alibaba up 13 year to date. Were following a major developing story in the auto world this morning Fiat Chrysler and French Company renault are teaming up shareholders are soaring on this news Fiat Chrysler shares up 5 , renault, 10 phil lebeau has more on this phil, good morning. Negotiations picked up speed over the past couple of weeks and especially in the last week. Thats when john elkin, the head of the ya nelly family, sha shareholder of Fiat Chrysler started talking quite a bit with the chairman of renault. Officially it isfiat proposing this merger. But lets be clear the two sides are talking. This is not like theyre saying, hay, do you want to get today . Jeandominique senard whos the chairman would be ceo. Annual says, 8. 7 million vehicles worldwide that would make them the Third Largest automaker in the world so in terms of investors, why does this deal make sense . Why would you look at this and say, hey, why not put these two companies together you get 5. 6 billion in cost savings. Thats the estimate at least on paper from Fiat Chrysler theres little overlap yes, theyre both in europe, but the areas where theyre strongest and the product markets they play in in europe dont overlap as much as you would think. 8. 9 billion in net profit in 2018 were going to show you three stocks to watch here first of all, lets start off with renault when it comes to renault, keep in mind the board is reviewing the merger proposal. It wont be long before we hear something from the board in terms of whether or not they believe this to go forward to shareholders then take a look at Fiat Chrysler the shareholders at Fiat Chrysler, by the way, so they can make the valuations match here, they will be sharing in a 2. 8 billion onetime special dividend so for many Fiat Chrysler shareholders, that i will get part of that dividend. The 2. 8 billion and finally take a look at shares of nissan and the reason were showing this to yo is because Nissan Renault are part of an Alliance Nissans stake in renault which is 13 would be cut in half, dropped down to 7 pn 5 . Nissan, to a certain extent, theyre boxed in here. Theyre not crazy about doing a full merger with renault thats the reason why the situation that developed over the last sex months with carlos ghosn and nissan executives and japanese authorities, thats one of the factors that many believe caused the situation with him being arrest and charged with a number of financial crimes that he denies. So what does nissan do from here, guys, because they dont want a full merger yet at the same time if they dont go forward with one. Their influence on renault, especially if its a merged Fiat Chrysler, it would be diminished dramatically. Phil, though, see, to me, i spent a lot of time over the weekend about this transaction it seems to me on the nissan piece, which i think is actually the most interesting piece, especially given that trump was over in tokyo and apirnlly there were conversations President Trump. President trump was over in tokyo that it cuts both ways in that nissan was always upset about how much power the french government had visavis renault and by turning into this transaction, the french government gets deluded. It becomes alarmer component, but in terms of the ownership structure, in terms of a government stake, that that changes. No youre correct that that does change, that the french government does not have as much influence on the Nissan Renault alliance. Wasnt that always one of the biggest points of contention it was a huge point of contention, a secondary print of contention was the feeling that carlos ghosn and the people that, you know, he worked who worked closely with him. It was not a japanese corporation. It was a French Company that worked with them, and as a result, increasingly you could tell there was strain from the japanese perspective that it was not losing cell of the company but that its influence was not as great as it should be. This would mean it was even less of a japanese corporation, that they would have less of an impact is that a good thing or a bad thing . I think in the grand scheme, given how upset they seemed to be about the french role but that seems like it could be now that it gets consider. Thats a red herring so to speak. Id be surprised. Im surprised theyre upset, except i think some of them thought it was being done behind their back, right, phil . Yes youre right on all those point, andrew the other thing to keep in mine, however, if youre nissan, things have not gone well, take a look at that chart that just is symbolic of whats going on with this company over the last six months. Ever since the ghosn affair exploded, they have had a rocky time in terms of the financials that theyve posted, and this is a company that is in many ways at a crossroads. Im talking strictly nissan. Im not talking Nissan Renault its at a crossroads whether youre looking in the United States, japan, or other markets in asia. This is a company that needs direction and it needs people to take control of it, and theres a feeling that that is whats lacking right now. Look. Shareholders are pushing that up its up 2. 3 so shareholders look the initial news on this what about management there . They wont like that. They were part of this, right. No. They wont like i it look they might ultimately sit there and say we would be the Worlds Largest alliance worldwide, 15 billion in sales annually. But nissans component within that is going to be small. Is going to be less, a smaller percentage than before. Hey, phil, then the last piece of this, the pledge thats been made and this is the political hurdle is the pledge by Fiat Chrysler that they wont be closing plants, that they wont be losing jobs, that all of the synergies in value will come from the ability to, you know, basically collect the supply chain so they would be able to get lower fees for product, et cetera is that realistic . No, no, its not as realistic as theyre portraying it on paper. First of all, lets talk no job losses theyre not going to close any plants theres too much auto capacity in europe. Thats not just renault and fiat thats all automakers. Theres too much capacity there. That has to be stripped out of the system while renault has done some of that over the last 15 years, not as much as people believe it should be done. If thats true, do you think the french deposit will ultimately approve this deal they will if they get those guarantees they say, if youre guaranteeing it, i think we will agree to this deal. In terms of your second point, andrew, we hear this all the time whenever theres an alliance, partnership, merger within the Auto Industry bother going to save x billion dollars. Never happens. If a company says were going to save 3 billion dollars, we know the synergies on paper, it rarely ever happens. That doesnt mean theyre not going to save some money they will. Theyll say, okay, youre going to get some of those savings, not a all of those savings kevin, what do you think this is a sign of weakness. This sector is a miserable place. Basically were building cattle cars do you think ten years, 15 years, do you think a car transports you if you dont own it i think these miserable mid markets have to face ability excuse me, dont shoot me for this i would never invest in this this is going to be costcutting, headsqueezing, margin crushing, and all theyre ever going to make is a box with four wheels on it. Who cares. This would be a miserable place to invest. Maybe you can keep a story going like a ferrari or maybe a bmw. But the rest is a cattle car business. Certainly not a renault. I dont know when is the last time i was in a renault taxi i havent seen one it doesnt matter. I think the industry has to look at it and say, were at a Tipping Point here. Thats why were doing this. It doesnt help the investor. If they guarantee the french jobs what do you prefer they do in. Nothing im telling you as an investor, its a miserable place. Wouldnt you imagine its better that they be tied up together than to basically be doing everything separately and spending x amounts they can hold onto each other while drowning this is a misery loves company. Its going to be a poop show thats what its going to say. Youre allowed to say that. Thats okay. Hey, phil thank you. Its good talking to you im sure well check in with you later in the day. You werent looking at the dod stuff this weekend you were doing this . I was doing this. You had to set the dod stuff on wowway over here. Thats true i did. I was ready to wok on my dod huawei stuff. You had three days. I did then i got waylaid by this news. They called it a long weekend. It was. Not long enough for joe. Did it seem so . It was so long. In other deal news, sources tell our own david faber that Global Payments and total Systems Services have agreed on a stock merger of equals an official announcement could come as soon as this morning Jeffrey Sloane has more. If you put them together, theyre worth 40 the merger, tss market cap is around 20 billion, so call it like a 20 billion, 21 billion merger acourses to sources, total system will receive 28 of the merged firm. The merge comes as they look to better compete with Newer Technology players like square, paypal, and the likes. And Cleveland Cavaliers owner dan gilbert remains hospitalized as he recovers from a stroke on sunday in a statement dave varner said he was not feeling well and take top the hospital by a family friend while in care at the hospital he suffered a stroke and was immediately taken in to a catheterbased procedure and send to recovery hes awake and resting comfortably. Obviously we send our very best to him hes a good friend of the show, a regular. Just here. Somebody we all know well dans only 57. Is he 57. Only 57 and a man responsible for rebuilding all of detroit, right . And the cavs, et cetera. Hes a good friend. We wish him well we do wish him well, but as long as youre here and you already made the comment and were talking nba obviously this is an aside raptors you know, you have to be there, joe, to feel the electricity. I know. I feel it, but theyre big underdogs, 320 yes, they are i think its be iter to be the underdog in a game like this when going against a team the first game or all series . First game, i think its in toronto, isnt it . It was impossible somehow they won four in a row. I know. How often does that happen . Never. Now we face an impossible uphill climb. I wasnt that big a basketball guy until i got watching this. Now im just hooked. I mean theres nothing like it it beats hockey. Be like drake drake is excited have you seen him . I know that. I figure youd be next to him, both of you highfiving. Hes a super fab and his brand adds to the excitement he was as told, youve got to get into the sport. It has so many riches. I have to thank him for helping me get tickets. Who who . Mark. Cuban. Yes or his guys did. Hes got a fantastic team there. Look bottom line is im hooked now. Im totally hooked i think whats going to happen is theres going to be a good morning on thursday and a game on saturday and if they pull either of those off, this is your next big Champion Well see. Well see and the automakers are all on shorts. Why cant we tell the truth with or without kevin durant, i dont want them. Not a big fan of the coach the golden state guy hes awful. Coming up, trade headlines over the weekend from President Trump in japan were going to show you what he said in a deal with china. Well talk about a potential market impact. As we head to break, heres the market of winners and losers e ecifical spifically 3m, still in a dark moment announcer this cnbc Program Sponsored by Suntrust Bank confidence starts here guys, get in here whos a good boy . Its me. Me, me, me. Hey guys youre gonna want to get in on this. I know how to those guys in here. Lets pause the internet on their devices. Wohhh . Huhhhh . [ grumbling ] all sausages mmm, mmmm. Bon appetite. Make time for what matters. Pause your wifi with xfinity xfi and see the secret life of pets 2 in theaters. In trade news, President Trump says the u. S. Is not ready to make a trade deal with china. He made the comments as he concluded an official visit to japan. As for as chinas concerned, they want to make a deal i think they probably wish they probably made the deal that they had on the table before they tried to renegotiate it. They would like to make a deal were not ready to make a deal, and were taking in tens of billions of dollars of tariffs, and that number could go up very, very substantially very easily, but i think sometime in the future, china and the United States will absolutely have a great trade deal. Over the weekend, a commentary piece by chinas state run agency accused the u. S. Of making air gabrrogant rs specifically trying to make a development of Stateowned Enterprises which touches on chinas fundamental economic system. The dow is down for five weeks, First Time Since 2011 greg hodges and charles campbell, mkm partners managing director and trading desk specialist just looking at those two things, the weakness in equity, charles, and what were seeing with the tenier, why isnt that indicating some type of issue in the future, some kind of slowdown, some type of break in the goldilocks scenario . Whats interesting, joe, good morning and thank you for having me, last year was distinctively different. This year its not an issue of rate hikes everyone knows theyre on hold for a long time. Its an issue of what are the earnings going to be and how are the bond markets going to perform. The stockmarket is within a couple of parnl points of the alltime high. The bond market, the curve between the threemonth tbill, its inverted three months ago its inverted a little bit again. If this goes on for an extended period of time, people will say theres a concern about recession. They ore not telling us that the tenyear is a pretty low yield. Which is the right one . Which is the right story both cant be right which one is right . President trump is a great at building billings on the west side and great at licensing his name, but dealing with chinese policy makers is a different game, and it reminds me of the michael situation where he became part of disney. You put a guy with a didnt job, different skill set, and it raises the question to me whether he understands his audience people who are very familiar with the chinese say theyre very smart, say theyve done business with them for years. Like a former peanut farmer or former actor or former baseball joe biden has been a politician since he was 29 years old. Would you rather have one of those . No. Oh, okay. Because they had a former life doesnt necessarily make them bad, but it doesnt guarantee success also. Let me get to craig. Nothing else works. I have lived with the chinese guys for 15 years. They dont play fair im okay with the new guy trying Something Different because i get screwed every day. Every single day people wouldnt dispute the notion that prior trade deals need to be renegotiated. I think what people are concerned with is the tactics that the administration has elected to use to achieve desired ends to say if you try to push the chinese into a corner and theyre a proud people, strong, high conviction, oriented, they might say, well stick this out. Well go beyond 2020. Let me get to craig craigs all excited. Hes been telling us this for years. Recent volatility in the stockmarket is driving stock picking comebacks. Youve been saying that. Its not a stockmarket its a market of stoxx i dont want to get you mad. He turns green and turns into the hulk. Dont turn me green. You were talking about stock picking. You were right all this time. The market, we believe, is setting up for potential big things its been a difficult year you get the starts and stops the economy is somewhat from our channel checks were doing we do about 2,600 over 850 companies. Things seem to be pretty good. Theres optimism out there, although its not showing up necessarily with investors, and there are the have and havenots of the investment world. There are a lot of stocks that trade in high amounts and theres this whole other part of the market thats been left for dead, trades, ten times earnings going much faster than that. Its a stock pickers market its showing up this year. Were having a tremendous year. Oleary is getting out of the a u toe ownings. He hates them. He could use some of owes those. Capri holding, michael kors, jimmy choose, and versace. Versace. Did i mispronounce that how about something boring like cisco systems, procter gamble. Versace is down 20 in the last month trades about eight times earnings, one times sales, and has three tremendous brands that all the negative is already factored in. Expectations are lo