Worldwide exchange begins right now. Quit playing games with my heart, with my heart, with my heart good morning, good afternoon, good evening, ask welcome from wherever in the world you may be watching. I am brian sullivan. Yesterday the second best day of the year for stocks, the dow soaring 500 points youre probably wondering is that rally going to follow through today . Lets go ahead and find out. Right now at this 5 00 a. M. Hour, we do see a little bit of a continuation of yesterday, dow futures up80 points. Were not soaring on the futures. No ones saying that, but we are not seeing that drop that we had in may every time we went up we take two steps backment not the case today. We are on green across the screen for bonds or bond yields backing up a bit yesterday the fed of course all but came out screaming it might lower Interest Rates this year the benchmark tenyear not reacting too much, still very low, only five bips, basis points as we say in the biz. A similar story in asia, at least for one major market let me clear this. There we go. Even though the world bank trimmed its Global Growth forecast for the year down to 2. 6 from 2. 9 , which is, by the way, the lowest growth forecast in three years, it didnt matter to the japanese market the nikkei 225 in japan spiking nearly 2 , one of the better days its had in a long time china, well call it flat, europe is higher gentle gains across the board. No major rallies, but the j trade of course remains your top global story this market may not be about trade right now. It is obviously about the Federal Reserve. Joining us is patrick armstrong. You know the fed utters and the market responds. Are you surprised by the magnitude of the rally of the u. S. Stock market yesterday based on a couple of words from the fed . Yeah, it was a very subtle change where powells move from patient to saying ill do whats needed should the economy deteriorate. Im a bit surprised by the sharpness of the move, but given the context of what we had in may and very oversold conditions, i dont think its out of the realm of what you should expect basically. The market was worried that the fed may not cut if we do get into a trade war and see Economic Growth weak, i think powells reassured the market he is there to cut if the trade war does escalate further. I think probably the markets gone too far right now pricing in that next fed cut i dont think there will be a cut unless we see a deterioration in trade or an upping of the ante on china, u. S. Trade relations a lot of sort of selling pressure coming into the day, and maybe some margin covering was it a shortterm maybe oneday wonder i think it is probably shortterm because you shouldnt have a euphoric reaction to what powell said. His words were that if needed well be there, and i dont think you buy base ond that because if its needed you dont want to be in equities its difficult for me to see where the real leadership in u. S. Equities are going to come from you might get a steepening of the curve which we expect, which will be good news for financials but its not the right kind of steepening you would want if youre a financial the weakening of the front end means youve got a weak economic backdrop you see issues with government and its going to be a very difficult decision on the way government treats these Large Cap Companies because if you are in a trade war with china, you want Strong Technology companies in the United States so youve got two edges of the sword right now on what the u. S. Governments doing on both the White House Administration and congress maybe looking at things from different perspectives. I think our viewers are kind of wondering what do i do now. We had a great start to the year may was a disaster, june is looking pretty good but they wonder what to do vinindividualy we talk a lot about boeings problems the ceo was on the other day, are you long air bus yeah, so were looking at ways to play a potential trade war on companies that might win in a trade war we actually expect a trade deal potentially and continued Economic Growth. We like air bus, we dont like boeing we dont like caterpillar. We like toshiba machinery in japan. Companies selling to china if trade relations deteriorate with the United States where china moves away from u. S. Domiciled company on goods they need to import or have production on and i think looking for regions that are outside the United States, maybe beneficiaries if it is a bilateral trade war where the rest of the world is not involved and its just the u. S. And china going head to head on a trade war. Also like gold from that perspective. Thats toxic for bonds, thats toxic for equities that means lower growth, higher inflation. You mentioned toshiba, obviously a Japanese Company weve talked about how the japanese market on pretty much every metric is the cheapest major developed market in the world, but investors havent cared. Its still well down this year, patrick. Are you betting on japan or just betting on toshiba we are betting on japan thats a relatively new position for us we are starting to go long japan now. I think germany and japan get hit up in any news thats negative on trade. If it ends up being bilateral trade issue between the u. S. And china, germany and japan could be beneficiaries its probably right from a global perspective those markets sell off on trade concerns but individual companies in those markets may be beneficiaries japans the cheapest its been in 20 years on earnings, on ebitda, on dividend yield even youre getting a significant dividend yield on Japanese Companies right now. I do think its the time to be buying japanese stocks right now. Patrick armstrong live from london, looking toward japan, new position there we appreciate it, patrick have a great day. When we come back, tim cook talking regulation, what he is saying that is getting a lot of attention today. Plus gameover . Shares of one video Game Retailer tanking this morning after a dismal First Quarter result well give you the full details coming up. Sales force shrugging off a growing slowdown, the backlash from tech regulators looming large. Were following behind what the krurp peen union is doing, jim the European Union is the ones that are the leaders in this area with their european action against these companies when they misuse data, misuse privacy or take advantage of customers lets clean it up and lets get back where, you know, that facebook is not the new cigarette. All that, plus futures are higher the dow futures up 82 points right now. Were going to take a short break and talk about more about whether or not we can continue on yesterdays monster rally ntueri when Worldwide Exchange coins ght after this ready to run, oh, but is that enough . I need tech that understands my business. I need tech that works at scale. Dear tech, dear tech, dear tech, were using ibm blockchain to help make sure food stays fresh. Were exploring quantum to develop next generation energy. Were using ai to help create more Accessible Health care. Were using iot to create new kinds of digital wallets. Lets see some more headlines about that. Lets expect more from technology. Lets put smart to work. [ giggling ] lim a slick chickp [ doorbell ] [ slap ] your nails xfinity home. Cameras. Xfinity home. Disarm the system. Doors open. Morning. Welcome to the neighborhood. Do you like my work . Secure your home with x1 voice control. And have professional monitoring backing you up with xfinity home. Demo at an xfinity store, call or go online today. And we are showing you some live pictures out of the United Kingdom where the president is headed south from london to portsmouth he is attending a ceremony commemorating the 75th anniversary of the dday invasion before heading off to ireland later on today well bring you more on this coming up. It is a big league kind of market for technology right now. Big governments, big crack down on big tech is heating up. Congress now calling on americas top tech ceos to testify. They want to know if theyre misusing their market powers to stifle competition, and apples ceo tim cook worried enough that he went on National News and weighed in on the issues last night. Lets get to elizabeth shul sooe who is live in london with more on what tim cook had to say. Reporter thats right, pressure is mounting on apple, facebook, google and amazon in washington as they face pressure now from lawmakers, the head of the House Judiciary Committee saying he wants tech executives to be part of the conversation on capitol hill when it comes to this investigation into competition on Digital Markets apples ceo pushing back on concerns that his company is a monopoly on cbs yesterday. Take a listen to what he said when it comes to those concerns. I think that with with size i think scrutiny is fair. I think we should be scrutinized. I dont think anybody reasonable is going to come to the conclusion that apples a monopoly our share is much more modest. We dont have a dominant position in any market. So youre saying youre not a monopoly skpl we a monopoly. We are not a monopoly so what were seeing is a fight here what were seeing is a fight brewing between these Tech Companies and between congress, in addition to those reported investigations from the department of justice and from the ftc, so a lot of regulatory pressure mounting on these Tech Companies in the u. S weve already seen it happening here in europe, and its likely that lawmakers and regulators are going to be looking to some of the precedents that have been set here, brian whren theyre looking at these cases. I want to switch gears. Youve been on the forefront talking about the general data privacy rules kbrgdpr as it is known, what europe has been doing is a crackdown on privacy and a disclosure of private data when you talk to people there about whats happening in europe, do you see any kind of framework about what might happen here . Thats a great point. Theres been so much focus on raining in big tech here in europe, and thats coming on all fronts weve seen it from the data privacy side, as you mentioned gdpr, that huge piece of legislation that came into effect last year that has big fines imposed on companies if they breach these privacy rules. Were seeing talk of a digital tax and have seen some antitrust regulation come into place when it comes to these Tech Companies. The European Commission has imposed about 9 billion total in fines just on google. Hasnt had a huge effect on the business, but generally could have a big effect on the precedent that it sets for these companies when theyre trying to look at what places can really hurt Going Forward with google and likely other tech giants too. Thank you very much well talk more about this a bit later on in the show. Lets get you up to speed on this mornings top stock movers including one name that is down 20 right now. Your stocks to watch. Good morning, well get to that disaster of the day lets start with salesforce. Com. Raising its profit outlook for the year after reporting better than expected First Quarter results, revenue jumping 24 that could explain why the stock is up almost 4 . Sales force has previously pointed to Strong Demand in Cloud Computing and Artificial Intelligence moving on now to sky works its cutting its revenue guidance for its Third Quarter due to the loss of sales from huawei sky works has supplied mobile and Wireless Infrastructure products to huawei and its affiliates those sales accounted for about 12 of total revenue. Shares of game stop down nearly 30 today, First Quarter profit and revenue fell. Brian, apparently the issue is that shoppers are just buying fewer video games and consoles in stores. Gamestop eliminating its Quarterly Dividend that stock down as proobrian mentioned almost 30 this morning. Got one word for you, you know what that word is whats that fortnite. How about that. No ones playing anything else but that. Thank you very much. Lets switch gears to china where president xi jinping says rising tension in the middle east in part due to u. S. Pressure on iran something to worry about and he adds that all parties need to exercise restraint. Beijing of course has not only been hit by the trade war but also by american sanctions on the sale of iranian oil. China is irans largest customer joining us is dan tennebaum. He joins us from hong kong its great to see you there in hong kong. Not only are you there visiting clients, but anecdotally, youre able to kind of gain the situation for yourself and what are you seeing on the chinese side yeah, brian, the timing worked out quite well, especially with president xis comments earlier today. This is another evolution in the ongoing standoff between the u. S. And china you have the u. S. Making allegations of a tanker docking in hong kong carrying iranian oil, which would be in violation of u. S. Sanctions in the eyes of the u. S. You have the Chinese Government saying in our law that is not a concern of ours. So you do have a bit of an issue to see how the u. S. Reacts from an enforcement standpoint on an on going basis it adds another wrinkle in an ongoing complexity of this trade debate. Your clients no doubt you are visiting dan, are people worried . Are they in a mild state of panic or it like listen this is going to work itself out we just need some time i think theres a bit of numbness to some of these issues and threats from the u. S. In the form of tariffs, in the form of sanctions enforcement. The u. S. Has yet to truly go after china from a sanctions standpoint the u. S. Government seems to have divorced the two issues from the chinese perspective they believe that they really are one and the same in terms of the ongoing relationship between the u. S. And between china, so i do get the sense from talking to clients locally that they are a bit numb to seeing how the u. S. Will react there have been measures taken against smaller institutions in china with respect to their ongoing business with north korea and iran, but that can easily be ratcheted up if you do take the example of some of the Technology Companies that posed a very big part of the ongoing trade dispute, one of them was put in both of them have been put in the hot seat related to alleged activity with iran. So this has formed a significant part of the debate, but none of these issues have really been seen through theres kind of been statements made by the u. S. Its been put out there in a threat to cease the business with iran by some of these other parties, but theres been no follow through were going to we might see what happens right now there is one super tanker that is floating on the ocean somewhere out there. It is owned by a chinese bank, and it is filled with iranian oil that was filled up after the sanctions went into effect now that ship, weve been tracking it, has not become to port yet to unload that oil in china. Youre a sanctions leader, dan, if that ship were to come in in direct violation of what the United States is saying cannot happen, what do we do . Whats our whats our policy here so that is the real issue the u. S. s position on iran is a unilateral position. Historically the u. S. Had allied support in the treatment of iran thats not what were seeing today. Youre beginning to hear noise of an attempted push away from dollarized transactions, which weve heard for years as a threat before, but until someone can truly punish the u. S. For these unilateral moves, it will be really difficult for the u. S. To ftamp down its expectations i think whats important to note with the vessel you mentioned there has been ship to ship transfers for years to transfer oil off vessels onto other vessels midstream in transit theres been moves to turn off the ais tracking equipment so that vessels can move untracked. For all we know the boat in question could already be here in hong kong but theres a number of measures that people have taken for years to circumvent sanctions. I can only imagine that thats continuing at this point, especially since the oil waivers expired last month. Dan tannebaum in hong kong, its a more humane hour there. We appreciate it thank you very much. Discord in the ranks, will the gop really go after trumps planned tariffs on mexico . And what will trump do if they do well take you to d. C. Next. Later why some say that breaking up big tech could be a blessing in disguise for investors. Fun fact 1 in 4 of us millennials have debt we might die with. And most of that debt is actually from credit cards. Its just not right. But with sofi, you can get your credit cards right by consolidating your Credit Card Debt into one monthly payment. You can get your Interest Rate right by locking in a fixed low rate today. And you can get your money right. With sofi. Check your rate in 2 minutes or less. Get a nofee personal loan up to 100k. The first survivor of ais out there. Sease and the Alzheimers Association is going to make it happen. But we wont get there without you. Visit alz. Org to join the fight. Welcome back, it is 5 23 on the east coast lets get down to news out of d. C. There is a very important meeting happening there today. Leaders from mexico will meet with secretary of state Michael Pompeo to talk about the tariff threat and more importantly what they may need to do to stop it tracy pot ss li tracie potts is live in d. C. With more. Reporter theyre bringing a plan, theyre also meeting with the