Carl jon, that was one of your better dad jokes morning, guys. Good to see you both weve talked so far this morning about production in manufacturing, talked about infrastructure this hour, obviously, youve got to ask the question whether or not we will one day be talking about vietnam as a true high tech hub its true that apple has components made here sharpe, intel, lenovo has component make heerg fing here a while. Was its that final assembly that is so hard to do and requires so much education that vocational schools like this one are in huge demand here. The government has vowed to train 2 million kids over the next several years we talked to one of the professors about this training, and he said, because the students who do graduate are getting snapped up like mad. One of those companies is samsung, guys. Thats one of the big stories here in vietnam. They came here a while ago back in 2014, invested 3 billion in an industrial park, 250 acres, 60,000 employees, which is now one of the biggest facilities to make cell phones anywhere on the planet but the question will be whether or not, guys, that is the exception rather than the norm, because although you do see, for example, these reports and rumors about, well, would apple one day move some of its productions out of china, out of foxcon into other countries, certainly possible but the work that vietnam and other countries would have to do to get there, to meet that demand is still a long ways away carl, just great work, great content all day today. Just really fascinating information. Im wondering about another piece of the trade puzzle here and supply chain puzzle, which is logistics and transportation. What it would take if more manufacturers are coming into vietnam to actually move those products to other parts of the world. Reporter i thought of you today, morgan, because we did go to the port and saw all of those containers and realized what a big deal it is to have a port that is a deepwater port, where you dont have to get your goods to another market to get on a bigger ship, to get to the United States. So the deepwater port is what vietnam has been working on. But again, thats a huge challenge. Its something they havent had to do so far and to get those things up and running is going to take about three years. So is this whole boom going to last throughout that time . What if we get a g20 deal this weekend or some time in the next six months what happens to all of those investments and those ideas then so, its really vietnam is in a really interesting crossroads whether its the production or the delivery, which, of course, you know so much about and thats the question that i have, carl, is around stability, because we didnt do tpp. And because nobody knows exactly how long this trade war with china will last. How reliant does that make vietnam on Getting Better trade agreements with anybody, who could then serve to fill that demand hole that could emerge, if things clear up between the u. S. And china yeah, i mean, believe me. The lesson at tpp is not lost on anybody here and in fact, just in the past couple of weeks, theyre making final arrangements to get a Free Trade Agreement here with the eu which is something that doesnt look, you know, likely in the near term with a bunch of other countries. So vietnam, i think, is overall playing it very safe theres a look at what they already ship a lot of machinery, a lot of apparel, a lot of footwear but there is sort of this dichotomy, guys, between the stuff thats easy to make, the tshirts, the sneakers, even, as opposed to the cell phones and final Assembly HighTech Products that are much harder to build. That said, i will argue one last thing. Theyre very big in auto parts if you need brake cables, the emergency exit signs that you see in a Movie Theater and schools, those are all made here but to get to the level of a of what china has been able to put together over the past 20 years, thats where they are theyre very much they have that in their sights, but they realize what its going to take to get there all right, carl, thanks, were going to get more from you, of course, later on this hour and so the question, will Companies Need to reshape their sourcing to respond to these trade headwinds . Joining us now, citis u. S. Hardware analyst, jim suva, who most recently slapped his apple target price on chinas and the economists editor in chief. Jim, theres been talk about apple making some adjustments in its supply chain to supply the u. S. How permanent do you see that being . And how much flexibility do you sense they really have well, first of all, they set up a great production coming and sourcing out of china. But with the evolution and the time of iphone growth as well as its apple user growth, beyond simply just north america, other countries have certain rules that are quite unique that people arent familiar with. For example, in india, you get taxed heavily when you import production into india. And you cant own any store and operate a store if youre in india. So when apple looks at this very complex supply chain, right now centered in china, theyre going to be looking at other factors, such as these National Rules of owning and doing production in other countries like india, vietnam, and places that will allow them to open up stores so we believe that this is an evolution, a stepping point, but importantly, as spoken earlier, the infrastructure of shipping, trucking, transportation, plastics, metals, bending, all that infrastructure needs to be in place, but we believe that it will happen. That apple will, indeed, diversify its supply chain beyond china, what we know today. Is that going to be the legacy of this trade war, you think . Sore is that even clear yet . More diversification into areas outside china. Or is this just the u. S. Kind of an isolated case, where there are going to be some temporary changes made, but not so much longterm . No, i think this is a longterm shift sor sorry, thats for zani. I think this is a longterm shift, because whatever the outcome of this current paceof the trade war, we are seeing a big shift in the u. S. In its relationship with china. And we have clearly moved towards a strategic competition kind of relationship and i dont think thats going to go away anytime soon. And so the sense that there is high tech rivalry and the concern about being too reliant on china is going to stay. And therefore, i think all companies are going to have to rethink their supply chains in response to that its going to take a long time its not going to be overnight, but even if there is some kind of breakthrough at the next trump xi meeting, dont expect this trend to stop this is a permanent shift. The question is how big it is, how deep it goes, and what it means for the future of globalization and for these supply chains. Jim, im going to ask a question ive asked many times on our air before. I get that youre seeing these supply chain dynamics play out, these changes play out ill use the case of apple, for example. In the midst of this u. S. china trade war situation, but why cant a company like apple start to bring some of its supply chain or some of its manufacturing back to the u. S. As well . Well, i think some of the skplin is going to continue to evolve and some may come back to the u. S. In small amounts. But keep in mind, also, the hourly relative cost of labor, plus the health care costs, retirement costs, unemployment costs are simply a lot more expensive than shipping something via air or sea internationally. But when you look at development, you have seen apple actually expand its campus, right here in california, as well as in texas, also those may not be Assembly Jobs we have seen the shift for production years ago, it was the shift to mexico, then the shift to china. Were seeing now a shift to potentially vietnam and india and other locations. Assembly simply as a lower cost tends to look for a lower cost of labor we do believe jobs are coming back to the u. S. Some of them specifically more high tech, some of them more programming jobs, some of them more hightouch jobs apple has been higher in california and in texas. Maybe not the Assembly Jobs were talking a lot about today, but is more higherskilled labor. Right theyre talking about an extra thousand people in seattle that they hadnt talked about before. Zanny, on this trade thing, im wondering, what about stability . The Trump Administration has seemed to really like these onetoone deals as opposed to bigger, broader deals like the tpp, which the administration backed away from doesnt that also play into how this plays out i mean, china could be a source of stability for some countries that are looking for a sure thing. I think stability, or rather, the lack of it, is going to be a really big problem going forward. The Trump Administration has correctly, i think, identified problems in the trading relationship with china, but you can have a very long debate about whether theyre going about solving them in the right away and the weapons of mass destructi destructionization is something that introduces enormous instability. If youre a company anywhere in the world now and have any links to the u. S. Financial system, any links to u. S. Markets, you simply dont know which bit of the u. S. System is going to be weaponized next. So that brings massive instability. And if you take a sledgehammer to the existing trade system but not very keen on building up anything in its place and not very keen on working with allies to build something new, then we have a whole load of instability. So i think youre absolutely right, thats a really big problem. And on top of that, you also dont have, i think, a mutually compatible view of what success looks like between the chinese and the u. S. And that for me is a real problem. Because the chinese increasingly think that the u. S. Simply wants to contain them, to keep them down and if they get that view, then its very hard to see how you get a kind of positive outcome to all of this so, yes, theres a problem yes, theres a trading problem that the administration identified, but right now, were on course to an awful lot of instability. Yeah, some people have been calling it a tech cold war jim, in terms of your coverage universe and all the macro uncertainties and the way this has been playing out in tech stocks in recent weeks, recent months, where should investors be putting their money right now . Well, we do have a buy rating on apple, and our target price is 205. But it is not our top stock pick because we believe consensus expectations are too high, and these trade wars are going to cause a little bit of a preference shift to the National Brands there in china, for some of those local domestic brands our top pick is actually a Company Called keysights, kyts nooirt ve theyre not very well known, because theyre a detailed intricate company that does 5g testing. We believe 5g globally will roll out and be a very big part in everyones life. So while we do have a buy rating on apple, currently it is not our top pick but we do have an upside for 205 for our target price for apple. All right, jim, zanny, good conversation thank you. Well, big deal to get to this morning in pharma all all allergen being bought in after 60 million cash and stock transaction. That 63 billion doesnt include about 20 billion in allergans debt. Thats a more than 80 billion deal altogether. Abbvie shareholders clearly dont love it off the bat, selling stock throughout the morning and after a conference where ceo Rick Gonzalez laid out his rationale. He says it gives them products rather than abbvies drug humira, which is expected to face direct competition in 2023. And he told me by phone this morning that the combined company will look in size a lot like eli lilly, but it will be a little more profitable and grow just less than 10 a year over the next decade. He said hes not surprised with the share reaction this morning, but said, quote, i cant think of a single scenario where abbvie isnt better off than without allergan with the purchase, abbvie gains allergans blockbuster drug botox and gonzalez says thats not all thats attractive among allergans 15 billion portfolio. He also pointed to products in migraine, gastrointestinal disorders and Womens Health its not a bet on allergans pipeline any successes from drugs in development would be further upside to the deal abbvie does plan cost cuts of at least 2 billion within three years. For allergan shareholders, its a culmination of a somewhat tortured road. Shares had rallied recently on speculation that the company would split in two, but clearly ceo Brent Saunders had bigger ideas. He is, of course, known for pharma deal making, as thats how he built allergan and he will join abbvies board guys, over to you. In terms of the deal making, meg, weve seen so much consolidation in this space in general in the last couple of years, will this continue to fuel more . And whats still out there that could be of speculation for m a . A lot of people have been really focused on biotech targets this year, morgan, like pfizers deal for array, for example. But we also see these deals like bristolmyers buying sell geceln abbvie buying allergan speculation today is kind of turning to Companies Like biogen for example, a Big Biotech Company that had a disappointment in its pipeline in its alzheimers drug recently so these companies that are very large, do have cash flow and revenue, but have faced some setbacks now are being considered potential targets and these would be huge deals to continue what weve already seen in this space. Meg terrell, thank you. Thanks. When we return, still much more ahead from vietnam and our live coverage from hanoi but next, is instagram listening to your private conversations . Well tell you what the head of instagram said next. Stay with us dow is down 49 creating the perfect night. Just takes a little creativity. The light beer youve been waiting for has arrived. Lower carbs. Lower calories. Higher expectations. Corona premier. So should the way you bank. Virtual wallet from pnc bank. Just one way pnc is modernizing banking to help make things easier. Pnc bank. Make today the day. Welcome back facebooks head of instagram, adam laseri appearing this morning talk about deep fakes and the companys ad policy. Julia boorstin has more from los angeles. Thats right, adam moceri took over for the apps founder last fall. This after franoutrage followin facebooks refusal to remove edited videos of nancy pelosi and mark zuckerberg. Mosseri says they do not have a policy against deep fakes and he doesnt feel good about that fif it takes too long to identify it, at that point, the damage is done we could declare victory, but thats not a victory at all. Thats very hollow the thing were focused is not if you take it down when you find it, but how do you find it more quickly if we dont, if a Million People see a video like that in the first 24 hours or first 48 hours. The damage is done. The damage is done. Mosseri also denied that instagram listens to consumers or looks at their messages to deliver ads based on what people are talking about. If youre into food and restaurant, you like the restaurant, thats subconscious and bubbles up later i think this happens in ways that are really subtle but we dont look at your messages or listen in on your microphone doing so would be super problematic for a lot of different reasons. These two lines of questioning, whether people can trust the videos they see ton facebook and instagram or whether they can trust that the company is not spying on them speaks to consumer concerns about facebook and its family of apps that dont seem to be going away guys julia, i think this issue of whether facebook and instagram are listening, i hear it come up all the time, but it shows to me just how good their targeting is like, sometimes, they can guess what youre going to talk about before you even know that youre going to talk about it yeah. I mean, jon, its definitely a sign that their ads are good the question is, are they too good that its creeping people out . And are people creeped out enough that theyre going to opt out of ad targeting, which of course would be bad for facebook and make those ads less valuable but what instagram and facebook would argue is that having ads that are that good that it almost seems like theyre listening to you would make them more valuable to you and actually things that you will want to click on yeah, im totally one of these people thats creeped out because i get a lot of these hypertargeted ads and i do feel like, at times, feel like its more than coincidence. But that being said, the deep fake part of this, its really, really worrisome to me and i cant help but think that from a facebook and instagram point of view and social media in general, its a really beg future business problem as well. Because if you have further erosion of quality control, content control, as you mentioned, is that going to turn users and potentially advertisers away i think youre absolutely right, morgan. This is the next frontier. Were just starting to see the early days of these deep fake videos and from what i understand, the real challenge is that the technology can be so sophisticated that it will be hard to identify them and pull them down before they can go viral. This is definitely something that facebook and other platforms such as youtube are thinking about but were just sort of at the tip of the spear in terms of how bad and how dangerous these could be if you look at the difference between this coming election cycle and the last two cycles, how fast that technology is moving and whether the next round of manipulation that we see around the elections could be from deep fakes, people seeing videos that are just totally fabricated well, julia julia, it seems to me that the problem here really is that social Media Companies have worked hard to destroy the idea of credibility. Its ike, content if anybody just as good as content from anybody else one of the ways you could fix this is by having a tier of content from people who promise to post true stuff and if they post anything thats close to a deep fake, you dej t delegitimize them. And then if somebody goes on and theyre looking right youre talking about a whitelisted group of respected news outlets and i think that totally makes sense, jon thats something ive been talking about for a while. Why not distinguish between different types of news outlets. But i think when youre saying that social media destroyed the idea of credibility, they might say they just sort of expanded the i