Talking about there the socalled jedi contract, its about a 10 billion contract related to Cloud Computing for the pentagon amazon is seen as the frontrunner for that contract it is a big, big number. Here the president saying that other Technology Companies are complaining about the way it was handled. Hell take a look at it. He doesnt specify exactly what it is hes going to do about that contract or how it will be awarded but poses difficult Business Decisions for them. There will be a political overlay onto this as well, tiger. As you know the president is a robust critic of jeff bezos, irked by his ownership of the Washington Post which the president says he feels is unfair to him calling it the amazon Washington Post. This could be seen by the president s critics as an effort to get back at jeff bezos. Well see where this all plays out. No guidance from the white house yet as to what steps the president will take here but sending a shot acrowe the bow. Secretary steven mnuchin. Reporter goingses are going on right now mnuchin said theres an increase in the debt ceiling, two years of top line federal spending numbers and recognition any spending increases need to be offset were working hard to reach an agreement if we dont get there in time, i am encouraging a debt ceiling increase reporter the offsets a source inside the white house tells me theyre looking for about 150 billion in spending cu cuts, a number making it tough for democrats to sign on a reason this is such an urgent issue the treasury could run out of money in Early September while congress is on recess. Lawmakers want to take care of this as they leave for recess. Republicans are floating the idea of a 30day debt ceiling increase if they cant reach a compromise thank you, ylan mui dom chu has your debt ceiling playbook get ready for volatility at least near term incidents of budget impasses and debt ceiling increases. In 2011, 2013, and most recently in the Fourth Quarter of this past year, take a look at 2011 we had the u. S. Debt downgrade at the time. The issue whether we could see that happen again. No debt downgrade but the market solidly volatile to the down side, the european debt crisis the markets did move higher in the weeks after these were resolved the other thing to watch is 2013 Government Shutdown happening in the fall there there was an issue with regard to whether or not we could see something similar happen again, that volatility, tensions surrounding obamacare also weighing in there. Markets move lower and then higher out of there and, of course, most recently in the last quarter of 2018 into the first half of this year, the longest partial Government Shutdown in u. S. History we saw markets take a turn for the worse only to move higher to the record levels weve seen now a lot of other stuff in play now. The fed chair making comments and the Interest Rate hike, all of these two commonalities, the u. S. Budget situation not the only factor in play and the markets are generally higher in the weeks after they get resolved trade this time the variable dom, thank you very much. The debt ceiling not the only thing in focus today but one of the big ones trade talks with china are reportedly stalling and there are fresh concerns about earnings so whats an investor to do . Senior investment strategist and shaun ohara president of pacer etf. Welcome to you both. Shawn, ill start with you since youre two steps down to my left here do you expect they will get a debt ceiling resolution this week or into next week i think it will get done. You just saw the notification if they cant get anything done theyll get 30 days. Theres always this drama beforehand as was pointed out theres potential for shortterm volatility lets turn to earnings and have you guide us through what youre seeing. The netflix numbers yesterday, it wasnt the earnings but the lack of subscriber growth. So the market does feel a little bit vulnerable to banana peels in Earnings Reports. Were getting a little skittish its been ten years in a bull market the estimators are 290. 29 straight quarters, they predicted a certain number on earnings they underestimated the earnings i think what were seeing now with 20 of the Companies Reporting they were coming in above the consensus. I think until we get the broader issues, the trade thing is still hanging out there. The longer it hangs out there the more pressure it potentially puts on earnings because were seeing some slowdown we can ultimately get a trade deal then you see some revisions up in earnings. 2020 looks better for earnings joe, youre recommending clients, whats the primary driver of that well, when you see just how markets have behaved so far year to date youve had this spectacular rally. This is happening at a time Global Economic growth is decelerating and the earnings picture has really just been uninspiring if anything. Were looking at modestly flat to slightly positive Earnings Growth this year and i think when we take a look at 2020 those numbers, while theyre going to accelerate, i think theyre going to come down a little bit which means everything that were seeing in the markets right now is driven by multiple expansion. Can this continue on the back of the fed cutting Interest Rates i think you have to proceed with a little bit of caution. If you are underweight equities, where is that allocation going you go into either cash or into bonds and despite the fact that Interest Rates have come down considerably i think this is part of being a little bit more defensive in your portfolio. With the rally weve seen so far this year are risks skewed to the down side . We think you should lock into some of those gains, if you will are risks due to the down side i think potential risks we have strategies that use trend following mechanisms all of those indexes are currently above. We had a nice fire drill in the Fourth Quarter of last year. Should have given people the ability to prepare for the inevitable bull market. What should i buy and what should i sell, joe you want to keep your exposure to the u. S. Opportunistically the u. S. Appears to be on solid footing and as far as earnings are concerned. Second to that look at low volatility strategies. This debt ceiling fore another example of something that could go wrong i think clients and investors need to be prepared and look for ways to capitalize thank you very much, we appreciate your time today thank you coming up, the new jersey governor joined us yesterday he is suing the federal government along with the rest of the tristate governors saying new tax rules are unfair. Will it work and netflix investors not chill. Shares tanking more than 10 after the Company Posted weak subscriber growth. Will the loss of friends and the office spell doom for stngerthneli ras ings have happened thats what happens in golf nothiand in life. Ily. Im very fortunate i can lean on people, and that for me is what teamwork is all about. You cant do everything yourself. You need someone to guide you and help you make those tough decisions, thats Morgan Stanley. Theyre industry leaders, but the most important thing is they want to do it the right way. Im really excited to be part of the Morgan Stanley team. Im justin rose. We are Morgan Stanley. Hey i live on my own now ive got xfinity, because i like to live life in the fast lane. Unlike my parents. You rambling about xfinity again . Youre so cute when you get excited. Anyways. Ive got their app right here, i can troubleshoot. I can schedule a time for them to call me back, its great you have our number programmed in . Ya i dont even know your phone anymore. Excuse me . what . I dont know your phone number. Aw well. He doesnt know our phone number you have our fax number, obviously. Todays xfinity service. Simple. Easy. Awesome. Ill pass. Netflix shares tumbling, down double digits now 17 off 52week highs. The stream giant posting a miss on subscriber growth netflix also lost about 100,000 subscribers in the United States its first quarterly subscriber loss in at least eight years as netflix continues to lose license content from its library. Can its original content keep people watching . Lets bring in our analyst who is bullish on the stock. Lowered his price target to 400 a share. And larry, welcome to you both why should i remain bullish at this point melissa, weve seen this movie before where the Company Significantly misses their estimated q2 and they come right back i think for us theres really nothing fundamentally different from the model as we look at the q3 guidance. It was extremely comforting to see theyre expecting about 7 million global subscribers and they did point out that thus far in q3 trends seem to have react se reaccelerated we did see, however, i think theres still that potential they predict 7 million additional subscribers in this quarter. Correct what did they predict in the past quarter, and how far off were they . They did miss their q2 by 2. 3 million subscribers. 46 which makes you wonder, theyre saying 7 million, are they going to get it right this time its a huge miss, no question, tyler. My bet is that were going to see some reaction. Remember the factors they pointed to for the miss entirely makes sense. Whether its the timing of the content slate. 9 plus and very importantly coming off this price increase across regions and did make the point there wasnt any particular region if you have a price increase you will see some attrition. We have dom chu with breaking news from the fed. Comments, melissa, from the Federal Reserve bank of new york president john william speaking at the Central Bank Research association in new york today. In those prepared comments he talks a little bit about what he views Interest Rate policy should be when you are at near zero Interest Rates. The headlines from this he believes, John Williams, already known as a dove on the street, perhaps even more dovish today saying they should keep Interest Rates lower for long er, that Central Banks should take swift action against adverse conditions and make best use of their tools. One of the things he mentions specifically in the context of his remarks is that the key lessons, keep Interest Rates lower for longer and adapt monetary policies in the context of low natural rates of interest and zero lower zlb those comments dovish from a very big dove on the new york fed. Tyler, back to you lets resume our conversation on netflix larry, jump into the conversation here. You are no fan of netflix. Why . No. I think its all about the cash. They burn 3 billion of cash you pay 150 billion for that. Now at some point the cash flow has to turn around how can it turn around the last time i looked the Rating Agency for content showed 88 projects under review to see how good or not good they are. The cost of content production is going up. You can burn through Stranger Things in six hours you do Stranger Things. At the end of the day youre paying an enormous amount of money to have someone try to create content having disney or time warner or comcast create content 70 times to have netflix create content. The mast doesnt work. Would you be short the stock . I probably wouldnt own it because its such a cult that i think its dangerous to short it its gone from 46 million this was fine to investors as long as they saw the subscriber growth is the Second Quarter in any way a preview of what is to come next year . Was the price hike the last netflix could pass through to raise their average revenue per user theres no question the price competition will get more intense with disney, et cetera that being said i think theres something to be said about the potential savings theyre going to have when you have all these popular shows pulled off the platform whether its the office or friends. That will make the content even more competitive they wouldnt have been paying those license fees to begin with they have no choice now thats a great point to larrys point, i would argue the pathway to free cash positive is clear to us. We see inflection. While theyre burning through the cash every year, we think that inflection is not too far away the Business Model in our view is pretty kind of laid out theres still International Momentum upside with the secular trends still favoring the migration from linear to television all right well leave it there, gentlemen. Thank you for joining us thank you coming up, we turn the page to todays big after the bell Earnings Report from microsoft, the trillion dollar behemoth is set to report, and so is a somewhat Smaller Company called chewy. Its a pet food company. Its first report as a public outfit will be today everything you need to know about microsoft and chewy before they come out, those reports trading nationilchk wl econ chips. Why go with anybody else . We know their rates are good, we know that theyre always going to take care of us. It was an instant savings and i should have changed a long time ago. Were the tenneys and were usaa members for life. Call usaa to start saving on insurance today. And were usaa members for life. Is where people first gathered to form the stock exchangeee, which brought people together to invest in all the things that move us forward. Every day, invesco combines ideas with technology, data with inspiration, investors with solutions. Because the possibilities of life and investing are greater when we come together. Welcome back to power lunch. Im mike santoli it is a tale of two chip stocks with micron higher and advanced micro lower. Which is the better bet now . Our trading nation team today, craig, amd was really the clear outperformer among these two for the past year or so, the last maybe month micron has made a catchup move. What do you see them doing from here from a relative perspective im going to be betting on the micron here. Its poised to break out i think micron has the edge. Obviously these Companies Operate in somewhat different segments how does that all play into what you would prefer to bet on here if there was one you would prefer over another . Mike, i like micron as well not only did it go down with the dram pricing glut, 50 of microns revenues from china so its extremely susceptible to headline risk. This is a stock now seeing a rebound with the dram pricing should correlate with nice bump in revenue a great sheet. Forward earnings are going to be improving. It can play catchup were long micron and i would be a buyer here all right i guess headline risk is headline opportunity depending on what those headlines say. We will watch it, craig and quinn. For more trading nation follow us on twitter tradingnation ahead on power lunch chewy on deck for its first report as a Public Company plus, clash in cloud President Trump weighing in on a multibillion dollar pentagon contract between two tech giants on todays tasting menu why one senator is calling for an fbi investigation into a seemingly harmless smartphone app. All this when power lunch returns. Here, it all starts with a simple. Hello hi how can i help . A data plan for everyone. Everyone . Everyone. Lets send to everyone [ camera clicking ] wifi up there . Ahhh. Sure, why not . Howd he get out . a camera might figure it out. That was easy glad i could help. At xfinity, were here to make life simple. Easy. Awesome. So come ask, shop, discover at your xfinity store today. Here is your cnbc news update iran releasing video of a ship seized by forces accused of smuggling fuel out of the country. It turned off location tracker early sunday at least 12 killed and 60 wounded by a car bomb that exploded at Police Headquarters in kandahar, afghanistan immediately after the explosion taliban fighters opened fire the pentagon says it is removing turkey from the program. The decision goes against the spirit of the eye lieiaallianced called on washington to reverse it after a water main break cut water to about 200,000 people in florida, the main was damaged in a construction incident near the ft. Lauderdale executive airport. Melissa, back to you we have a little bit of a comeback this hour were sitting at session highs right now. This 15 minutes after comments from John Williams the s p has been in a tight range of 18 points the dow struggling to stay in the green just down by four points the nasdaq higher by 0. 1 . The oil market is closing for the day. Lets go to dom chu. Tyler, were watching whats happening with oil prices. Wti crude off by just about 2. 5 , down by over 3 just five minutes earlier. Ice brent down by 2. 5 as well what we do have is a hangover from yesterdays down side move. Remember, it was tied to the department of energy data showing a bigger build in gasoline and inventory for crude its the Third Straight day of losses in a row trading below its longer and medium term averages leading to technical down side in the shorter term it seems as though markets are shrugging off the geopolitical tensions around the middle east given irans seizure of a foreign oil tanker back over to you dom, thank you. A big spike interday in bit coin seema . It jumped 1,000 in a matter of 30 minutes, right around 10 30 a. M. Eastern breaking above 10,000 which is seen as a psychological level. Up about 9 . Keep in mind ever since facebook announced its libra project, bitcoin has been on a tear chall