Many people. Tencent is one of the most active investors in the world. More than 450 investments under the companys umbrella and that is more than the number in softbanks universe and includes names like tesla, snap and epic. Thirdly, american businesses operating in china, like mcdonalds and starbucks, they rely on the wechat app for their operations so being cut off could jeopardize their business there. There are so many questions still outstanding but its really hard to understate the importance the daily role of wechat for chinese internet users. Its called a superapp people use it for everything from messaging and booking a doctors appointment and we dont have an equivalent here. Tik tok is popular in the u. S. Its looking at a sale to microsoft so it could get around that ban there is no such option for wechat, carl weve tried to explain to investors just how important it is on the other side of the world. Lets bring in global head of Technology Investment strategy at deutsche. Welcome. Good to see you. Great to be here. Do you have odds as to whether or not this order takes effect in 45 days . Its hard to bet whats going to happen given its an Election Year a lot of talks as tensions keep escala escalating i expect more escalation coming up on u. S. Side given the sensitivities. I think the big question will the chinese retaliate . The reason the markets have been the way they have this year is because escalation is from the u. S. Side. Wechat coming up yesterday and tik tok before but the chinese have not done anything substantive this year. The issue is trust thats what the market is focusing on. If that happens, then perhaps it will become front and center so why do you think theyve played their cards slowly and what do you think the first card they play would be theres so many options right now the u. S. Supply chain, we did a study a few weeks ago and we estimated just for the global sector if there was a complete decoupling, the cost is trillions of dollars you look at demand every year from western tech goods, the supply chain and networks that are hard to replicate would take five to ten years and to relocate would be a trillion dollars and the third is the tech world which is an example of whats happening where the world gets delineated into rival sides. So the chinese can react and theres a lot of u. S. Companies with large exposure to china they can put them in an unstable entity list. It remains to be seen whether it will be preelection or postelection. Many would argue that that decoupling has already been under way for a number of years. Many of the most Popular AmericanInternet Services and apps are already banned in china. So what do you think chinese retaliation might look like . Is it going to be in the tech sector or could it encompass other American Companies that are quite successful in china like star bubucks and mcdonalds theres other places of vulnerabilities. Tech is the crux of this cold war. If you go to 2010 and 2015 and 2018 front and center. The issue is china feels that they want to be a global tech superpower and the u. S. Administration view is that this is a transfer mechanism and the two views are loggerheads. They say obviously ai is a big part but semiconductors is one area where the u. S. Is 25 years ahead and china has a huge deficit. Thats what they want to get in part with the u. S. For them to retaliate, i believe it will always come in tech. Tech is where this battle will be forged over the next five years and a lot of hardware companies, Telecom Companies in the west have exposure to china and that could come at risk if things escalate. Weve certainly seen that over the past few years in apple in the crosshairs. You mentioned semiconductors im glad you did you said the u. S. Is ahead by 25 years. China trying to catch up are there any areas that you think china may be pulling ahead or is in risk of pulling ahead you mentioned Artificial Intelligence china has large pool of people they are able to see big data. Thats where they are ahead u. S. Because of the pool of data they can analyze. We did an analysis and tried to quantify this relationship theres a lot of talk saying lets look at it and measure major sectors in tech. And compare the two. From 2014 onward to 2018, there was a steady rise. China was run 40 of u. S. And in 2018, 65 . Strong rally in terms of where they were and they want to be at 100 at par with u. S. By 2025. A lot of it came from ai we found fascinatingly in 2019 that it dropped for the first time it saw china slow down it begs the question where did this come from was it the result of a policies or the slowdown of their own and we found that semiconductors slowed down. Thats the arroi areas youll s china push forward on. The china risk as weve discussed is not a new story its glaringly obvious in which direction its headed. Is the market mispricing china risk or do you think within sectors like hardware that its been accurately reflected, this increase in tensions thats the trillion dollar question the market is focused on liquidity. All bets finds a home in tech. Its just the fact that postcovid the world realized how relevant tech is the risk of u. S. China remains there. I believe the semiconductors have high exposure to china and if you look back last five years, semisuconductors reacted positively to tensions which is a counterintuitive finding if you start to see things escalate further, the maximum risk is in hardware and semiconductors really good insight as we continue to watch the story evolve thanks so much good to see you. Great to be here. The other big story today are those job numbers and our Steve Liesman is here to break it down. Steve . Yeah. Thanks a better than expected july jobs report thats representing a slowing from the strong rebound that we saw in may and june. 1. 7, 6. 3 million jobs created against estimate of 1. 5 million. Unemployment rate declined to 10. 2 . It would have been higher if they count the unemployed the right way. Despite todays solid job report, a more sober reality in terms of hiring will begin to settle in but it is also a reality that will keep the Federal Reserve on hold for a long time. Here is where jobs were. 592,000 is a big number for Leisure Hospitality comingback government, a big number there 301,000. Part of that is seasonal adjustment where teachers were expected to be fired in july and they didnt. Education, health and temporary help weve come back a long way look at how much further there still is yet to go 9 million jobs have been called back over the past three months. That is still 13 million shy of the number that lost their jobs in march and april two indicators im watching give an idea of how much permanent damage is being done in the labor market first, you have the 4. 7 million that left the workforce since the pandemic began and 1. 6 million permanent job losers where they were. Two quick commentaries that i have here. Its a relief but august will be weaker hunter says recovery remains intact despite virus resurgence. People starting to get concerned that the no new relief bill could mean another round of layoffs. Did we lose carl on the other side, dropbox ceo after the break and a big show still ahead so dont go away take a look at shares of dropbox they are falling sharply despite beating on top and bottom lines the Company Announcing the resignation of the cfo joining us now on a cnbc exclusive is dropbox ceo drew houston. Thank you for joining us today good morning. Now, as i mentioned, shares of falling quite steeply, but it was a solid quarter. Theres some speculation that it may be changes at the top. How can you reassure investors that it will be business as usual and what does dropbox without him look like . As you mentioned, we had a great quarter. Were profitable a bunch of great launches. I fundamentally believe if you build great products and make your customers really happy, your stock price will take care of itself in the long run. And im excited for him. He came from the world of investing and hes going back. Thats always been his career aspirations. So im really supportive and also really excited to welcome tim, our new cfo, who is an amazing leader should mention that he led you to Second Quarter of gap profitability. I know that dropbox has benefited from the work from home trend i guess the question for you and many other companies in this space that have seen that increase demand, i know you put out new engagement numbers, how sustainable is it . Well, our product is made for distributed work and our customers turned to dropbox for sensibility and since covid weve seen an uptick in demand we see the shift of distributed work as transformative as the shift to cloud or to mobile. I see it making our opportunity a lot bigger the way i see it is were in the first inning of this shift none of the tools were using were purpose built for this environment, and thats what were focusing on and that shift to working from home happened in the most dramatic and abrupt way possible so back in march we asked ourselves what if we made the work from Home Experience really great. What new tools and technology would you design for this world . We completely reorientated our development. Im excited for the launches in the second half. A lot of your customers are in the small and medium sized Business Space what kind of trends are you seeing from them how are they faring a few months now into the pandemic and stay stayathome orders . We have customers of all sizes including a lot of Small Businesses i think clearly were all keeping an eye on the macro environment and its a challenging environment. In general we find that our customers tend to be businesses that employ knowledge workers that can work from home. They are relatively less disrupted. Dropbox is essential to their Business Operations as opposed to discretionary so were certainly keeping a watch on all of the trends, but weve seen a lot of health and stability in the business. In terms of their spending habits, drew, when they face so many uncertainties, you say its not Discretionary Spending to them are they ramping up particularly that space certainly in q1 and q2 we ha elevated trial volume. Weve seen Strong Demand so usage of the esignature product is up. So theres been a tailwind into demand and a need for our products in this environment i want to talk about one of your newest partnerships, the larger one, and thats the university of michigan to power their Remote Learning this fall. Is education a space that dropbox is pursuing aggressively especially given that it looks like a lot of schools and colleges will be remote this fall absolutely. We have since the beginning. Since we launched dropbox, people are bringing it into schools around the world and now were doing that in massive scale. University of michigan one of the countrys largest Public Institutions and they are deploying dropbox institution wide so we see dropbox as an important part of how you distribute learning and get your students back to school even if they are physically at home. Competition has always been, you know, i ask you guys about it every quarter, but when you go deeper into the education space, youre running up again against some of big ones like google and microsoft and how do you difficult rengs yseparate y . I think by making a product that easy to use in Cross Platform what we find university of michigan is a great example. They have a number of Different Solutions deployed and what they find is students end up choosing the one easiest for them and allows them to work across all platforms and thats why in the adoption of dropbox was a big factor in that weve been in a competitive environment. Always will. Thats what happens when youre working on important problems. But were addressing a universal need every student and knowledge worker needs an organized place for their content that works across all platforms okay. Drew, i just want to get your thoughts on the topic weve been talking about all morning and that is potential executive orders on chinese apps like tik tok and wechat and microsoft could acquire tik tok. Do you have thoughts on this you know microsoft better than many people. What might that look like . Yeah. Its a fascinating situation you know, it doesnt really impact dropbox directly so were relatively insulated from what happens on that front but obviously a big impact on the Global Economy its something that were watching closely you and us and many, many others, drew thanks for taking the time to chat with us today well talk to you next time. Thank you still to come, uber ceo on how the company is dealing with the pandemic well break down their quarter next stay with us shares of uber down nearly 5 toy. Da take a look at shares of uber today a mixed quarter. The ceo did join us earlier this morning on squawk on the street and talked about the companys results and the growth of the eats business which was up take a listen. The eats business is growing at unprecedented rates eats is at 30 billion plus run rate to put that in perspective, when i joined uber this was less than three years ago uber rides business was at 30 billion so we now have an eats business in three years at a 30 billion run rate 113 year on year. We also got dara to comment on u. S. Tensions with china. Its unfortunate how it is happening. I would say the speed with which its happening and the process is not the kind of process that you want to run. But i do think that this is a part of a pattern of there being two different internets. China internet and nonchina internet china has been a protected market in certain Strategic Industries and i think the west has to make a decision as to whether were going to be consistent that way outside of china as well. Im not surprised this is happening and these are important discussions to be had. I think the dialogue can improve. In addition, he talked about use of pro forma and defended that saying he was giving investors two sets of information into the Building Blocks of the business and recovery around the world depends on how countries are managing the Public Health crisis and thats why he sees better results in parts of asia and europe rather than north america. I loved that question that you asked him on the different metrics that they use. Yes, they provide two different sets of metrics. Net loss for the quarter was 1. 8 billion for the first half. Nearly 5 billion. Thats just an enormous sum. The one they lean on is adjusted some take issue with that profitability. Its adjusted adjusted profitability. I would note that on the analyst call last night, they were short on details management said they still plan to reach that target of profitability by the end of 2021 they were asked several times how they get there it really wasnt clear he couldnt even really say what would make him comfortable to choose a quarter next year so i think theres some detail lacking. As for his china commentary, carl, i would love to hear traviss response to that answer remember uber went into china in the early days of ride sharing and they just couldnt compete i think he would probably have a lot to say im not sure he would want to say it on record to say about competing there and how the rules can get changed right under your feet at any time. One of these days well hear from travis again on ghost kitchens and more. You know these guys so well. I think back to the early days where they went public, lyft went public and ubers model was not focused enough on rides and whether now thats been flipped upside down and they are grateful that they have eats to make up for some of the weakness in rides given whats happened in cities all around the world carl, thats a good point it feels like to me the narrative is constantly changing with this company. Remember when they went public they wanted to be seen as the amazon of transportation they wanted to have a hand in everythi everything i think what the pandemic showed them is they need to narrow their focus. Its really quite remarkable what we saw this quarter they were Ride Sharing Company in one quarter they have become a food delivery company. I would note that while thats a really fascinating shift and it happened really quickly, the margins are not the same take rates are far different ride sharing was getting to profitability. That adjusted profitability. Food delivery is a long, long way away from that carl great point i think youre going to send us to some news on european slows, right . Thats right. The European Market set to close in just a moment seema mody has the details for us over to you. European markets are mixed as escalating tensions between u. S. And china offset both the strong jobs report in the u. S. And better than expected data out of germany and france where we saw Industrial Production output jump 13 in france, 9 in germany as factories reopened in june both topping analysts forecast a number of travel stocks in focus today after the u. S. State department lifted its International Travel advisory warning on going abroad. A warning it issued at the height of the pandemic on march 19th however, europe is not allowing americans in the country or in the nation a review of that ban is set for next friday. Given the high number of covid cases in the u. S. , experts expect that ban to stay in effect and travel in europe stocks are set to post their best week since early june rates are improving in parts of europe as Domestic Travel picks up finally, take a look theu euro. They say the dollar continues to depreciate due to a number of factors. Carl, back to you. Thank you so much lets get to sue herrera and a news update on this friday hello, everybody. Heres whats happening at this hour a victory for congress in its efforts to get former white House CounselDonald Mcgahn to give testimony the white house refused to let him testify citing immunity. Toda