Im carl quint knanilla along w sara eisen technology is one of the leader sectors and President Donald Trump is on his way to meet with g20 leaders in germany later this week, including the oneonone with russian president Vladimir Putin all this amid growing concerns over north koreas growing tension. That escalated over the weekend. Joining us to discuss is john rutland, and math chthew mcgwir former director at the world bank welcome to you both. Thank you for joining us good morning. John, your expertise is china. You have studied china for a long time. We have been trying to dissect the tweet this morning, trades between north korea and china grew over 40 in the First Quarter. So much for china working with us, but we had to give it a try. That was from President Trump as he embarked on this journey. What is the prospect of a risk factor for investors escalating tensions between china and the u. S. The two biggest economic superpowers right now . They look like they are going that way its in the interest of the chinese leaders, its not the interest of the chinese leaders to have an outofcontrol trade war. They are trying to pressure the u. S. About the Senkaku Islands and other assets in the South China Sea and trying to look tough at home. So it is a very difficult thing. Trumps plan is not very orderly. You know, we put bad missiles in south korea. We have been trying to talk about taiwan but north korea is shooting missiles into the water. So its a pretty messy part of the world. So i think its going to get tougher, but i dont think were going to have an allout trade war with china matt, what is your assessment, especially as someone who comes from the world bank, the world bank and the imf, they advocate economic cooperation, cooperation to solve global problems at a time when that is needed on north korea. What is the status of Global Cooperation as leaders meet for g20 . Thats exactly the role of the g20. These Companies Make up 80 of gdp. What they agree to lays the road for the rules across the board china is the leading trading partner of more than half the countries in the world one of the things the g20 has focused on over time is pulling in shadow banking and making sure theres solid regulation across the various economies in the g20. This is a concern people have had with china as john knows far better than i. This could be one of the things quietly if not in some of the more public settings will be discussed because as goes china, so will go many other countries, not only in that region, but in farther regions of the world as well john, what is important about exports from europe, the germans are growing like crazy right now. And its really chinese exports that are they are driving it. So, sorry. No, john, speaking of which, what do you make of these overtures between china and germany at a time when the Trump Administration has had testier relations with both . Is that a leverage point to watch in how that relationship develops over the g20 . Its very important you know, look at who weve got in the room. We have merkel, macron and trudeau. Three enormously popular leaders, let alone modi from india. On the other side of the table, you have putin and erdogan and chi. And weve got mr. Trump in there with no state department trying to negotiate with those guys i think weve got a formidable lineup there the u. S. Vacated the position in the free world its being occupied by the eu, by china and by russia our interest is for the eu to take that spot in which case its merkel and macron that are the leaders. But the chinese see this differently. This is their onceinalifetime chance to get to the adult table and they are doing everything they can to get there. I agree if i can pick up on that, one of the things we have to remember about our relationship with germany, which has hit a rocky road about what President Trump has said about chancellor merkel, over the last ten years, we have seen about 200 billion investment on the part of the German Companies into the u. S. Bmw, amerimerck, you can go dowe line and as chancellor merkel said, bmw is one of the lead automobiles in the United States as that relationship between germany and china grows is, aught you not be investing even more in china. We are friendly, we are reaching out to you and trying to work with you youre getting static from the other side of the atlantic one of the things we have to worry about is the trade relationship as it pertains to germany because they have been such a great ally and important investor employing americans right here at home the driver i want to bring up a point on trade. Why doesnt the market seem to be worried about this . China has key trading partners and economically important investors, are the investors not buying the prospect of this happening . First of all, growth is very strong in europe we have seen very strong numbers coming out pretty food in china right now, the emerging markets and the u. S. So its the fundamentals underneath the politics which are showing us this year in earnings growing quite strongly and revenues for u. S. Companies growing about 5 this year thats pretty good but the driver between what you were talking about a moment ago is chinese leaders are very worried about hong kongs stability, about Migrant Workers and other stability issues so for them, having incoming capital from overseas offsets the capital outflows they have been trying to bottleup. So it is very good to support rnb. The other context in the g20, people may be waiting to see what the concrete moves of this administration are so while we have had a lot of rhetoric and a few things early like the tariffs placed on canada, i would note canada is the largest customer we have sold about 270 billion worth of goods and services to canada last year so that is a worrying trend that some have picked up on i think one of the things that people are watching for in the g20 is to see what the u. S. Puts forward and what stances it takes. And that will spell out more on where we are headed with the trade relationships and the impact it will have on American Companies and communities. There are also major suppliers of steel to this country, something President Trump has been talking about as well so, john, just final word here as we watch all of this develop with north korea they are taking front and center stage. Why isnt china doing more to shut out north korea well, im really puzzled by that i have been in pyongyang and its the most dismal place in the world. The fellow running it is absolutely crazy and the chinese interest is to get rid of the Nuclear Weapons i dont understand why he hasnt just disappeared with the head cold over one weekend, which is the chinese solution i think that is what is likely to happen. There are innocent people in north korea. And about a million bad guys and if we blow the place up, well blow up the 20 million poor people with it. All right well leave it there guys, thank you. Mad matt mcgwire, john rutledge, thank you, both. The dow is down 13 and the s p again in the green specifically were watching tech as we enter the second half of 2017 amid all the geopolitical uncertainty. For more, we are joined by the global adviser senior Portfolio Manager walter price and senior Portfolio Manager dan morgan two guys we like to have on together to talk about this. Good to see you both once again. Walter, for a while there nasdaq was looking at the fourday loss of the year, it could still happen this afternoon, well see. But do we think this selloff in tech was limited to the past week or so i think its pretty limited because youve got, youre about to approach a period of stronger earnings reports and i think that will help stabilize the stocks here. Strongest earnings from whom . Well, i think it is very broad across all of technology youre saying that Summit Companies are strong, Software Companies are strong, so theres a nice tail wind to tech businesses for the first half of this year. We have seen this before announcements. I wonder if you think the period going into the First Quarter is a sign for good reports . Im optimistic like walter is in terms of numbers. The selloff is more profit taking kind of coming in to end the quarter and so forth there were recent studies that just came out that showed demand for Information Technology from cios is expected to be up 4. 9 , which is very strong so i agree with walter i would expect good numbers coming in here, you know, well kind of kick things off in about two weeks. And i expect tech to perform very well in terms of profits. And hopefully add a little bit of juice to this wishwashy trade you have been talking about in terms of the nasdaq going down walter, besides pure earnings, i am fascinated on what is moving tech stocks around i cant help but notice that this is better than 2 , perhaps on the announcement the two of them will be working together on Artificial Intelligence partnerships between the autonomous driving platform, that has gotten working things into the platform. Do you think ai is that present right now that these partnerships are really moving stocks yeah, i think ai is starting to be a significant business its well over 100 million a quarter now. And i think its growing very fast and i think they are clearly betting they will help the chinese Auto Companies embrace ai and autonomous driving. So, yeah, i do think ai is pushing the needle and it drives memory demand. You know, people dont realize that for every 100 of nvidia on the board, it drives a whole semiconductor industry, actually ill take this for a moment, dan. There appears to be some correlation lately with higher yields globally, but also with treasuries and the selloff in the tech sector, something reversing a bit today. Is this all one big qe, liquidity trade where tech has been the biggest beneficiary lately of that rally well, what is kind of interesting is we saw the fed come out a couple weeks ago and raise rates. With e swe see the tenyear go down that will slow Economic Growth we all know the kiss of death for technology is a negative gdp. We all remember what happened in 2000 when we hit the cliff we all remember in late 2007 2008, it is interesting to see this on and off situation in regards to yields and technology i think people are kind of betting what direction the economy will go based on what the fed is doing, but also trying to figure out how that is going to Impact Technology going forward. So far, it doesnt appear to, based on the information i have, but you can kind of see this back and forth going on between what the fed is doing, what treasuries are doing and what is happening in technology. So it is very interesting. Yeah. Hey, walter, im curious, we went through a period where we talked a lot on this hour about tech of a pause and innovation, right . I mean, technology was sort of plateauing on innovation in terms of product phone improvements were incremental, now we are talking ai and everybody seems to have a digital assistance and maybe the aid is going to be amazing do you think wereexiting that period where innovation so to speak was leveling off i think so. I think that ai is affecting all businesses and will affect all businesses and i think if you get some sort of a trade rebalance, that will help manufacturing in the u. S. And that will result in more robotics being used and more Vision Systems so i think those all help drive the leading edge of tech and demand for tech. All right nice intersection between the macro and the micro. Walter, dan, thank you, guys well see what happens as we kick off the earning season in a few days when we return, watch out, tesla. Another automaker unveiling plans to go all electric by 2019 all bbibaba taking on amazon well hear what jack ma has to say about it and why samsung could be overtaking intel as the biggest chip maker a busy hour ahead as squawk box comes back. These days families want to be connected 24 7. Thats why at comcast were continuing to make our services more reliable than ever. Like technology that can update itself. An advanced fibernetwork infrustructure. New, more Reliable Equipment for your home. And a new culture built around customer service. It all adds up to our most Reliable Network ever. One that keeps you connected to what matters most. Welcome back watch out, tesla another automaker is going all electric in the next two years phil lebeau is in chicago with that story phil john, were talking about volvo and the announcement of volvo certifies what the company said a few months ago fazing out diesels. Starting in 2019, all the models will come with electric motors that doesnt mean they will build engines with the internal combustion engine, but this will start to phase them out. Internal combustions will be phased out in announcing this decision, keep in mind that when you take a look at shares of volvo, this is a chineseowned company and where are electric vehicles growing very quickly and the government encouraging electric vehicles china. So, at the end of the day as you look at shares of geely, that is driving the volvo announcement we want to switch gears and talk about tesla with a fair amount of news that come out over the last couple of days including q2 deliveries many are looking at to say, these were not exactly what we were looking for. A total of 22,000 vehicles delivered to breakdown as 12,000 being the model s. And 10,000 the model x. Goldman says we think demand has plateaued in that 24,000 range for model s and x for the remainder of the year, as a result, its a price target of tesla dropping it down to 180 goldman also expecting lower margins than originally forecast in the second half of this year for tesla. Thats one factor weighing on the stock today. Guys, we have talked about this for some time, a big second half for tesla, we had the announcement about the model 3 and for the remainder of the year with the first deliveries of the model 3 will be heavy news flow for tesla. We were just talking about thank you, carl. We were just talking about the really ambitiouslooking projections for the production of the model s. What happens if what tesla always does happens again here and they end up missing projections but still being impressive is wall street losing patience do you have the take on that so far . Youre talking about the model 3 in terms of ramping up production 20,000 for the month of december wall street is looking at this and saying, look, they may not hit the full production of a half million next year but lets say they get up to 450,000. Is that going to make people change their opinions on tesla a lot depends on what we have seen with the growth margins we are in the waitandsee period where we start to see the ramp up in production. If we see a repeated quarter after quarter after quarter where they fall short of estimates, then i think youre going to see pressure on the stock. As of right now, were in that waitandsee period. We are seeing pressure on the stock today on the back of the downgraded spot almost 6 . Phil, thank you. Disney shares are under pressure today. Down a percent after the wall street journal put a spotlight on ratings declined at its channel. Were talking kids and teen channels, not just espn. Julia boorstin is here with something you have been watching for a while. But the numbers are staggering espn has been in the spotlight, but Disney Channel and freeform are suffering from a massive shift away from primetime tv now, people under top age of 34 are watching about a third less primetime tv than they were five years ago. In the first half of the year, disney ratings on Disney Channel, disney jr. And disney xd xddeclined by doubledigit percentages. Freeform, which used to be abc family, generates revenue from ads and the cable group. So the channel says it targets a slightly older demographic than that all the channels play a valuable role in promoting disneys characters to drive its studio, its theme parks and its Consumer Products now, freeform and the Disney Channel both losing about 4 million cable subscribers over the past three years according to kagan but they dont decline from growth in digital bundles including directv now and hulu that include their channels. Freeform says it just had the best may ever in digital doubling digital viewing on the apps in the past two years for the quarter that ended in march, disney said on the Earnings Call the decline at espn was partially offset by growth at the Disney Channel and freeform so now well see if Second Quarter ratings declines hit the dismal Third Quarter we are on the lookout for disney to launch a standalone Disney Channel or freeform service as disney increasingly looks to take its brand and products direct to consumer sarah . Yep, that is the question we will see. Julia, thank you still to come on squawk alley, jack mas response to amazons alexa and apples si rir ri well have recodes ceo weigh in good morning once again, everyone im sue herrera. Heres your cnbc update at this hour an overnight shooting in savannah led to a Police Choice that ended in a deadly crash four people were injured when shots were fired at the historic city market. Police then pursued a car leaving the scene which crashed killing the three people inside. And travelers coming to the United States from turkey may now be able to keep their laptops with them. Turkish airways and emirates say they have been exempted from the device ban after meeting enhanced security measures the tsa tells nbc news it is visiting both airlines today to