copper is on the move after moody's downgraded china. we'll hit the future pits next. ♪ predictable. the comfort in knowing where things are headed. because as we live longer... and markets continue to rise and fall... predictable is one thing you need in retirement to help protect what you've earned and ensure it lasts. introducing brighthouse financial. a new company established by metlife to specialize in annuities & life insurance. talk to your advisor about a brighter financial future. >>> welcome back to "the halftime report." i'm jackie deangelis. we are watching copper today falling after moody's downgraded china's credit rating for the first time in nearly 30 years. china the world's largest consumer of copper. did you short copper on the down grade? >> i did not. that was a mixed down grade. think of how moody's hedged themselves. that was actually an upgrade. the modern day silk road from 2,000 years ago in china, that silk road we're calling one belt one road will touch 50% of global gdp, and that infrastructure should buoy

moody's estimates

this is what moodies is highlighted again. moody's has not pressed that panic button. chinese paper is still investment grade. but it does send a signal. what it suggests is that it may be less of a good thing, of course, for international investors to invest money in china. now, those signals are very much there. what we've had in china in recent months is an effort for them to try to protect the value of their currency. not let it push down. by doing that, they have stopped people from being able to take money out of china. that, too, has been a bad signal for many investors. of course without investing -- investors coming into china, there is the problem that more own news will onus will be on domestics to keep up the pace of growth which may be unsustainable. if you look back at some of the japanese newspaper stories over the last few months, there are stories that many japanese companies, this will also relate to u.s. companies and other foreign companies, are having difficulties because they cannot take money out of china and back to the parent, this is creating

and director of moody's around the desk. let's talk about the first quarter. i spent a lot of time talking ubs and the numbers and being very bullish. we see this, given seasonality, how much of the strength was se seasonality and how much is strength? >> well, we do expect that the markets will remain volatile. so we're not saying that one quarter necessarily makes a trend. but it was a good quarter for the european investment of funds and the market revenues with the exception of barclays. but really, what we saw was that capital markets revenues pulled the revenues for the quarter. because as revenues overall were relatively flat. and that's really reflecting, you know, weaker results in some of the noncapital markets where low interest rates continue. >> much of 2016, i feel like we talked about the fact that u.s. banks were gaining markets here at the expense of the european rivals. do you feel with that strong first quarter, european investors are able to claim back the risk markets here or is it too early? >> i think

this puts them solidly below the top tier in terms of moody's anyway. granted it's not a market moving call, but an acknowledgment of, you know, potential risks there. >> and none of us expect that moody's is going to come up with the smoking gun when it comes to debt. >> watch iron ore prices. not rating agencies. >> there are things to be f focused on when its comes to china. and china, a possible tax war could be on the horizon as the tax plan may have an impact on china, specifically on its manufacturing sector. our eunice yoon has more on that story. eunice? >> hey, guys, i'm at an apparel company in china. just like where you are, everybody here has been talking about whether or not president trump is going to be able to get tax reform done. the reason for that is because if president trump is able to make good and follow through with a large corporate tax reduction, that could have a big impact on manufacturers like this one. now, i have been in and out of factories all week. i was speaking to one owner of a textile manufacturer who is investing

we'll also hear from vice chair stan fisher and presidents john williams, on the earnings front, cigna, moody's and transcanada report before the bell. >>> still to come, becky has more on warren buffett's big ibm move. an expert's take ahead of this weekend's french election and we're counting down to the jobs report. we have a busy friday morning for you. stay tuned. arns. it's great to finally meet you. nice to meet you too. your parents have been talking about you for years. sorry about that. they're all about me saving for a house, or starting a college fund for my son. actually, i want to know what you're thinking. have a seat. knowing that the most important goals are yours. multiplied by 14,000 financial advisors, it's a big deal. and it's how edward jones makes sense of investing. you...smells fine, but yourin your passengers smell this bell dinging new febreze car with odorclear technology cleans away odors... ...for up to 30 days smells nice... breathe happy, with new febreze. hey you've gotta see this. cno.n. alright, see you down there. mmm, fine. okay, what do we got? okay, watch

mark andy from moody's analytics. andrew, i guess that's back to you. >> okay. steve great to see you. great interview. thank you for that. when we come back, just when you thought leg room couldn't get any tighter we're going to tell you about which airline is cutting space for economy travelers. joe will also tell you about his travels on southwest. and pay for the "a" group. coming up at 8:30 a.m. eastern time senator bob corker's going to join us live. we've got a lot to talk to him about. >>> still ahead, "squawk box" goes out of this world. >> to infinity and beyond! >> neil degrasse tyson opens a portal to the cosmos in his new book and he's taking us along for the ride. the celebrity astrophysicist lands here at 8:40 a.m. eastern time. stick around. you're watching "squawk box" on cnbc. >>> welcome back to "squawk box," everybody. shares of true yo are plunging this morning. the cloud communications company warning of lower than expected full year revenue. the company's ceo says that uber is to blame for this. the ride sharing giant will reduce usage of

moody's says that the deal will add to its perngs as soon as next year. >>> also this morning lyft is teaming up with alphabet's self-driving car unit waymo to develop a pilot program. the companies aren't releasing many details. waymo has some of the most advanced self-driving technology and has just started testing cars in phoenix, arizona. lyft office ride sharing services in 300 u.s. cities. the deal isn't exclusive. lyft will continue working on a self-driving program with general motors, which is a major investor in lyft. >>> coming up former nato commander james stavridis will join us to discuss the cybersecurity, as well as north korea. we will be right back. >>> on deck, right here on "squawk box," former major league baseball superstar alex rodriguez. and starwood capital chairman and ceo barry sternlicht. they'll step up to the plate and take a swing at the issues that matter most to your money. from game changing policy issues in washington, to market curveballs. we'll cover it all. grab a hot dog and a cold drink, the 8:00 a.m. hour is sure to be a grand slam. "squawk box

housing problem of -- speaking of 2007-2008, how worried should we be about home capital trowels and moody's cut ratings on big banks. >> my guess is not terribly worried. this has been one of these long percolating slow motion crisis for a long time now. canadian housing market did not tank with ours, so it's hard for me to see why the banking system is choking on bad housing debts. >> worried about canada in the next u.s. sub prime crisis? >> no. no. >> got other things to worry about. >> in the scheme of things, i worry about big things like china. you know, you worry about the things -- >> you said it like trump. china. you worry about china. >> you know -- now you're really hurting my feelings. now you are getting back at me for the streamers comment. i know where this is going. i'm now talking like donald trump. >> irony is real estate shows in cana canada. >> yeah? the brothers from canada? all right. massive ransom aware attack hitting asia attack this afternoon. here's what we know so far. >> hey, kelly, well, we do know that it's scores of countries, some estimates put it north of

the next m is moody's downgrade on china's debt. >> what do you think about that? >> it's not a huge thing. however, debt is a huge thing. in 2000, china's gdp was $1 trillion. japan's was $4 trillion. today, china is 11 trillion, and japan is still 4 trillion, 17 years later, but the debt to china is off by 2 trillion to 30 trillion, so that's what people are worried about with that second m. >> right. >> e, earnings phenomenal. you all reported this day after day. up 13%, and so this is one of the things powering the market. the final, the r, is what winston churchill calls a riddle inside a mystery inside of enigma, and that's russia, political machinations, washington, could affect the market, and if that's the case, you can go ahead and use that as an opportunity to buy. hope it doesn't happen. if it does happen, that's a good time to buy. the earnings -- you know, there's so much cash on the sidelines, interest rates are very, very low, the market is high, kelly, and volatility is low. this is not a great recipe for a long term, but i think it can continue fo

they paid 31 cents on the dollar, and moody's did a study in 2010 of all of sovereigns that had defaulted between 1994 and 2010, and they averaged a rate of 31 cents on the dollar for defaulted bonds, so in a sense they bought these bonds that the average default rate already. they bought them, really it was a fire sale. it's as if the bonds had already been defaulted on when they bought them. so -- >> what would be preferable about the potential outcomes if goldman sachs and other institutions essentially said, no, we're not willing to put up our capital to buy these bonds? do you think it would hasten the demise of the regime there or somehow reprioritize their spending and not service the debt and maybe essentially feed the people of venezuela? >> i think it's -- >> i'm sorry -- >> yeah. >> i think, first of all, it's not entirely correct to say that they are supporting the regime in particular. they are supporting the bet that whatever happens, and i believe they are supporting the bet that the regime falls apart, which is no what they were not necessarily talking about that story, bu

i believe moodies did something similar earlier this week. all this after warren has sold out a third of its shares. another beg week of earnings is headed our week next week. i love this calendar, it looks so exciting. snap is the first time the company will report quarterly earnings since going public. i know it doesn't meet your big money to the mark threshold, however. it's a lot bigger than many. >> the crazy thing about snap, they must be in the $20 billion. >> 27 billion. >> by the way, snap, snap is 20 times bigger than shake shack that you talked about. >> real quick. >> it's interesting to see how they characterize their own results, what metrics they want to put forward, because they were trying to de-emphasize user growth in the ipo. >> by the way, mark hauthen an analyst said he wouldn't be surprised the user growth turns negative because of the strong growth and what facebook, instagram is doing. thank you, guy, for being here. appreciate it. have a lovely weekend next weekend, that's it for "closing bell." "fast money" starts n

cnbc did a tracking update with moody's, it declined to 0.1% from the previous reading. the economic surprises have been coming in negative. >> absolutely. that's been one of the surprises that the market has done so well, it's surprising to see the various measures they all measure the same thing and the economic data didn't do so well in q2. but we're very optimistic. that's what the fed has been saying this week that, you know what, just look through this. the minutes said look through this. just see if things will continue to improve going forward. >> is that why the market has remained resilient in the face of some weaker economic data? >> i think the market is disconnected from fundamentals. the last time i was with you guys i talked about the ecb and monitoring how aggressive both the boj and the ecb were going to be coming into this year. in fact, between the two of them, there's $1.2 trillion of balance sheet expansion. let's not forget they're not just acting on benchmark rates. the boj is buying equities and the ecb buys investment grade. in particular ecb buy

amherst and moody's at 3.8. action at 3.2. and bank of tokyo at 2.9. look at the futures market, the uncertainty shows up. not in june expectations which is around 60% for that hike. but in expect anxiouses for the -- expectations in september. you have a bun of people who think it happens, a bunch who thinks it doesn't. >> did we expect the discussion to begin about shrinking the balance sheet and what do we need to know about that? >> when and how much and how it proceeds. we have some general statements from the federal reserve that they're having this conversation now. we expect to know more say by the end of the year. maybe as soon as the fall. does it taper the reinvestments? you have a statement by the way from the treasury. which said, hey, we're getting ready for this. that means we have to sell more to the public because the fed won't be buying. it's interesting to see how the bond market reacted which is not at all. it suggests to me that the bond market is ready for the reduction of the balance sheet and if the fed plays its cards right it