Transcripts For CNBC Closing Bell 20171102

Andrew levin, whos professor of economics at Dartmouth College and former adviser to former fed chair ben bernanke victoria fernandez from crossmart Global Investments is in houston congratulations. Thank you. Peter costa from empire executions is sheer at pohere a9 with us. Rick santelli is at the cme. Were going to get reaction later from former Federal Reserve governor larry meyer with us and Richard Fisher well get color from them on the new nominee, the impact he will have on the Federal Reserve Going Forward. Steve, lets start with you. As we await the president , to come out of the oval office which could happen any moment here, hes considered the safe pick why . Well, i think because he doesnt want to have a huge change at all in policy. Doesnt he loves the way the markets have been behaving doesnt really want to upset that particular apple cart look, were not sure whos going to be appointed, bill, but i thought we might just talk about the bio of Jerome Powell, how about . The fed governor oh, sure. Reporter lets just talk about who he is. 64yearold washington, d. C. , native princeton educated law school from georgetown fed governor appointed by president obama, by the way, as part of a republican democrat deal for the fed you have business experience in Investment Banking also government experience as an undersecretary of the treasury under george h. W. Bush a guy whos spoken, by the way, favorably of the past policies of the Federal Reserve in the foe postcrisis when it comes to Monetary Policy. Some of the issues, on the path of rates, he wants them to rise gradually. On the issue of reducing the Balance Sheet, what he said in the past is it ought to be reduced gradually. On the issue of bank regulation, generally in favor of the existing dodd frank framework but says adjustments need to be made its only appropriate to make those adjustments. Finally, on the issue of the economy, he has called it strong hes called the labor market very strong. Lot of continuity on Monetary Policy well see how far he goes along with other new appointees from the Trump Administration to the board of governors when it comes to changing some of the regulations on the banks in dodd frank guys stay with us, steve victoria, whats at stake for you with this announcement yowhn you think about your investments . When we look at what were doing on the fixed income side especially, we have positioned ourselves for rising rates Going Forward. We have shorter duration bopnds, we have high levels of income coming in in order to really buffer any volatility we see with Interest Rate movements if powell is our person thats going to head the fed, i dont think were going to see much change from the path thats already been laid out. Yellen has been very specific in what she planned to do i think powell will continue that but he does kind of give the best of both worlds. He allows trump to have the same policy that continuity of low rates, which he likes. And yet you also get someone coming in that maybe will side with him on the regulatory front. So i dont think were going to have much of a reaction at least in the near term Going Forward, however, i think its those open seats. Its that vice chair seat, its the other open seats with the board of governors that we might be able to shift the, kind of the feel of the fed a little bit over the coming years to see if theres something thats maybe a little more hawkish than what weve seen in the past andrew levin, you studied under john taylor who was also under consideration as we well know, and you publicly said you would have favored janet yellen at some point. So what do you make of Jerome Powell getting the job well, first of all, i think President Trump emphasize ed yesterday, again, Janet Yellens done a terrific job, the labor market improved dramatically over the last few years. Inflation stayed low even though there were some warnings and concerns a few years ago that it was going to get out of control. Inflation has stayed, if anything, below the feds target but jay powell has been there these last five years supporting the Federal Reserves Monetary Policy framework and hes voted in favor of their decisions, so i think theres going to be a lot of continuity as others have mentioned and as victoria said, theres several other vacancies that the Federal Reserve board in d. C. That the ft. Will need to appoint and the senate quill need to confirm. Those are also going to be important. This is not a ding tat dictatorship its a real committee. Every person on the committee is important. Larry, is there a chance john taylor could show up in one of those other seats. Its possible ive spoken to john about it i think he has mixed views but if the president asks him, its pretty hard to say seats about vice chair. I dont want to put words in johns mouth a great friend of mine taught me a lot of economics i want to say, a little bit of a quibble, this issue of continuity interests me because one thing thats going to change bigtime i think is fiscal policy and you have to look at monetary and fiscal policy together money is the lever for inflation. Usually fiscal is the lever for growth so if the tax cuts go through, you, in my opinion, will have a jump in economic growth, big jump from 2 to 3 or 4 ish the question is, has the fed han ha handled this we have no mint hints of this,l faster growth cause higher inflation . By the way, hes not on economist. Right. Thats an interesting wrinkle, if he doesnt come with an economic dogma about what youre raising, who is he going to lean on to answer that question i dont know who his closest confidants are having a its not only powells view of the world, theres a whole committee as said earlier and the trouble, larry, i think you have and will have is that the fed is still going to lean less on a phillips curve framework, if wages go up at a pace thats faster than productivity, its likely to be inflationary. So i can translate, larry, the question youre asking is how much leash does he give to the economy in a supplyside tax cut framework . Actually thats thats where im going on this. And i agree with you look, my view, lot of people disagree with me, i get that, but i regard this principally as the supply Side Business side production side tax cut i think it will boost wages. How much, i dont know, but a significant amount it will boost overall gdp. So i think the chairman has enormous power at the fed. And the board staff has enormous power at the fed staff is really important. All right. And if, you know, if they stick with the phillips curve, they may tighten more to stop the growth. What happens, larry, if you get hang on, steve. I know you cant see it, but here comes the president and look at that surprise, surprise, Jerome Powell standing next to him. Jerome powell im pleased to welcome members of the cabinet, members of congress, and distinguished guests to the white house rose garden this afternoon. Also i want to welcome the chairman of the Senate Banking committee whos done an incredible job, mike crapo wheres mike please, mike great job. Appreciate it. As president , there are few decisions more important than nominating leaders of integrity and good judgment to hold trusted positions in Public Office and few of those trusted positions are more important than the chairman of the Federal Reserve. Accordingly, it is my pleasure and my honor to announce my nomination of Jerome Powell to be the next chairman of the Federal Reserve. Congratulations. Thank you, mr. President. Jay is joined here by his wife, lissa, and his two sisters, monica and elizabeth. And i say congratulations to you all. Please, take that bow. Please you deserve it thank you very much for being here today is another important milestone on the path to restoring Economic Opportunity for the American People. In just a short time, we have already made incredible strides. Unemployment is at its lowest level in more than 16 years. You know that very well. You know that very well. Youre happy about it. Weve now had backtoback quarters of 3 growth, a major accomplishment and were doing better and better every single week but if we are to sustain all of this tremendous economic progress, our economy requires sound Monetary Policy and prudent oversight of our Banking System that is why we need strong, sound and steady leadership at the United States Federal Reserve. I have nominated jay to be our next federal chairman and so important because he will provide exactly that type of leadership hes strong, hes committed, hes smart and if he is confirmed by the senate, jay will put his considerable talents and experience to work leading our nations independent central bank, which has the critical responsibility to set Monetary Policy and monitor our Banking System as a whole. There are few more important positions than this, believe me, in h our government. Jay has served on the Federal Reserve board of governors since 2012 during his five years at the fed, jay has earned the respect and admiration of his colleagues for his hard work, expertise, and judgment he has proven to be a consensus builder for the sound monetary and financial policy that he so strongly believes in based on his record, i am confident that jay has the wisdom and leadership to guide our economy through any challenges that our great economy may face jay has earned the respect of members of congress straight across party lines for each of his appointments to the fed, the Senate Confirmed jay with strong support from members of both parties. Thats unusual i hope the senate will swiftly confirm him once again jay will also bring to the fed a unique background of prior Government Service and business experience he previously served as undersecretary at the department of treasury in the administration of president george h. W. Bush and just like william mcchesney, the longest serving chairman in Federal Reserve history, jay will bring extensive private sector experience and realworld perspective to our government. As a result, he understands what it takes for our economy to grow and just as importantly, he understands what truly drives american success the innovation, hard work, and dreams of the American People. I also want to thank the current chair, fed chair janet yellen, a wonderful woman whos done a terrific job we have been working together for ten months and she is absolutely a spectacular person. Janet, thank you very much we appreciate it for the past four years, she has served with dedication and devotion and we are grateful for her total commitment to Public Service. The Federal Reserve is one of the most important institutions in our government. It is respected all around the world and is crucial to our economic prosperity. I am confident that with jay as a wise steward of the Federal Reserve, it will have the leadership it needs in the years to come. Thank you, and god bless you all. Now i would like to invite jay to say a few words thank you. Thank you very much. Thank you, mr. President. Thank you so much. Thank you very much, mr. President , for the faith that you have shown in me through this nomination. Im both honored and humbled by this opportunity to serve our great country. If i am confirmed by the senate, i will do everything within my power to achieve our congressionally assigned goals of stable prices and maximum employment i want to thank my wife, alyssa, for her love, support and wise counsel. Without her, quite honestly, i would not be standing here were thinking today of our three children and of the world theyre inheriting my five siblings and i, two of whom are here with me today, are thinking of our parents who gave us so many gifts including most of all a loving home in the years since the Global Financial crisis ended, our economy has made substantial progress toward full recovery. By many measures, were close to full employment, and inflation has gradually moved up toward our target our Financial System is also without doubt far stronger and more resilient than it was before the crisis. Our banks have much higher capital and liquidity. Theyre more aware of the risks that they run and theyre better at managing those risks. While postcrisis ill proouchmp in regulation and supervision helped to achieve these gains, ill continue to work with my colleagues to ensure the Federal Reserve remains vigilant and prepared to respond to changes in markets and evolving risks. Finally, to echo the president s remarks, ive had the great privilege of serving under chairman bernanke and chair yellen who guided the economy with insight and courage through difficult times while moving Monetary Policy toward Greater Transparency and predictability. Each of them embodies the highest ideals of Public Service. Unquestioned unflinching commitment to fulfilling our mandate inside the Federal Reserve, we understand decisions matter for American Families and communities. I strongly share that sense of mission. Im committed to making decisions with objectivity based on the best Available Evidence in in the longstanding tradition of Monetary Policy independence. Mr. President , thank you, again, for this extraordinary opportunity to serve the American People. Thank you. Thank you, jay. Thank you, everybody thank you very much. Thanks. Thank you jay powell there, the new nominee as expected to be the next chair of the Federal Reserve, has to get through the Senate Confirmation process. Hes already gone through that as a Federal Reserve governor. Not anticipated there will be any big problems there. Steve liesman is back with us along with our panel steve . Is. Reporter well, it was interesting to hear jay powell, Jerome Powell talk about the idea of making change in concert with colleagues, praising yellen, praising bernanke, connecting himself and his forthcoming tenureship with their prior tenureship and the policies they made, again. He praised those policies breaking a bit as we talked about with republicans also the president made clear, i think, in his statements what attracted him to powell. It was the combination of three things prior government experience, prior business experience, as well as experience at the Federal Reserve. So those three things, it was interesting to hear him connect to William Chesney martin almost 20 years. Chairman. 20 years ending in the 1970s who also was not an economist and also had business experience. I was just reading up on him after he mentioned him i hadnt thought of it in a while, larry served from 1951 he was nominated by truman and served until 1970 and Richard Nixon blamed him i know. For losing the Economy Campaign in 1960 for his tight money policies. I think wasnt bill martin the head of the New York Stock Exchange or a broker in the New York Stock Exchange . Something like that. I think he was. Was he . I think he was. Was he the head of the exchange i think he served for a short time he was definitely a broker. Lbj took him out publicly arm twisting doesnt really give enough credit to what johnson did to martin. Right. For one lousy quarter or half point discount rate hike middle of the vietnam war and oh my gosh. What fed chairs go through. Rick santelli, not much market response at all. I think thats the point you know, they didnt want the markets to be spooked by any of the whoever was going to be nominated, right reporter yeah, as a matter of fact, you can almost take it a little faurther than that, bill the lodge eng end has been drifg the short end is most closely associated with the fed. Now, if you look at all the spreads, the 2s to 10s join 30s minus 5s the flattest in ten years. Last time two year note yields were here was 2008 so, yes, from the standpoint of the markets, the transition seems to not only have any detrimental effects, by the way the markets trading, they just have the general assumption that everythings going to carry on in the stencil that janet yellen has begun. The Balance Sheet idea, with regard to making it smaller. The ongoing, if not, you know, so many rate hikes a year not on a necessarily guaranteed course. All that seems pretty safe in the other issue i think thats quite important here is the regulatory side, to many on this trading floor, is one of the bigger reasons why the markets have done what theyve done since the election. So, yes, Steve Liesmans right, the wall street journal article, larry, you know, the soft touch on regulation fits nicely, it dovetails perfectly with the Trump Administration agenda i just want to point out, we also this morning got data that fits nicely with this idea you can have lot of Growth Without inflation. Productivity growing at a 3 rate, the best in a couple of years. That number has been closer to zero in the last couple years. Jobs report, well find out tomorrow morning the private sector number was pretty good this week. Challenger said year to date announcements for job cuts are the lowest since 1997. We have stock markets rallying bond yields basically not moving what does this all say to you . Theres a couple of things. I do think there will be a pickup of inflation. I think when you see producti productivity start going up like that, thats a huge move i do think that that could put some pressure on wages which will then put pressure on, you know, inflation. I also think that inflation is not a bad thing. Its not a curse word. And to me, this having powell lead the fed after yellen, its smooth sailing as far as thats concerned. I think the regulatory aspect is the bigger part of it for me you know, being in this industry, i do think that there should be some relief in the regulatory end but, you know, with all that being said, i think that we will start seeing a little bit of a pickup of inflation. Im on the minority where i dont really think we need as many rate hikes as the fed has been asking for. I think that the economy is growing. Let it grow. Let people earn more money dont try to put a speed bump in the way. Thats my feeling. Thats the key issue here look, i i dont want to sound negative on jay powell first of all, hes a very good undersecretary for domestic finance. Second of all, his Business Banking experience in the private sector is a good thing very good thing. And you cant judge fed people until they are on the job for quite some time. The question ill ask is very much related to what peter said, if the economy revs up because we are having a big change in fiscal policy, lower tax rates, productivity revs up, i dont think thats inflationary. Absolutely not everyone youre right, were seeing a little it was only one quarter, but, you know, productivity better. Productivity may rise a lot more than people think. So might the economy so might wages that is not necessarily inflationary more people working at higher wages. Inflation is when the dollar collapses. Thats your leading indicator. Larry, dont you need some cushion if theres a downturn . Yeah, i mean dont can you need cushion i mean, isnt that really the key . No. I dont want to go into quantitative easing all over again. Right. Get it up to 2 then they can bring it down three or four eases. Thats what im trying to say. I dont want them to repeat qe i dont want them to repeat zero Interest Rates. Then they need to buy some Life Insurance i need to they are. Id like them to throw out their models, yellen, herself, said hadnt worked in 20 years all im saying is, we have to see what kind of leadership mr. Powell gives if and when the economy begins faster growth i agree. I dont want them to snuff it out. Thats all. Meanwhile, victoria, youre with crossmart Global Investments. We stand at a time when our fed is starting the tightening process. Japan and europe are muddling along right now even though their stock markets are on fire. The nikkei and especially the german dax are at alltime highs. Where do you see the better opportunity, especially with this change in leadership at the Federal Reserve . Well, i mean, i think a lot of it similar to what we saw here if you look over the past two years, the fed was moving more based on what asset prices were doing than what inflation was doing. I think were seeing that some over in europe, some in japan, theyre starting to have assets climb as well. No, theyre not raising rates but theyre definitely starting to taper we see that with bank of england this morning here they gave outlook that was not very promising, but yet they went ahead and raised rates. Kind of similar to our one and done that we did in 2015 and in 2016 so i think theyre looking at the sasset values, driving a lo of what theyre doing and allow v investors to see the best place to put their money to work if we have 3 growth people are talking about, we had gdp that came in, had the productivity higher, i actually disagree, i yellen congratulates powell. Think that can lead to higher inflation we got wage pressures coming in. And then we can raise that neutral rate past the 2 that were at and thats going to day plow rates to move higher to look at those financial names that benefit from that okay. Sounds like we have a statement from the white house steve . Reporter no, no, sorry, statement from janet yellen. From the fed. From janet yellen. Reporter saying ill read it, its a couple sentences. I congratulate my colleague jay powell on his nomination to be chairman of the Federal Reserve board. Jays long and distinguished career has been marked by dedicated Public Service and seriousness of purpose im confident in his deep commitment to carrying out the vital Public Mission of the Federal Reserve. Im committed to working with him to ensure a smooth transition. Janet yellen commenting on the nomination of fed, now chairman nominee. Does she, steve, stay on the fed, on the fmoc even if shes not chair . Reporter she can choose to stay as a governor she would be she would not be the fed chair. That happened once before for a period of time my understanding is there was some confusion as to who to call chair on that mind gue my guess is she would not do that, bow out gracefully and leave that position which would mean theres still another reporter for the beleaguered people in the president s office, four positions to fill on the Federal Reserve board. It was mariner ecleys who stayed on the board. Truman would not renominate him. He was the first chairman. Devoted keynesian. He actually stayed there three more years fortunately that hasnt happened since. Reporter any historical event in the past two centuries, larry was there. Its really quite amazing. Whoa, whoa. It was in the late 40s i was just born. I mentioned whether this was you know, according to establishment rules. All right we have is to go at this point a fun segment. We got what we were expecting here but thank you all for your thoughts today on the nomination of jay powell as the new Federal Reserve. Thanks see you later. Thank you. To the markets we go 34 minutes left on what has been a very, very busy day. Were not done yet the dow right now is up 52 points were in record territory now. The s p down 2. 75. Reaction to the president s fed chair coming up including interviews with Laurence Meyer and Richard Fisher theyre going to talk about what Jerome Powell could mean for your money. Details on another announcement that could have a major impact on your portfolio newly unveiled republican tax reform plan. Well break down the biggest changes and stocks that could be affected atndoss. Ners a ler th when we come back on closing bell. Inside the Federal Reserve, we understand Monetary Policy decisions matter for American Families and communities i strongly share that sense of mission and im committed to making decisions with objecti objectivity based on the best Available Evidence in the longstanding tradition of Monetary Policy independence mr. President , thank you, again, for this extraordinary opportunity to serve the American People. That was Jerome Powell just moments ago after President Trump did nominate him to be the next chair of the Federal Reserve to replace janet yellen. Joining us right now to give their thoughts on all of this, two familiar faces Laurence Meyer, former fed governor, now president of Monetary Policy analytics. Richard fisher, of course, former president of the Federal Reserve bank of dallas and now a cnbc contributor good to see you both thank you for joining us governor meyer, your thoughts on jay powell, how you think he might differ, if at all, from janet yellen well, let me make three points here. First of all, the president had a chance to go for continuity or change with respect to Monetary Policy, not surprisingly he went for continuity whats not to like for him strong employment growth, low unemployment rate, falling unemployment rate. Doesnt mean hes a clone, but for now, the story is continuity there. With respect to regulation, he may think that he got somebody more in sync with the republican agenda on regulation what he got was somebody in sync with the current fed position which is for substantial rollbacks in terms of less burden on small and mediumsized bank, we think the volcker rule, but dead set on retaining the core i think one of the most important things is how he differs. And he differs in the sense that unlike bernanke and yellen, hes not a rock star in the economics community. As a Monetary Policy expert. Right. Hell be a superb consensus builder. Absolutely tireless and superb and a great communicator of the consensus. But the point is that he wont be able to shape the consensus that bernanke and yellen were at the margin respecting the consensus. All right Richard Fisher, somebody whos been part of these discussions, what impact do you think that will have . Look, i think its a great choice he sat to my right the entire time we shared membership of the fomc he is a consensus builder. Very importantly, i agree with all the points just been made, what he brings to bear here in addition to understanding how this Monetary Policy evolved after the correction, after the crash, is an understanding of Financial Markets which ben bernanke, who i served under, janet yellen, who i adored serving under both of them, neither of them came from the Capital Market side. And it wasnt just Mcchesney Martin who didnt have a ph. D. In economics, paul volcker didnt have a ph. D. In economics. Thats not requisite here. I think jay has learned an enormous amount. But bringing the Capital Market sensitivity here, he contributed on that front to all of our discussions starting in in 2012 when he joined in a very wise manner is an additional dimension which is a big plus for jay. I think janet did a great job. I give her an aplusplusplus beginning the exit and unwinding. This is important to hav portfol portfolio, however gradually, thats sensitive, and this is what jay powell brings to the table. Quick question on color, we were talking about this earlier, richard, how you think the dynamics might change. I mean, governor thats a good question. Powell is going to be in there during the deliberations in december when this meeting when they presumably are going to raise rates and there is still the pocket thssibility ja yellen stays on the board. How do you think it will stay in that regard during this time of transition i dont think janet is slyliy to stay, obviously if he doesnt get confirmed, shell have to be in the chair their personalities mesh very well heres a point to consider which i havent heard anybody to talk about. Federal reserve Bank President s control the vote presently you have five voters, the new york fed is vice chairman of the fmoc most people dont remember that. And has a permanent vote then you rotate the vote amongst the other 11 Federal Reserve banks to get four votes. There are only four governors if janet stays in the seat. And if she leaves, there are only three governors this is why its important i think that jay was given this position hes been onboard. He works well with the Bank President s he was the governor in charge of coordinating all their operations or working with them on their operations. Hes highly respected. And if he had brought someone from the outside under those conditions, lets say it hadnt been janet, it hadnt been jay, then you would have basically bill dudley of the new york fed having control of the fmoc because a new person takes a while to get into the mix. Even someone as powerful as john taylor so i think this is also part of the decisionmake bing. I think its important i think jays a perfect person for it before we go, larry, how important is it that the president fills up the remaining vacancies including the one janet yellen may leave on the fed board or is it important talk to me after we know who they are in terms of in terms of Monetary Policy, you have to understand that without quite the same influence as a bernanke or a yellen, the next four appointments, vice chair and the others, will be very important richard makes a great point, right now its the president s who are really important i say thank god for the president s i dont always say that. Thank good for the president s. Finally i heard it from you, larry. Thats right. I just want to reinforce what richard said, though he comes with more experience in Financial Markets. And i think hes going to exploit his comparative advantage there. And theres only one thing i see different right now. I think he is more skeptical of macro prudential policy and sees more of a role for Monetary Policy and takes a view of what Financial Stability means, not just systemic risks but markets. Unsustainable bond prices like jeremy stein i think thats the one place all right very good. Always good to see you both. Agreed. Larry meyer, Richard Fisher. Time for a cnbc news update, lets get over to sue herera. Heres whats happening at this hour, everyone. House republicans unveiling their tax reform plan with claims it will benefit middle class earners and help businesses compete globally. House Speaker Paul Ryan says filing your taxes will be simplified. With this plan, we are getting rid of loopholes for special interests and we are leveling the Playing Field were making things so simple, were making things so simple that you can do your taxes on a form the size of a postcard. Ivanka trump arriving in ja fan japan ahead of her fathers visit. Shell speak about being an entrepreneur at the 2017 World Assembly for women shell also have dinner with the japanese Prime Minister mr. Abe and his wife. The Boston Red Sox have hired Tony La Russa out of retirement where hell assist the Team President Dave Dombrowski in player development. Hes been around baseball for 56 seasons. He won two world series as manager of st. Louis cardinals thats the news update this hour ill send it back downtown to you guys bill, kelly . Thank you, sue. See you later. See you next hour. Still ahead, apple, were not finished yet or started from that point of view. Exactly so well get to the apple earnings, one of the most highly anticipated releases of the earnings season. Bring you a preview of what to ex ekt fr expect from the worlds most valuable Company Coming up. Check this out, bro. Whats that, broheim . I switched to geico and got more. More savings on Car Insurance . Yeah brofessor, and more. Like renters insurance. More ways to save. Nice, brotato chip. Thats not all, brotein shake. Geico has motorcycle and rv insurance, too. Oh, thats a lot more. Oh yeah, im all about more, teddy brosevelt. Geico. Expect great savings and a whole lot more. Weve been trying to assess some of the winners and losers of the tax bill today. Home builders are down as House Republicans release that tax reform bill. Ylan mui with details on that part of the plan and kind of look at what it all says and means. Ylan reporter bill, republicans are calling this the most comp hence comprehensive tax reform in a generation it would lower the corporate rate from 35 to 20 and that would happen right away and that reduction would be permanent it also establishes new repatriation rates 12 on cash, and 5 on noncash assets and companies would have eight years to bring those earnings back over america on the individual side, the top rate will remain at 39. 6 , however, now applies to households making over 1 million in income, but as you alluded to, not everyone is happy with this plan part of the reason is because there is a new limit on the deduction that you can take on your mortgage interest for newly purchased homes. Previously, that was 1 million. Now its down to 500,000. Theres also a new limit on the deduction for property taxes thats now capped at 10,000 so you see the National Association of realtors, the National Association of home builders, theyve both come out against this plan already. There are also four republicans from new york and new jersey who are unhappy with the way the state and local income tax is being handled in this. So negotiations are still under way over here on capitol hill, but house Speaker Paul Ryan said that he is sure that the commitment to getting this done in the house is ironclad back over to you ylan, thank you ylan mui covering this all day for us lets bring in terry haynes from evercore isi terry, you think 75 thchance ti gets done, becomes law First Quarter of next year yes, we do. There you go. Thanks for joining us, terry. See you, bill. Has to move through the house, has to move through the senate while it sounds like the first part of the rollout is going better than the health care bill, how much might this plan have to change in order to become law i think what people should look for is the way i get asked about this, sometimes, kelly, is what are the negotiables and the nonnegotiables right. The way i suggest people look at this is the nonnegotiables pretty much are what was in the big six plan the basics of this the very low Corporate Tax rate, simplification of individuals. You know, variety of other things like that pretty much Everything Else including the pay fors and where they come from will end up being negotiable thats not to say that republicans dont have preferences, but that sort of stuff is more fungible than the fundamentals let me just point out, for those of you listening on satellite radio, the markets rallying right now were hitting highing fhighs. The s p is positive we may hit records here before the end of the day. You know, the 401 k plan, there was talk of reducing the amount you can contribute there lot of pushback so they gave on that they blinked theres some pushback on the state and local taxes which they want to cap at 10,000 you think that will hold or are they going to have to give that away as well i look at the today i look at the state and local Tax Deduction as being more likely than not to happen thats not to say there wont be some carveouts like in the property taxes but what you got to understand here is that on a raw political base, on a policy basis, they need a major pay for thats it. On a raw political basis, what you have is a situation where there arent very many blue state republicans in the house and there are no blue state republicans in the senate. So what youre going to end up with is a compromise in the house on property taxes, i think, that may end up making it through the senate but make no mistake that i think most of the salt deduction is going to end up happening. Okay. Im curious what that would mean for the cost of the bill and other negotiables. I also wanted to ask you about the companies most affected. You guys have broken this down pretty well. Who have the biggest winners and losers from this plan, terry well, what we have, kelly, is weve put together a stock basket and the stock basket has a number of financials in it, about five different financials including bank of america, terow and some others. A number of Consumer Companies including ralph lauren you got degree or four healthreh Care Companies Energy Companies Telecom Companies and industrials and utilities. Theres a variety of Different Companies in here that we think are going to end up being beneficiaries if this plan goes through. Home builders, we mentioned, are lower. And i wonder what you think the cutting the deduction in half does to an industry thats already still trying to find its footing even as rates are going to be going higher here. Is that counterproductive if youre trying to grow this economy . Well, as you point out, theres some haircuts here taking place and our fundamental folks are covering that. And but at the same time, most of what is what the house people would say to you, anyway, is most of whats being covered here are things that, you know, absolutely continue to benefit middle and lower class people. So they dont think its going to be a negative and i would imagine that they might adjust that a little bit Going Forward. But i dont see them giving up on it. Terry, we have to let you go, but if the state and local deduction stays, what does pay for this bill . Or does nothing pay for it well its above the budget its above the deficit line right now, kevin brady admitted that well, yeah, they have a magically the initial number they proposed is about 1. 5 trillion deficit increasing. Weve always been of the view, always, going back to the end of last year, there would be deficit increases as a result of this bill. I think youre going to end up getting a lot of wrangling over pay fors over the next three months. All right always good to see you, terry, thank you. Thank you. With 14 minutes to go, we have a rally with the dow in record territory s p and nasdaq close russell is not there even though its up five points. At t and warner deal may be in jeopardy. Why the department of justice may reportedly be considering an antitrust lawsuit against these companies when we come back. Is the monolithic view of emerging markets obsolete . At pgim, we see alpa in the trends, driving specific sectors of out performance. 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With adt, you can feel safe with an adt starter kit professionally installed for only 49. 00. Call today, and install an adt starter kit that includes security panel, keypad, key fob, entry and motion sensors and for a limited time, get a camera included and installed at no additional cost. Thats a 449. 00 value, installed, for just 49. 00. Welcome back with the dow up 88 points, this is a big move higher for the session today. We saw some declines after the tax bill was originally announced. This afternoon, though, a different story with ten minutes to go until the close, we see gam gains across all the major averages. Shares of tesla sinking after releasing its Earnings Report last night. Trading lower 7 did scale back model 3 production targets that 4 to 5 decline we saw yesterday evening has been magnified in the session today. Meanwhile, on a day full of big stories, heres another one. The department of justice is reportedly considering an antitrust lawsuit against at ts acquisition of time warner Julia Boorstin stepping in can the story for us julia . Reporter hey, bill, thats right. The wall street journal reporting the dojs preparing a suit in case the government and the two companies cant agree to satisfying antitrust concerns. They are currently in talks about possible terms to enable government approval with conditions now, this headline does not necessarily spell doom for the deal valued at 85 billion when it was announced even if the doj were to sue to block the deal, the department would have to prove to a federal judge that the deal would harm competition. The doj has no comment at t saying, when the doj reviews any transaction, it is common and expected for both sides to prepare for all possible scenarios for over 40 years, vertical mergers like this one have always been approved because they benefit consumers without removing any competitors from the market we wont comment on our discussions with the doj, we see to reason in the law or the facts why this transaction should be an exception. Just this morning, cowen issuing a report saying they believe the deal is still likely to close with conditions. Guys, over to you. Guess was that before or after the doj yes reporter that was after that headline, after the headline julia, thank you very much. Still to come, Earnings Results from apple we also have starbucks, cbs, aig. When we come back, well head to the nasdaq for a preview of apeeain pls rngscoming up. Lets begin. Yes or no . Do you want the same tools and seamless experience across web and tablet . Do you want 4. 95 commissions for stocks, 0. 50 options contracts . 1. 50 futures contracts . What about a dedicated service team of trading specialists . Did you say yes . Good, then its time for power e trade. The platform, price and service that gives you the edge you need. Looks like we have a couple seconds left. Lets do some card twirling twirling cards e trade. The original place to invest online. Rays always been different. Last year, he said he was going to dig a hole to china. At t is working with farmers to improve irrigation techniques. Remote moisture sensors use a Reliable Network to tell them when and where to water. So that farmers like ray can compete in big ways. China. Oh. He got there. Thats the power of and. Welcome back apple is gearing up to report its earnings after the bell, and just a couple minutes here Bertha Coombs is standing by at the nasdaq watching this one bertha hi, kelly, we are watching this oomn the bottom line, analysts looking for 1. 87 a share on earnings on about 50 in revenue they expect to see sales of about 46. 5 million phones. The real x factor in the earnings is the commentary around the iphone x. One of the things folks will be watching for is what the revenues will be and their sales expectations are if the revenues are a little shy of the 85 billion estimate tony over at bernstein says its okay as long as they let us know those 1 ,000 phones are in hig demand at this point one more thing, guys, were about 6 bucks away right now from a 900 billion market cap for apple. Oh, boy we know what comes after that. Thanks, bertha and i didnt mean 800 billion, by the way well come back, looks like were going to have some records on wall street well have the closing countdown right after this. Letsfist word that comes to mind when you think of lowcost futures trading. Was it happy . What about a dedicated service team with futures licensed specialists . And what about being able to react to the 24hour futures market with integrated trading across web and mobile . Still happy . Good. Then its time for power etrade. The platform, price and service that gives you the edge you need. Etrade. The original place to invest online. 90 seconds left in the trading session here for those of you at home playing along, looks like well have records for the dow and nasdaq today with this lateday rally theres the dow. We had a little hiccup this morning. Sideways action most of this day. As all this news was unfolding in the tax bill, the new fed chair, and the possible imposition against at t and time warner merger. Here we are near the highs of the day above 23,500 for the first time going through the tax bill, who are the potential winners . One of the categories are those companies that have a lot of cash overseas and can repatriate at a lower tax rate . Right now its proposed at 12 according to the institute of taxation and policy, here are the five companies that have the biggest cash overseas, apple, pfizer, microsoft, ge and ibm. Tle three of them are i h higher ge and ibm lower today. Home builders the losers today with the cap on the mortgage deduction. Tenyear yield, bob pisani, tell me if you can see when i show you the yield on the ten year today, if you can see have they introduced jay powell. Of course you cant. Thats the point right . Very quickly, the gop tax plan would limit Interest Deduction for Certain Companies to 30 of their adjustable income if you look at kkr, some of the private ek quity firms that isse a lot of debt, that could be o problem for some of them well keep looking for winners and losers right now were looking for earnings from apple, many other companies. Thats on the second hour of the closing bell with kelly evans and company. See you tomorrow, kell thank you, bill, welcome to the closing bell, everybody, im kelly evans. We have a record close for the Dow Jones Industrial average today on wall street, about a 79, 80 point gain here on the bell closing above 23,500 for the first time 23,515 for the dow, up a third of 1 today. All of that basically took place in the final hour. The russell 2000 adding. 25 not good enough for a new high s p 500, same deal, half a point higher the nasdaq actually lowed fractionally lower on the bell to 6,714 a record for the dow 55th of the year on todays close. Investors also getting set for a huge hours of earnings once again we have reporters standi ining y kate rodgers covering starbucks. Seema mody will cover aig. Well sew ye you in a moment. Later this hour, earnings from apple well have reaction to those meganumbers coming up. Joining me on the table today, stephanie link, managing director at equity Portfolio Manager at tiaa. Michael is here at post 9. Hes founder and ceo at destination wealth management. Welcome to you both. First lets just look at todays market with the biggest dow winner being boeing own the biggest loser was dow dupont home depot was close the s p the biggest winner the big east loser by far was nuel brands. Talked about a hit from toys r us and weak back to School Season among other things. Lot of news out of d. C. Today. Moments ago President Trump announced Federal Reserve governor jerome as his pick for the fed chair nominee. Earlier this morning the gop revealed its highly anticipated tax bill it includes a plan to permanently lower the Corporate Tax rate to 20 and reduce the number of income tax brackets. Home builder stocks dropped on the news that bill would cap the mortgage Interest Deduction at half a Million Dollars also cap property Tax Deductions sue, theres meritage down 5 . Stephanie, what opportunities does this create for you, if any . I follow thor ea earnings so much news overload. The earnings, when theyre good, guidance is good, stocks tend to do well, sometimes they dont do well like the dow dupont today thats your opportunity. When a Company Reports good numbers and something happens that people react it doesnt seem appropriate, now on the housing side, just to your question, builders, themselves, are theyre kind of elevated. Theyve had a nice run theyre not super cheap at this point. I think if Interest Rates continue to go higher, thats your headwind. However, the Home Building companies, like the home depots and the lowes, thats i think where your opportunity is. I think thats where earnings are going to come in quite well. Stanley black decker told you home depot and lowes are going to do well, 30 of their cdy business consumer do it yourself. Youre a new homeowner youre going to know it. I did kitchen knobs i spray painted them this week michael, how about you were learning a lot of the details about the gop tax plan and new fed chief potentially, so hows it all shake out for you . First of all, like everyones been saying, the fed news is very positive for the markets, obviously from the equity, fixed income market. I was actually watching the announcement and actually looking at the ticker reminded me of the old day when they used to put greenspans comments and put the ticker tracking what words he actually said i think its a net positive. You know, this is a market that stephanie said that really just wants to go up based on earnings and guidance is what it comes down to. If you have reasonable earnings, reasonable guidance, then you have tax cuts and you have a low Interest Rate policy that looks like its going to continue, its just hard to get in the way of this market at this point and for corporate earnings, if we get that cut to 20 , what does that do to you guys to the earnings projections for next year its a big deal. Thats not the only thing, too, immediate expensing theres a lot of different the repatriation. Theres a lot of things in this tax bill which is all very much kind of floated at this point. Its all going to be negotiated out. But if, in fact, these policies, these proposals become policies, its just hugely positive for companies. If youre paying 20 tax, rather than 30 tax, how is that not a good thing especially the immediate write off in capital goods that, to me, is such a big thing. In this cycle we havent had business investment. Not in an aggressive way weve had certainly Companies Invest not really what you would expect if you start to have Companies Start to invest in their businesses because of this, and its the industrial part of the economy that kicks in, thats a real nice kicker because we know the consumer has been okay right . Its been the industrial part and the manufacturing that hasnt. Absolutely. I wonder if there might be an Inflection Point Consumer Discretionary stocks were hit today theres a sense if you bring that down for companies but actually for some of the wealthier people in the income brackets, they might have little bit less to spend right away the tristate area with its population base might get hit because of property tax and maybe mortgage caps and those kinds of things. Is it possible that actually consumption kind of is a little 23 you have better jobs and better growth and better wages. I guess the question is if that comes out right away, that benefit doesnt float through for a year or so you could you could. It could, but it doesnt really matter when the benefit actually happens its when the its the expectation of when that benefit is going to occur. If we think the benefits going to happen in a year and people all think its going to happen in a year, theyre going to be there before a year. Theyre going to be there in advance. Thats really actually its a sentiment issue, right if you have an atmosphere of lower taxation, lower regulation, it does create a Market Sentiment that really is positive for equities and fixed income. Want to mention a couple of the Companies Going the other way today, this again goes back in a lot of ways to the earnings newel brands down 25 today, wayfair, which you think would be a housing kind of play, it down 20 teva down 18 . Tesla down 7 . Discovery was down 10 you know, these are a lot of earnings themes here. When you miss, you get penalized in a big, big way. On average, companies are down 3. 1 when you miss, when you beat, youre up about a percent, right . Which, it gets skewed a end you get exaggerations like we had today. Newel, thats a Second Quarter in a row that they missed and had to guide lower thats kind of a rollup story in itself people are starting to wonder what do you have does the management have they embraced amazon, how are they going to deal with that . So i understand why that stock did not do well especially because everyone really likes that ceo so its a shock teva, not a surprise, generics, its like every day. What a struggle its been for teva. Thats a world of hurt you dont necessarily need to be part of. I think facebook, that was one that got hit i dont know, the company is growing 40 plus in revenues and margins and all that. At some point these companies have to take a pause. Absolutely. I dont think that one you let it sit and thats one you go back into, right i dont know if can you necessarily have to rush into a teva to have secular issues. What about alibaba . Numbers were phenomenal. The stock not reacting great up 70something percent. People are saying its disappointing the stock didnt poll, only went up 70 this year like saying tesla went down today, how much is tesla up for the year teslas 7 move, do you think theres more to the story about not being able to get model 3 production where it needs to be . Like every other fundamental investor in the world, its hard to understand tesla, its a sentimentbased stock. The earnings are simply not there. One thing i will say, elon musk has come out and actually took it on the chin regarding this. So while theres been some razzledazzle on some of the Earnings Calls, i think this time they actually came out and said, hey, listen, were having problems and going to fix them hopefully it will be fixed in the next couple months. Lets flip over to starbucks. Kate rogers has those numbers. A mixed quarter for starbucks. Eps in line with estimates reporting 55 cents adjusted, what the street was looking for. Revenues miss thed the street had been looking for 5. 80 billion. On to comp sales, global comps up 2 . U. S. Comps up just 3 . The street was looking for 3. 4 . They said that is adjusted for the hurricanes also, 8 Comp Store Sales growth in china which is an important market for them. Also doing a 20 increase in their dividend to 30 Cents Per Share per quarter. Theyre also returning 15 billion to shareholders in the next three years also saying about 3 to 5 Comp Store Sales growth annually is one of their longterm target goals. Also news here in their tea division, they announced separately outside of their earnings that they have entered into an agreement with unilever to buy their tazo brand for 384 billion. They owned that since 1999 theyre going to continue to invest in their development of tea in and outside of stores the stock down 5 . Back over to you. Wonder who that will mean for the stores mall owners were upset when they said they were going to wind down that. Shares dropping 5 . The stock fell 15 , 16 from last quarter and the low 50s, it sort of found its way, found a base i think thats because people thought that as they went through the quarter, comps would get better remember, the ceo said last quarter that the first month of this quarter was really, really terrible so, you know, 3. 2 comp number is not horrible, but the whisper number was 4 . That global comp number is a disappointment for sure. And now we have to wait for the reset. Were all waiting for the company to say, you know what, we cant grow 15 to 20 anymore. Were going to grow 12 to 15 i think that might be your bottom so lets wait and see what they say about guidance. This is not really purely growth to value. Its that kind of story. Youre going from high, high growth, to more maybe consistent growth thats wide the revenue should starbucks embrace that or try to fight back against that saying, no, we do theyve been fighting it. Heres the bottom line, doesnt matter what theyre going to do. Theres 1,000 starbucks within five miles of this building today. Granted they have the stores everywhere we talk a lot about that. Saturation. They still do price they can do food. Theyre really trying to move into more mobile. Of a destination food kind of place its tough its tough for starbucks at this point i think whether they embrace it or not, its going to be a lower growth name is what comes down to. Got to move on to cbs. Stock was down in the session. Lets see how its going after hours. Julia . Hey, kelly, thats right, the stock was down 3 during the session today. Right now its flat. The company missing estimates on the top and bottom line. Revenues of 3. 17 billion coming in light of estimates of 3. 26 billion. Earnings of 1. 04 per share, thats adjusted. Missing estimates of 1. 07 per share. Now one reason why the stock might be moving slightly high right now is the fact that cbs Ceo Les Moonves making commentary in the release very positive saying theyre not feeling effects of cord cutting, seen dramatic growth in affiliate and subscription fees including revenue from traditional and skinny bundles as well as over the top viewing. Have more subscribers than a year ago and newer digital platforms resulting in more revenue per subscriber than traditional ones talking about monetization of delayed viewing and ott services positive commentary about the new Digital Future for cbs even though those earnings and revenue missed back over to you julia, thank you. Shares are up a little bit well keep moving on got a lot more news to get here in just thisstephanie, thank you both for now. Apple results due out at half past. Find out whether this stock can keep rallying as its market cap mushrooms. Plus, outspoker democratic senator Elizabeth Warrens reaction to the house gop tax reform bill and the fed chair nomination you do not want to miss this first on cnbc interview coming up today, smart planning is helping the new new york rise higher than ever. As the world leader in unmanned aerial systems, were attracting the worlds best talent to Central New York. And turning the airport into a firstclass transportation hub. All while growing urban areas into vibrant places to live and work. Across new york state, were building the new new york. To grow your business with us in new york state, visit esd. Ny. Gov. To grow your business with us in new york state, whyour boss . Ork for . Yourself . Your family . Our Financial Advisors are free to realize a plan to fit your familys unique needs. Well listen. Well talk. Well plan. Baird. His family. His steinway, which met a burst pipe. So grant met his insurance you are caller number 12. Which didnt quite cover the steinway. But what if hed met pure insurance . Owned by members. Hed have met lisa, your member advocate. Whod introduce him to gustav, a temporary address, and help him get tickets to the mozart festival. Excuse me, grant likes beethoven uh, the beethoven festival. Pure. Love your insurance. Welcome back the new tax plan backed by the president getting some interesting reviews today. The harshest words, unsurprisingly, have come from democrats. One of the leading voices of Senate Democrats and member of the banking community, e liz lih warren is with john harwood. Reporter lyme goiim going in with senator warren big picture, are you against any tax cut or this tax cut if particular so i am against what the republicans have put together in this tax plan. In which they give 2 trillion in just giveaways to giant corporations big winners here, number one biggest winner in the country is estimated to be wells fargo who would make out with billions of dollars. You do remember wells fargo. The company that opened fake accounts, cheated its own customers. Second big group that would make out big would be the Foreign Investors who are estimated to make about 700 billion out of this third big group would be the multinationals and this gives real subsidies to move jobs overseas to make Investments Overseas bad idea. Reporter do you see any merit to the idea that cutting taxes for corporations, expensing provisions will stimulate Economic Activity and therefore help workers this is the big lie that the republicans keep trying to push. Theyve been pushing it, lets face it, for 30 years now and for 30 years now weve watched workers wages just stay flat. In fact, what happened after the george w. Bush tax cuts in the early 2000s . Wages stayed flat. What happened over in Great Britain . They dropped Corporate Tax rate by 11 points and wages actually declined reporter some economists in your party say, in fact, given the demands of Social Security and medicare, the deficits we have already, taxes no ed to go up, not down is that where you have are is. The way i look at it is the reverse. Whats happening right now is the republicans are saying lets give 2 trillion to giant corporations then when it blows a hole in the debt, which we know it will do, they come back in a year, two years and say, gee, really, really sorry, but were going to have to cut medicare, going to have to cut medicaid, going to have to make cuts in all the investments here in america you know, i just want to say on that 2 trillion, if the republicans really think we have 2 trillion to spend, why not spend it on infrastructure thats something that will really boost the economy right now. Why not forgive Student Loan Debt that would boost the economy why not write a check to every american earning less than 200,000 a year for 17,000 . A lot of ways you could spend 2 trillion reporter as you know, they dont need your votes to pass this bill. Can you stop it . Im going to do my best this is really once again like it was with health care. Its whether or not the American People get to see what goes on, and maketheir voices heard that happens, this bill will never become law. Reporter Jerome Powell was picked as the new chairman of the fed by the president today hes described as the closest thing there is to janet yellen whos there already among the choices the president was considering. Do you support Jerome Powell do you envision problems with his von tir magconfirmation the closest thing to janet yellen is janet yellen its worth a minute to stop and say janet yellen has done a great job as a fed chair and will be the first fed chair since 1979 who doesnt get reappointed. Thats been true regardless of party, this has been a very nonpartisan thing. Jerome powell reporter any concern about powell on regulation, wall street regulation . Powell has aligned himself with janet yellen on a regular basis, and that is a good sign, but look, this is what hearings are about. Im going to ask him some tough questions and see what his answers are. Reporter Elizabeth Warren, thanks so much for being with us. Thank you. Kelly, back to you. All right our john harwood speaking with senator Elizabeth Warren thank you both very much. How much of an impact will the iphone x have on apples Earnings Guidance . Were going to have instant reaction to the tech giants results coming up. Were back in o. Tw lets head back over to Julia Boorstin with an update on cbs earnings. Julia . Yes, an update, kelly, cbs though it missed the top line on revenues earnings actually beat, were correcting the earnings number, adjusted earnings per share were 1. 11, beating estimates of 1. 07 per share were correcting the number previously reported. Revenues falling a bit light of estimates at 3. 17 million. Earnings beating expectations by 4 cents. Back over to you all right we thought, yeah, maybe it was 3 cent miss. Shares still are down about 1 julia, thank you very much shares of starbucks are down much more, though, after missing wall streets revenue estimates. They are now down nearly 6 . Joining us by phone, r. J. Hottovy from morningstar, r. J. , whats going on here yeah, really theres two things going on here heading into the quarter i think all eyes were on the comp number that was weaker than expected. 2 marngt w market was looking for 4 . Even if you factor in the hurricanes, it was a myth on that front long term, the company is looking at 12 growth. I think the market already adjusted down from previous goals of 15 to 20 . That 12 number raises a number of questions i think the company is going to have to answer on the call today. Sis there confidence in the 12 figure. I think theres confidence in the 12 figure the market was looking for something in the midteens this companys still got a lot of growth, international, in the u. S. , with the consumer packaged good products. Thats a lower number than the markets are expecting. Thats what youre seeing from the stock price. R. J. , what about the comp, samestore sales how important are those going to be i think thats absolutely critical i think the company is going to have to make a significant case they can get back to 3 , 5 , running in 2 to 3 right now. I think thats the big thing the market wants to address on the call this afternoon. R. J. , thank you well let you go get ready for that starbucks shares down 6 r. J. Hottovy from morningstar joining us. Aigs earnings are now out seema mody has those numbers. Aig reporting a larger than expect ted quarterly loss of 12 adjusted, worse than what the street was expecting the street was expecting a lot of 79 cents. Pretax catastrophe losses of 3 billion try maprimarily from hue harv harvey, irma and maria again, the hurricanes having an impact here on aig which is the largest u. S. Underwriter of property and casualty policy looking at the stock down 3 here, kelly. Should be an interesting call tomorrow morning with the new ceo, seema, thank you. Apple earnings due out in a couple minutes time sure going to have those relts when we come right back. Instant reaction well see how the company can do stay with us minutes. That guests would compliment our wifi. That we could video conference. And do it like that. snaps if youd have told me that i could afford. A gigspeed. A gigspeed network. Its like 20 times faster than what most people have. Id of said. Id of said youre dreaming. Dreaming definitely dreaming. Then again, dreaming is how i got this far. Now more businesses in more places can afford to dream gig. Comcast, building americas largest gigspeed network. Now more businesses in more places can afford to dream gig. I cant wait for her to have that College Experience that i had. The classes, the friends, the independence. And since we planned for it, that student debt is the one experience, im glad shell miss when you have the right Financial Advisor, life can be brilliant. Ameriprise dow closed at a record today. The first time its closed above 23,500 it was 23,516 with an 81point gain the s p higher by half a point the russell up three the nasdaq was a point and a half lower on the bell today. Meantime, were awaiting earnings from apple. Had some earnings already going our way from aig, cbs and starbucks among others see starbucks down nearly 6 cbs down more than 2 now. And aig down a little bit less than 3 . Now these apple numbers are headed our way shortly stephanie link is back with us along with recodes ed lee and our own jon fortt. Everybodys all here at post 9 theres, bit way, seems like a ton of Different Things to focus on jon, let me just begin with you, is it as much about what they report as whats happening in the current quart eer with iphoe x shipshipments . All about the iphone x. They could get away reporting anything iphone wise, if they report margins 40 above, above gross margin wise, for the Holiday Quarter, and if it indicates that they have a good supply of iphone xs, you want to see a big revenue number as well there. If theres too much supply constraint and the expected slowdown in iphone 8 and below sales, in the quarter theyre reporting, that would be bad news. Ed, what do you think they got to do here the revenue estimate number, a little over 50 billion. Eps looking for about 1. 85 of course, watching shipments of the iphone, the ipad, the mac, the watch. We havent even talked much about the watch lately. Yeah, the watch, i think im with jon, i think were looking at iphone shipments, thats the key thing slight difbference, its interesting the iphone 8 didnt have the demand people thought including me given the lower point. Soft on iphone 8 sales, could be a boon for x sales jon, stephanie, jon mentioned the profit margin figure looks like about 38 is the estimate so if they certainly above that you know, that would give some i mean, certainly the new phone costs so much more, right . Give you an indication about supplies, they have enough, right, so far, and also the mention. The mix is more shifted toward the high end theres a 60 gap between the low end iphone and the high end in terms of price. So Gross Margins are guided higher, they feel really good about what theyre selling i would say this momentum, a supplier in 3d sensing. Both companies in the last two days had pretty good things to say about revenue trends Going Forward. And they are suppliers to this phone. So thats something that i think is very encouraging. Were getting some signals that the demand is there. Theyre also, jon, pretty conservative on next quarter guidance as a rule, right . Gross margins do tend to be smaller with a redesign like this because they have to get manufacturing ramped up. Joshua lipton has the numbers for us josh kelly, lets get you those numbers. Apple reporting eps of 2. 07, kelly, versus expectations of 1. 87. Revenue, kelly, 52. 6 billion versus an expectation of 50. 7 billion. Gross margins, 37. 9 iphone units, 46. 7 million ipads, 10. 3 million. Macs, 5. 4 million. Services up 34 to 8. 5 billion. Other products, remember, that includes the watch that was up 36 to 3. 2 billion. As for that q1 guide, apple guiding here for a revenue guide between 84 billion. Consensus called for 82. 1 billion. Consensus guide of 38 and 38. 5 . Kelly, back to you josh, all right, thank you very much. Theyre up 2. 5 right now. Jon, what are your thoughts . On the gross margin, it didnt quite hit 40. I guess thats sort of expected when you got a new design. Everything else, particularly the revenue guide of 84 billion to 87 billion suggests they actually have supply of the iphone x, thats what investors wanted to see. I think thats why you got the stock up about 2. 5 right now after hours. Ed, you were looking at the top i was astounded by the numbers here feels like apple cant do anything wrong i was actually really surprised by the Services Number its the Fastest Growing unit, the smallest, of course, as well 30 plus, thats pretty astounding they were going 20 the quarter before im with jon, clearly the signs are good for the q1 in terms of the new shipments for the x. Shares up nearly 3 right no for apple. Also joined by ross gerber, apple shareholder, and apple analyst angela from cfia research ross, what do you think . What jumps out to you most about this report . Im super happy i mean, ive been really tough on tim for about a year. I was hoping to god that they would innovate something in the last three product releases, the watch, the tv, now the iphone x, are just marvelous products. And im so happy its like not only that, they got through this quarter which i was scared about because the iphone 8 l,i didnt expect anybd to buy because why would you we know the sales are now going to be big for the iphone x its 1,000plus phone its got huge march. Margin apple had a great runway going into 18 im excited. Angelo, are these upgrade kind of numbers for you . I mean, the numbers are great. We have a buy recommendation on the shares but overall, i mean, i dont think you could have expected anything better from apples results. Overall, for the september quarter, results, iphone numbers came in line the big surprise really is that Services Number. Significantly better than we anticipated. We were looking for about 18 to 20 growth they blew that out of the water. Looking a the december quarter, i think the fear was, of course, supply constraints for the iphone x and looks like youre not going to get as bad a feared kind of constraints that maybe some thought you would have had. Yeah, great point by the way, the shares looking at about 173. 50 bucks, i like to multi multiply by 7 to get the pre the market capsize, mega valuations between apple and amazon heating up. I think people try to get cute with this stock whats really important, you dont want to get too down on a company that has a product cycle especially one as powerful as this in addition to having the services component, having the watch, having some of these other things that can be also additional catalysts clearly, the guidance was good, and i think sets up really well for next year. Again, it comes back to some of the suppliers who are trying to tell us that things arent so bad, they werent great this past quarter, but they gave good guidance Going Forward so obviously they are feeling very confident, too. Not to be jooverlooked, ipad shipments, the 10 million expectation. You thought it was a dead category, right . Exactly. People again, its a big part of the apple ecosystem, you know, you love the phone, maybe have the watch, like, you just want to complete that circuit. Right . Of all these Different Things. What i want to know more Going Forward, hear on the call, is the Services Business. I want to know how apple plans to go forward with its media strategy its never really had a cogent media strategy in the past say theyre going to spend 1 billion in original tv con te t ternt. How important is that business for them . Begin gagain, its the faste growing part of the business they have one of the best media platforms. Everyone whos got an iphone, an ipad if they can pump in nfl content exclusive to that, that would be huge for them. Is it worth them paying up big . You know the other platforms are going to be competing, too. Yeah, it probably is. They got a ton of revenue. Apple likes to say on the product side, theyre not going to build anything that doesnt need to exist. That anybody else could have done but so far on the content side, thats exact bly what theyve bn churning out stuff people have done before. Doesnt make a ton of sense. At some point, they need to make a big investment on the guide, i want to point out from the numbers i had seen, consensus revenue expectation for the Holiday Quarter was just over 85 billion the midpoint of the range apple gave is higher than that its 85. 5 billion so theres plenty of room here if they are able to make more iphone xs than they estimate they tend to be conservative for the number to be really good and for Gross Margins to be really good. So everybody who is fretting about these reports out of the supply chain or cant make the xs, theyre downgrading cold water on that. Always be cautious its something every year. Oh, the phone bends, if you hold it here, the antenna doesnt work mow its they cant make the sensors didnt give viewers a lot of time with the phone. Everybody go ahead, ross, what were you going to say im totally with jon there. I agree with you 100 . I wish they extrapolated that out to tesla like today. The previous conversation that where jon was saying they need to do something big, i totally agree. This is their opportunity to put 10 billion into tesla, or get into the car or get into the home, because they do need to think about the future as far as the services and the tvs strategy, theyre making some very big moves here in l. A. Theyve basically taken over sony television. Theyve taken over the studio, the executives theyre putting 1 billion in a project. My sources are telling me theyre looking at pretty highquality projects and so apples trying to do the amazon strategy now of building the ecosystem through investing in it, through content. Yep. And i think the jury is going to be out whether this is valely worth the money. Ross, im not sure what that has to do with them putting 10 billion into tesla i mean, i understand where youre going with it, okay, youre going to own the platform, you want to own the vehicle, but, you know, is tesla i mean, is that the right move for a company that seems to be getting it right here in terms of their slate of offerings . Theyre talking about 10 billion in tesla well, i look at it as the other screen you spend, like, probably an hour to two hours in front of your tv screen in your car, and with the car driving itself, youre going to be watching a lot more stuff on that tv. In the middle of the tesla so does apple want to cede control of your eyeballs during the time youre driving . Thats something they should think about. Whats 10 billion to apple . Its like a quarter. Come on, its discipline, right . Ange angelo, what would you say about that is. No, i mean, when we look at the opportunities for apple here in the coming years, i mean, we think it really is in Autonomous Cars is an area for growth as well as the streaming Services Business if you look at what tim cook said earlier this year, expecting to double that Services Business over the next four years we thought kind of they needed to really get big in Tv Streaming Services to hit those goals. If you look at the Services Business this quarter, they may not even need that that being said, we do see media as a bigger opportunity for the company near term. I think longer term, Autonomous Cars absolutely is an area that apple okay. Dont you think media is just too difficult . I mean, i think media is so difficult with netflix getting so many eyeballs. You know, when you look at apples installed base over there, i think its an opportunity they have they can really capture and really take advantage of i do think theres a real potential there for apple. Steph, what would you say about that i would agree you have to be excited that i have a lot of opportunities. I think it goes back to where do they have the most momentum right now . I think its really services you would ask the question how important is that . That is clearly a growth driver that no one really gave them credit for just a couple of years ago so i think thats really what i want to see them spend more money on, trying to grow that business, because, of course, it has more implications to margin what does that look like . Little scared of spotify . Dont you think theres competitors like spotify that could hurt Apple Services . Theres competitors everywhere. These are good competitors. Spotify is making moves. Spotify, the thing about spotify and apple music, they both effectively have the same content on there its a Commodity Service do you want exclusive content . Hang on, everybody, josh lipton has more on these results. Kelly, i did just have the chance to speak briefly with apple ceo tim cook about the quarter. We also touched on some news today, kelly, qualcomm suing apple alleging breach of contract that apple was apparently trying to help rival, intel. Of course, these two have been locked in a battle now for some time i asked cook about that as well as these reports, kelly, that apples designed devices for 2018 that would not use qualcomm components tim cook declining to comment on the latter point, but as for this fight with qualcomm, tim cook telling any, the u. S. Ftc has sued them. The eu is investigating them and so i think its pretty clear there are problems there. I asked cook, you know, on cnbc we talk a lot about how for qualcomm, apples business is so important, but i asked cook, listen, isnt qualcomm important for apple . As you design products in the future, dont you depend on apple if you want to keep selling top of the Line Products cook simply replying, no so on to iphone demand, kelly, we talked about the iphone x that iphone x demand was off the charts i asked him if that meant higher than ever. He said that was difficult to compare because this is such a different kind of device he said this one is hard to read we have three iphones for the first time we have staggered launch for the first time and so theres a number of things weve never experienced before. I did ask cook whether he thought it would come into supply demand balance with the x in roughly a quarter, as with other models he said he couldnt say for sure whether that was true right now. Of course, skeptics have countered, kelly, if the delay goes on too long, do consumers then move to the 8 or the 7 . Cook said he wants people to have the phones they want. As for these various reports and rumors weve seen flying fast and furious, kelly, about manufacturing problems plaguing the x, cook saying they were happy with where they were, in fact, the ramp was going well, that was improving, in fact, every week kelly, back to you. Josh, great stuff thank you. Apple shares up more than 3 anything from what we just heard from the ceo jump out at you i think tim cook is downplaying the qualcomm issue too much there is no mobile player in the world who can say that qualcomm doesnt matter period now, is one side right the other side wrong who knows. A court will decide that but it is true, right, that these qualcomm chips are the industry you needsmartphones, thats simple you cant make a smartphone without intel or you need the intellectual property that qualcomm provides. There are various ways at that apple doesnt use the application processer that qualcomm provides, but hey, a lot of others do thats why qualcomms earnings were good yesterday. I think its interesting, this is a stock that was down around 1. 50 in late september because of all the fear, uncertainty and doubt around this launch so even though apple is the most valuable company in the world and people talk all the time, oh, theres this hype around apple, got to remember, in these launch cycles with apple, all of the rumors out there do really interesting things that investors need to Pay Attention to people are saying nobodys going to pay for 1,000 phone, they really screwed up this time. Well, lets take a look thats what makes it so interesting that its up 4 in the aftermarket. Whats the valuation here its still very attractive. Still very attractive and youve got tons boat loads of cash, right . You get this tax situation thats exactly what on top of that the story goes from being a product cycle one this year into next year anyone you have this tax tailwind in a big, big way these guys normally give out their capital returns in april thats about the timeframe so this whole tax plan is coming at a perfect time. Just at the right time. Over 200 billion in cash overseas, they bring it home. 269 billion in the number. Angelo, what do you see as the i impact on apple from this tax plan if its enacted First Quarter next year . Yeah, i mean, with regards to the tax plan here, i mean, i think overall the Company Looks to at least buy back about 10 of their shares from the money they repatriate here i think the rest of it they kind of hold on to, look potentially for, you know, an acquisition that could make sense for them but at this time, you look at what historically apple has done i mean, their largest acquisition has been that of beatz of 3 billion. I just cant see at the moment them really kind of going out and doing some kind of enormous m a deal i think they could potentially reinvest some of it, but its going to be primarily use ed we think for buybacks. All right angelo, we have to let you go. I know that calls coming up everyone else will stay here thanks very much to you for joining us, angelo, appreciate it. Thanks. Were going have more reaction to apples big earnings beat after this quick break and the cbs Conference Call is under way. O ll have some highlights from celes moonves as we get them stay with us were back in two. Were drowning in information. Where, in all of this, is the stuff that matters . The stakes are so high, your finances, your future. How do you solve this . You dont. You partner with a firm that advises governments and the fortune 500, and, can deliver insight person to person, on what matters to you. Morgan stanley. Well have smr on apple in a moment lets get to seema mody for a quick Earnings Report. Seema, Big Data Analytics company Tableau Software reporting disappointing earnings revenue, too, missing street expectations at 215 million versus the expectation of 219 million. Digging through some of the other metrics, nongap operating mar margins were light billings at 233 million came in weaker than expected youre looking at the stock down more than 11 . I would point out the stock is up over 60 year to date back to you. All right, seema, thank you jon, you want to any reaction to that . Actually it was on Something Else it was on apple. It why dont you just kick it off right here jon fortt for us, ed lee, stephanie lee. What else do you want to talk about . Apple is up 3. 5 . Up 3. 5 we were talking a little bit about the Services Business in apple. I noticed something here in a footnote on services it says, Services Revenue in the Fourth Quarter of 2017 included a favorable onetime adjustment of 640 million due to a change in estimate based on the availability of additional supporting information. No idea what that means, except that 640 million worth of that Services Line that accounted for that 34 yearoveryear revenue bump might have to do with accounting more than it does with the organic Services Business so investors will want to watch out for that. Im sure there will be more questions about it on the call on services i also feel like apple in some ways gets too much credit for this category a lot of services isnt services its transactions. Theyre just yeah 30 they take of inapp purchases . Exactly, inapp purchases oneoffs. Right what you really want to see apple build is things like apple music, services that people are specifically paying for. Icloud things that are similar got it think theyre going to be doing that. Their strategy is not just to keep going down the route that theyre going now. They already got subscriptionbased kind of if you pay for the phone over a monthly plan, youre paying whatever, 30, 40 bucks, doing that every month, icloud services paying a buck or two a month, wlovr hatever it might b. Havent amped that up to where its more meaningful. Something about services you also have to consider with the growth of some areas of services theres also the decline in others as people arent purchasing music anymore and theyre not purchasing movies. So as certain areas of services go up, certain areas are going down and youre absolutely right, naur padding those numbers with transactional sa s sales. They really call services. So its really not services. Its really not easy to determine the real growth of this area. And i think youre also toosly dismissing the issues with spotify and netflix in going so into services versus looking at the future, which is Autonomous Cars and internet of things in your home. And i think not being in there is really a problem for them they solved the iphone is our only product thing by charging more and making a great phone, which im happy about, but three to five years from now, where will we be the china numbers have been a big question mark hanging over the company. The sales in china rose for the first time in early 2016 were still looking for evidence whether the iphone 8 is selling well there because of the lucky 8 number or whether the x will appeal because its a unique type of product. Some of this might be a macro china issue. We heard about this last night on qualcomms call, qualcomms ceo telling me he saw broad based geographical growth across asia and theyre growing their average selling prices as well, moving into premium categories if youre seeing that in china as well, thats good theyve basically gone from having decent market share to losing it quite substantially. They have to defend that and grow that share, right they had an issue not that long ago with the watch, the Chinese Government said, hold on, because there was this weird issue with the seller connection and how they were tagged and who was identified hardware is always easy to sell in china because its hardware, not a media thing. The consumer in general in china is actually doing quite well thats a whole part of the strategy of this government, to really become a more consumptionbased economy. Its lifting a lot of votes youre hearing it across the board from Different Companies, the consumer is spending more. Probably supporting the whole Global Economy ross, we have to go. Thank you for joining us boldly going where no network has gone before, cbs turned to the iconic star trek to bolster its streaming service. Coming up, what cbs just said about the paid tv landscape on its Conference Call. Were invested in creating the worlds first stateoftheart drone testing facility in Central New York and the mohawk valley, which marks the start of our nations first 50mile unmanned flight corridor. And allows us to attract the worlds top drone talent. All across new york state, were building the new new york. To grow your business with us in new york state, visit esd. Ny. Gov. To grow your business with us in new york state, well, itsonce again. Eason yeah. Lot of Tech Companies are reporting today. And, hows it looking . I dont know. Theres so many opinions out there, its hard to make sense of it all. Well, victor, do you have something for him . Check this out. Td ameritrade aggregates thousands of earnings estimates into a single data point. That way you can keep your eyes on the big picture. Huh. Feel better . Much better. Yeah, me too. Wow, you really did a number on this thing. Sorry about that. Thats alright. I got a box of em. Thousands of opinions. One estimate. The earnings tool from td ameritrade. The cbs Earnings Call is under way. Julia boorstin has some interesting comments the ceo just made, julia reporter thats right, with cbs beating earnings estimates by 4 cents, reporting earnings of 1. 11 per share, les moonves kicked off his comments by saying cbs is different from other players, saying cord cutting has a positive impact on the company. Where others worry about cord cutters, we dont. Were ready for them we welcome that. In fact, where others are losing subs to cord cutters, we are growing. Reporter moonves announcin that his Digital Service cbs all access will launch internationally next year. He said while nfl ratings are down, he said the nfl is still the best game in town, kelly, back over to you cbs shares down about 1 . Julia, thank you starbucks getting hit hard on the back of earnings well tell you what its listed for on that Conference Call when we come back ahead on fast money, Senate Majority leader Chuck Schumer will weigh in on a first on cnbc interview, next hour well be right back. Opportunities arent always obvious. Sometimes they just drop in. Cme group can help you navigate risks and capture opportunities. We enable you to reach Global Markets and drive forward with broader possibilities. Cme group how the world advances. This is not a cloud. This is a tomato tracked from farm to table on a blockchain, helping keep shoppers safe. This is a financial Transaction Secure from hacks and threats others cant see. This is a skyscraper whose elevators use iot data and ai to help thousands get to work safely and efficiently. This is not the cloud you know. This is the ibm cloud. The ibm cloud is the cloud for business. Yours. When it might be time to buy or sell . With fidelitys realtime analytics, youll get clear, actionable alerts about potential Investment Opportunities in real time. Fidelity. Open an account today. Welcome back weve had a bunch of big earnings this hour as we gear up for Conference Calls for apple and starbucks. A final thought, what you think is the most important to listen for. Stephanie. A lot of the starbucks earnings were below the items, thats disappointing exhurricane global comps were better so so that was an impact that was an impact. So not as bad as the 2 number that was shocking. Americas market is down. Almost 5 percentage points. And look at the shares down 7 they lowered the guidance like i thought they would. John . Iphone x, supply most important. Next most important, demand. What was the impact of the 8 on xs demand the mac had 5. 4 Million Units moved in q4. Anything above 5 million is good for the mac. 5. 4 before the Holiday Quarter is kind of extraordinary its the return of the mac. If they wanted to, burger king just used it if this were a mike kelly a very fun couple of hours. Guys, thank you very much, we appreciate it. Time for fast money, to get you covered on all of these calls. Fast money starts right now. Live from the Nasdaq Market site overlooking new york citys times square im melissa lee. Tonight on fast, apple and starbucks reporting earnings moments ago. Apple crushing earnings. The stock surging to record highs. Starbucks is getting crushed those Conference Calls are kicking off. We have full Team Coverage josh lipton is outside of apple headquarters gene munster is here on set listening to the call. Kate rogers is back at headquarters listening in on starbucks. In just a few minutes, senator