Transcripts For CNBC Fast Money Halftime Report 20240714

But a different story for amd. Both stocks on fire this year. How to trade them from here. The Halftime Report starts right now. Welcome to halftime good to have you with us on this wednesday. Our Investment Committee today, joe terranova, Jim Leventhal allianz Global Investment strategist we begin with the countdown to the fed today. Thats what everybody is talking about including Steve Liesman who is in d. C. Following the money for us i guess its pretty much a foregone conclusion on a cut i think thats right, scott i think there are some questions as to whether or not the Federal Reserve also were to end its Balance Sheet reduction. Supposed to do so in september a lot of talk on the street that maybe they do that today along with cutting rates doesnt really make sense to be tightening up financial conditions through reducing the Balance Sheet along with cutting Interest Rates and also, i see a big question about the guidance worth taking a look one last time at where the market position here are some of the four keys to the fed elevate and repeat the uncertainties that were repleeth in the last statement. Act as appropriate thats the guidance its going to provide for the future. And the question about ending the Balance Sheet reduction. Take one more look here about where the market is priced, at least right now. Rick santelli is a good caveat about looking at the future rates. You are looking through one opaque glass at another opaque down the road because you havent cleared the existing contract nevertheless, heres how were priced 100 for the cut today and then we have a what is it, a 70 chance of a cut in september going to a 57 hint of a third cut. A greater than 50 chance of three rate cuts. Well see how powell plays this. Does he tamp down those future expectations or bring them up . There are some who will say he bowed to political pressure, right . Thats inevitable given what the president has said over the last many months,steve. Yeah. A lot of people who say that and are concerned about that at the same time, i think what powell has to do is make his best case for why hes cutting rates. And i think hes going to be a little challenged looking at the data we had 150,000plus today on the abp. Looking for reasonably strong jobs where the weakness is, scott, its broad, globally and we see it in the manufacturing. We had another sort of lackluster or contracting Regional Manufacturing report today. Thats where the weakness is what you dont see on that adp payroll number there is that manufacturing employment was up only by 1,000. Thats where were seeing the weakness is that enough to cut rates . A lot of economists, half of our panelists in the fed survey did not think the rate cut is warranted but a bunch of powells Committee Members dont think its warranted either. Were watching the number today and that is another key to the outlook for future rate cuts if he has a lot of dissents, maybe those future rate cuts are in danger. Warranted or not, it looks like its coming today Steve Liesman down in d. C. Steve weis, now what theyre going to cut maybe they do something on the Balance Sheet. What does the market do as a result in the weeks ahead . I do think theyll maintain the dovish tone. So the market is going to react positively react positive in advance, thats going to continue the most interesting thing today was in terms of the underlying strength of the market is that the news that was coming out of china in terms of any progress on trade talks was negative. Yet the market just shrugged it off. So again, that news has reached diminishing returns in terms of its negativity in the market its up, up and away were still the best market in the world, and i believe you want to be investor here the only other place to be is if you want to be in longer duration, alternative assets that arent correlated to the market if youll be in any type of public invest automate. Up, up and away says steve weiss. Do you agree steve summarized it nicely. Jerome powell is going to point to the weakness abroad Global Growth slowing. China trade issues uncertain he hasnt yet pointed to whats happened domestically. Strength in the consumer gdp that was pretty good you see historically when the fed does undertake insurance cuts, the market does well theres a positive Market Reaction i think at some point, up 20 . I dont think we analyze 20 we get to 40 . You have some volatility along this path but generally the backdrop positive. Pete, insurance cuts better than the skys falling cut, right . Yeah. Well, you know things are pretty good. We just want to take out an insurance policy if things dont turn were they backed in a corner . Absolutely yes perfect scenario for stocks looking forward yes. But looking forward to the 70 , i think those will be tamped down, i think, by powell i think hes going to probably want to attack that a little bit to say, hey, look. We still look at the rest of the world and its as its been absolutely under pressure. Will that continue and theyre going to monitor that if theres any improvements on that or the trade front, we talk about this all the time. Weve got they extended out now. That was something we talked about many, many times theyre extending out this conversation and im saying a conversation because i dont know how much negotiation is going on right now with china but this conversation keeps getting pushed out now its pushed out to september and President Trump was talking about that today as well after yesterday saying how negative things were, we start off and we actually recover 130 points off of those lows its interesting to see, but the volatility index is saying a lot today. Back up and over 14 from the 12s. Its not significantly high. But it is telling you a little bit of something, the nervousness in the market and what powell might say. We agree, rate cut baked, Balance Sheet not baked in if you get the perception of a more dovish move today by the fed, that is a little bit of a different story we have to deal with well, i think it speaks to the potential that possibly its one and done so theyre trying to shock the system. The Balance Sheet, why not end it today youll end it in two months. Shock the market and give it 25 basis points and the end of the Balance Sheet. Then you go one and done i dont know if anything is going to change, though, looking forward over the next 3 to 6 months you have the following conditions the u. S. Consumer is the place to be right now. Get behind it. Thats the strength. Nothing is going to change in terms of consumer is going to remain strong. Manufacturing may remain week. Will remain weak. Global economy will remain weak which keeps the fed in play exactly thats what the market wants see what the probabilities are. The trade talks are being pushed out to september. Quietly, the market applauds that if we were to get a resolution prior to the Federal Reserve meeting today, chairman powell is not giving you 25 i dont think the market cares that much about the resolution at this point the market cares about the tariffs. Additional tariffs you can deal, i think, without a resolution you cant deal with additional tariffs. That sort of that trumps, so to speak, the fed. Youre absolutely right that nails it on the head. And you cannot rule out that we wont get more tariffs as steve pointed out, these negotiations in the last two days really didnt result in anything and theres been no frankly if were talking about whether this is an insurance cut or a rate cut cycle, it depends on whether you get resolution on trade in the next couple of months its a short time frame but im looking at things like ceo confidence yes, its ticked a little higher recently but well off of its highs. If i put that in context of some of the Earnings Reports weve gotten that have pointed out this is a difficult environment. Think about the csx ceo saying this is an unusual environment like nothing hes seen before or caterpillar or i can go down a long list. Basically tariffs, trade tensions are showing in effect in what the second half of this year is going to bring if you clear those trade tensions, i think this is a one and done cut but you dont have much time left to do it. Not everyone thinks a rate cut is needed. You know that by now, including lee xocooperman who joins us on the phone. Welcome back to halftime. Im listening to all you geniuses there a lot goofof good things being. You dont think they should go theyre going to go 25 in my opinion. I think theyre going to basically imply the data depending Going Forward. I just raised a question whether they should go i think on cnbc the other day, Eric Rosengren, the head of the boston fed was interviewed i thought he made a lot of very good points. He seemed questioning the need to go. The way i look at it i see Consumer Confidence high retail sales recently strong employment is strong Interest Rates already quite low. The economy is growing a trend trend growth is about 2 wealth is at a record level and, obviously, due to the stock market corporate profits are decent coming in stronger than expected in the quarter and stock repurchase activity to me which suggested businessmen are not pessimistic. Whats going on is were rewarding one questionable policy with another questionable policy the questionable policy was the indiscriminate threats of tariffs. I understand what were doing with china it makes sense, but threatening europe, threatening canada and mexico thats created a lot of Business Uncertainty and, you know, a weight on Capital Investment and now were rewarding that policy by cutting Interest Rates when Interest Rates were already very low and were just forcing people out on the risk curve whats going on is very simple ten years ago, five years ago, eight years ago, people that bought i cant survive on near zero. Im going to buy t bond. They t bond buyer says im going to buy industrial credits and thats 4 . The industrial credit person says, 4 doesnt impress me. Im going to buy high yield. The high yield person says i cant get by on 6 or 7 im going to buy structured credit clos and the clo guy or gal says im going to put 25 of my fund in equities and so were pushing people out on the risk curve. I have to admit im of two minds. Mind number one, the more practical end is the condition for a big decline in the market are not present. Ive said that consistently on your program you have. You know, we need accelerating or problem atic inflation. We dont have it we need an oncoming recession. I dont think we have it and the old line that ive used repeatedly, bull markets are born on pessimism, mature on optimism and die in euphoria the only place i see euphoria is the ipo market not in the overall stock market. People are meshing their teeth over google at 21 or 22 times earnings cisco was 100 times earnings so i see the conditions are okay for the market, but my view is any substantial rise from here, substantial, that, i think, would put you in the land of euphoria and that would mark the end of the cycle for now, the market is okay but i do question the need for the fed to cut short rates are 2 you know, you return after tax inflation is already negative. Thats not restating the economy. Whats going on, simply, were all getting tied to european monetary policy. But the ecb, theyre crazy over there. They should not be pushing, you know, negative Interest Rates. They should be germany wont let them so theyre relying completely on monetary policy. And just ask yourself the following question you lend money to germany for ten years. They give you backless than yo lent them ten years from now same in france same in sweden same in the netherlands. Same in japan. Significant negative rates in switzerland. The greece tenyear bond is slightly below the u. S. Tenyear bond i mean, 40 of the time greece is in default. So we had this crazy monetary environment that does not seem to be warranted by economic conditions, and i think if we had more fiscal policy, wed probably get more do you expect do you expect the stock market to go up meaningfully into that euphoria place that you just spoke about . Yeah, i would say the trend looks up i am playing with my own money now. 65 exposed to risk assets and 30 in cash and i find a lot of things to be done. Plenty of things of good value but i do personally believe that there are issues out there that which suggest any substantial rise quickly would be taken away from future returns. Things that bother me are Profit Margins are well above normal. Secondly, i saw 12 santa clauses on the stage last night. The country is moving to the left third, we have a debt structure thats concerning. The debt is going up at a fairly rapid rate with the economy doing as well as it is and the economy approaching full employment, it should be declining, not rising. Im very concerned about market structure. Step back and think about it, okay in the Fourth Quarter last year, we had decline rival in 29 no economic justification. And the reason is, if you look at the market, theres no stabilizing influences anymore you know, in when i joined the industry 51 years ago, the Brokerage Firms traded stocks for 25 to 50 cents a share the volcker rule didnt exist. Now a penny, two cents a share some cases zero and the volcker rule they cant legally do it and cant afford to do it. Theyre not being compensated. Secondly, the volume was done on the new york stock exchange. Now 80 of the volume is off the exchange so the special system doesnt have any relevancy youve criticized the socalled algos in the past. It works both ways i agree i agree. No question basically. And the third thing i was going to say which leads to the algos. In 1938, they enacted the up tick rule. For some unexplained reason its given rise to a lot of these algo traders which seem to buy strength sell weakness and that exaggerates the up side and exaggerates the down side and what worries me when legitimate conditions materialize for the bear market. Theyre not present today. This thing goes down so fast your head is going to spin so i kind of think were borrowing from future returns. So im looking to put my money to work. But i do question the need for a cut. But, you know, i dont see the optimism that is associated with a big top. I have spent this past weekend with the rich and famous out in the hamptons a terrific guy he has these benchmark lunches i went to one on friday. Without identifying who said what, his first question was, what is your biggest concern and somebody said inequality another said cybersecurity, cyberterrorism another one said the debt levels in china another one was a u. S. china relationship the movement to the left global Interest Rates. The 2020 election. The middle east situation. Negative Interest Rate environment. Trump. Climate, you know, global warming. And the last one was war with iran and i very cynically observed said nobody has a concern about being underinvested. People are cautiously conservative for a lot of reasons and i dont want to say i can find a lot of stocks to make more sense than 2 fed funds rate and 2 government rate. I wouldnt buy a bond with your money. Going down, by the way i suspect the bond yields are going down given whats going on globally and Interest Rates, what the fed is likely to do i just think theyre overvalued. You know that some as i asked Steve Liesman earlier are going to say jay powell given all the positive things going on bowed to political pressure. The president has been lighting him up for months and powell is going to cut rates today what do you make of the pressure that the president has put on the fed and mr. Powell and whats likely to happen today and what the narrative becomes in the weeks following well, i think what the president should do is take a victory lap saying i told him not to raise rates in december so hes unwinding what he did in december and i think hes paying a lot of attention to the Global Environment. But i say the Global Environment is weaker than expected in part because the uncertainty injected by tariffs i understand what were doing with china china has not played the game fairly i dont see why youre threatening europe, canada, mexico so, you know, i think that the tariff policy has been indiscriminately employed. That has created uncertainty in the Business Community on your supply chains you dont know what to do. Do you build your plant in vietnam, in mexico in the United States theyre stepping back. But i dont think theyre all that pessimistic why are they buying back so much stock . You know if youre pessimistic and certain about your outlook you dont take your money and buy back stock so i think its a lot of crosscurrents i think all of this emanates from large, negative Interest Rates in europe which is affecting our Interest Rate structure and the stock market i dont even know why investors are so focused on this the stock market is not expensive if you believe 2 fed funds and 2 10year government. Ill give you a statistic that ive often cited the last five years, the 10year government was 6. 5, currently 2 and the fed funds rate was, i think, 5, currently 2. So the multiple maybe is 10 higher than historical but Interest Rates are a third of what they were historically. Relative to existing Interest Rates. You should not require lower Interest Rates its like these algos have programmed into their system rates. And if rates get cut, theyre bullish. If rates dont get cut, theyre not bullish. You dont need a rate cut. All these algos know everything about price. They know nothing about value. How do you get rich buying strength and selling weakness . How do you assess earnings thus far amid concerns of earnings recession i dont know. I believe my partner who is a terrific guy and deserves a shoutout, he sent me an email this morning it says 70 of s p 500 companies have reported earnings and Second Quarter earnings season is coming in better than expected at the start of q2, consensus was s p earnings would decline 3 year to year, and he expected a small increase and now it looks as year to year eps will lift 3 as opposed to the expected decline and sales are expected to increase also by about 2. 5 . So i think the earnings are coming in a bit better than expected looking for 168 in s p earnings this year. So the multiple in the market is about 17 1 2 times i wouldnt want to say too low, but i wouldnt want to say its too high relative to Interest Rates, seems about right to me. Youll get multiple expansion. Some people are talking 20, 21 times. Yeah, i would say that the bulls will say that given current Interest Rates, the multiple of 17 which ive been assuming is too low and the bears would say the multiple assumption is too high mainly because you have to normalize the multiple for where Profit Margins are in their cycle. You have to, you know, adjust for the debt structure of the country and the degree of government involvement in the system you know, the president is very intent on getting the stock market up as the vote on his administration and my guess is were doing a lot of things that are pulling demand forward for example, why is the deficit going up when the economy is reasonably fully employed and the economy is growing it should be growing down, not up pulling demand forward why we are cutting Interest Rates when theyre already so low and Esther George and the Kansas City Fed and Eric Rosengren of the boston fed. These are smart people questioning the wisdom of the rate cut were just pulling demand forward and youre asking whether powell caved into trump. Who knows. I think he would say hes focused on whats going on in the european economies and whats going on in asia and hes taking an insurance cut. I dont think you need it, but who am i im just a kid that grew up in the south bronx that working for a living 3200 on the s p doesnt seem out of the realm of possibility to you . No, as ive said on the program, my last appearance, that were in an abnormal world, and i have to spend my time figuring out normal. Normal to me is about 2 real growth, 2 inflation 4 nominal and 4 nominal world, fed funds, 3 , tenyear government 4 take you quite some time to get there. 17 multiple is reasonable. 17 multiple, which we spoke a moment ago would be considered low by the bulls 17 times 168 is 2900 and bull markets dont end at fair valuation they end at euphoria 10 to 15 to that is the up side you could see. And i wouldnt fight it. Thats what some say. Its like, you know, if the fed is going to embark on this ratecutting cycle, go back to the old simple playbook. I dont expect a ratecutting cycle. I think were one and data dependent. If were right on the economy, its one and done. You think that. One and done interesting. Because the market the market thinks otherwise the market is building in, i think Steve Liesman went through some numbers a moment ago. I dont have them in my head 70 in september. I would assume that will change if the economic numbers get stronger and if europe starts resorting to more stimulative fiscal policies and their rates start to lift, that will take the pressure off our fed you know, the president , when he says Interest Rates are too high, hes been a borrower his entire life. He would like zero Interest Rates. I would like as a saver, a return on my savings so if im a marginal tax rate of 40 and getting 2 and keep 60 of 2 , 1. 2 , the inflation rate is running 1. 5 to 2 , i have a negative return on my savings. Its not an incentive to save. Its an incentive to speculate let me open it up to the panel in front of me, lee. Jim lebenthal has something for you today. Thanks for being on the show. You talked earlier and i agree low Interest Rates abroad are being imported over here what about economic weakness being imported from overseas i know thats a change that a recession overseas or weakness overseas generally doesnt get imported but a lot of things have changed. And you look at china. Their pmi is below 50. Europe, gdp, 1 is something to be celebrated over there what do you think the possibility is that that gets imported over here well, i think thats the concern of powell. But where im trying to figure out is, what is the weakness tied to . And i think the weakness is tied to business fixed investment turned a bit soggy because the uncertainty injected in the businessmans mind over what these tariffs are all about. You know, what do they do for their supply chain do they move out of china to somewhere else do they build in china, build in the u. S. Build in mexico . In vietnam this is causing uncertainty. I think, to me, there are two risks that the market are facing if something goes awry with iran and leads to a big spike in the price of oil, that will be a problem. And the second will be a breakdown in china u. S. Trade negotiations but, you know, if the president is true to form and he wants the market up, he knows what hes got to do. And hopefully he can come up with a deal. Lee, are you buying new stocks or just adding to existing positions that you already have you know, i have a team of six analysts in the Family Office and they propose and i dispose. We have not really had anything new. A lot of things we have we really are very enthusiastic about. We are having a decent year. Up double digits 65 exposure i would say im reluctant to open new positions because were in an advanced part of the cycle. Anything thats not worked out in the last ten years, you know, your odds of, theres something wrong. But i am very interested idiosyncratic. Very idea oriented for example, i have a decent size position in something called new media not a great business deteriorating business local newspaper chains but they have disclosed theyre in advanced negotiations to merge with gannet. If you look at that, theres probably several hundred million of synergies there you put a four multiple on those synergies, over a billion dollars of value created nothing like that reflected in the stock of the price listened to a call this morning. Love the management. The stock went down 5 quickly, amcx media company. Six times cash flow with a very good management. Ive said this before on tv. I Pay Attention to capital management, particularly when theres a large insider ownership. So the dolan family owns 17 of the economic interest of the company. Its a dual voting class of stock. They own 60 of the vote yet every quarter they are buying back 1 or 2 of the company. I Pay Attention when a big owner is retiring stock. Hes selling the discount what he thinks the business is worth and sells six times cash flow. Its not doing anything because everybody is worried about cord cutting but they have content and other things going for them. So we find a lot of things that make sense google i was going to ask you about google do you feel better about google today than you did some three months ago following their earnings you got a buyback. You must feel better today yeah, yeah, i felt good when i owned it basically its 22 times earnings not expensive where it is. And now with 25 billion buyback they announced, they maybe have a more efficient capital structure. Yeah, look as i said earlier, in 2000, everybody was hopped up on cisco at 100 times earnings. Now theyre worried about google at 22 times earnings with a fortress Balance Sheet a lot of things you can be doing. And, you know, i hope it goes on forever but we know things dont go on forever. And i would say that to me, were not the only sign of euphoria i see is the whats going on in the ipo market i have no position in beyond meat but the multiple of revenues it trades at would suggest to me people are must be vegetarians lee, well leave it there i appreciate the time very much. I think i took more than i told you i would. Im grateful for your patience there and your time. My pleasure good luck to everybody well talk to you soon. Thats leon cooperman joining us there on the phone what do we think about what you heard . Could we be about to enter that zone of euphoria as lee has spoke ben in the past and others have said thats the ultimate stage there . I think one thing he brought up, u. S. china trade, thats one of the key concerns Going Forward. Interestingly, i think a lot of this tension thats come up lately, ive even heard theories that perhaps President Trump and the administration have brought it up ahead of the fed meeting but not having that last tranche of tariffs is important. Those would impact the consumer, and we want to avoid impacting the consumer but the other thing is chinas dug in its heels now and i dont see a resolution coming ahead of 2020 i think they want to wait it out. Luckily President Trump has pulled back and, like i said, that last tranche is the one we want to avoid. What was interesting to me is that all the concerns that were raised at the lunch he was at, its a lunch of very smart people i know people that historically go it sounds like a lot of them were just reaching for something. And generally that happens to be the case you never know whats going to hit you to take a market down. Theyre all legitimate things they are. Its just on the other side you have the powerful hammer of jay powell but i dont think anything that was said really derails the market in terms of how it unfolds. I dont see that deriling t ini market saudis will meet the demand because they hate iran and youre off to the races again. I dont see getting too euphoric so much bearishness. Theres nobody i talk to that it fully invested that isnt cautious on the market and you dont have that euphoria youve had in past cycles. If you believe the fed is about to embark on a cycle, even though lee doesnt necessarily agree thats whats going to happen, you could enter that phase, couldnt you . Yeah, but you know, scott people were talking about apple is up big today. Go ahead and chase it because its likely going to go higher, for example. Why not the s p in that same vain i think theres a im not suggesting people do that im simply saying thats what some suggest heres what i think i think theres a possibility that were about to enter euphoria heres the big condition on that you have to have resolution on china. And, frankly, thats what lee was saying i agree so strongly with this. This economy is dependent on the consumer up until now. We need capex to pick up cap ex isnt picking up because of geographic uncertainty of where youre supposed to expand. If you get rid of that uncertainty, the economy will roll higher and the markets with it not much uncertainty in apple today. That stock is having a very big day. Thats coming up next. Heres what else is coming up on the Halftime Report. Apple beats the street. Despite a slowdown in iphone sales. What the number one apple analyst Tony Sacconaghi has to say about the tech giant plus, one of our experts is buying shares today. Also, the Investment Committee is answering your questions. Reach us at cnbc. Com halftime. Or tweet us Halftime Report using askhalftime according to our data partners at kensho, over the past five years, apple has jumped at least 5 in one day just eight other times. A month later, the bullish trend tends to continue with the stock adding another 5 . Trading positively 75 of the time for more go to cnbc. Com kensho the hftalime report with scott wapner and the traders is back in two minutes for your heart. Your joints. Or your digestion. So why wouldnt you take something for the most important part of you. Your brain. With an ingredient originally discovered in jellyfish, prevagen has been shown in Clinical Trials to improve shortterm memory. Prevagen. Healthier brain. Better life. Welcome back, everyone im sue herera heres your cnbc news update at this hour. A roadside bomb tore through a bus in western afghanistan killing at least 32 people, 15 others were wounded. And most are in critical condition. The bus was traveloging on a ma highway. No one immediately claimed responsibility but taliban insurgents do operate in that region a federal judge has set a tentative trial date next year for jeffrey epstein. Judge richard burrman says june 2020 is the earliest epstein will stand trial on sex trafficking and conspiracy charges. Epstein is being held without bail in a new york city jail pennsylvanias former attorney general released from jail this morning. Kathleen kane served eight months of a 10 to 23month sentence for leaking grand jury information and then lying about it she was the states attorney general from 2013 until she resigned in 2016 an unmanned supply ship was successfully launched from russias space complex in kazakhstan it is heading for the International Space station. Carrying about 3 tons of food, fuel and supplies to the six astronauts on board. And this just in to the newsroom an explosion occurred at the exxonmobil baytown, texas, facility firefighters are on the scene. They have no indication of a cause for that blast and as you look at that live picture, you can see that there are a lot of flames. Its still very much a fluid situation. Currently there are no injuries. And there is no shelter in place order. But it has moved gasoline spot Prices Higher at this hour, scott. So were watching that Market Reaction as well back to you. Sue, well continue to do that we appreciate that meantime, apple shares powering the dow today following its Earnings Report. Our next guest, one of several analysts raising price targets for the stock. Tony sacconaghi joins us once again following earnings you raised the price target today but below where the stock is currently trading you are pleased, but not that much look, i think the risk reward on apple is balanced at current levels we have the stock relative to the market trading at about a fiveyear high and theres still a lot of uncertainty about next year. Apple is going to be coming out with probably only incrementally better iphones and not a 5g iphone and so theres a real question about what the strength of next year will be and with the stock trading at fiveyear highs, on a relative basis, you know, our price target ends up being below where the stock is trading at. Wearables and services, a fortune 50 they seem to be doing the things they need to do to offset whatever iphone weakness they may be having. Yeah, i mean, kudos to apples Management Team for really developing the services opportunity. And that is the intrinsic tension in the stock which is the iphone is under pressure, and services is doing really well now this year, that nets out to revenues being down 4 and net income being down 10 . So the weakness in the iphone is dominating the question is, whats that steady state can services get big enough to sustainably drive revenue and Profit Growth Going Forward . Do you think it can i think it can. And a lot of it depends on the success of new services. Because new Services Like particularly content will be lower margins. So we feel confident in the top line growth in services. Im not sure that Services Margin improvement will continue at the same rate because youll be adding lower margin services. And Services Margin improvement has been important because hardware margins go down and effectively services have been subsidizing that. So it is imperative that Services Margins also go up. I feel quite confident about Services Revenue growth continuing to grow at double digits im not as confident that Services Margins will continue to grow at the same rate even my friend in front of me steve weiss has been beaten into submission by tim cook he bought the stock into the print. He bought the stock out of the print. Come on, weiss its true i bought in spite of tim cook, actually and i disagree i dont think theyre doing such a great job. Services growth has slowed its gone from near 20 to 15 to this quarter 13 . Its actually 18 its actually if you factor 13 , but if you factor out some of the details theyve got right now from the financial, legal side of things, its an 18 run. Im sorry i dont deal with creative math. I deal with its not creative math if its fact. It shows that yet hes buying it shows revenue i buy it because of fan boys like you has nothing to do with being a fan boy. No, thats cool he can be. Ive only owned this the longest any of stock ive owned. I teed you up for toni. I bought it because the 2020 launch of the 5g phones are going to be the biggest upgrade cycle well ever see and they have to parks ss, as we seen in prior quarters when the x was launched, theres a pass up until that occurred so you get a pass on this for the next year. Okay this can be a phenomenal, phenomenal grower, but its not because its held back by management he hasnt had the vision to make aqcquisitions that iger made and zuckerberg has made. He said kudos to the i think toni misspoke he spoke right but thats not the case look, the company has actually im going to let you finish and then toni can respond. The company has been rerated. Despite growth in revenue and net income being flat to down over the last year is because they bought back stock so the p e is actually gone up on lower net income. Thats not a company thats they have cash to buy back stock. True. But what do you do with your cash buy an asset that grows that offsets more so . Your declining margins and 50 of your business lets hear from toni. Mark zuckerberg is toni . I think on the services side, they deserve credit. Theyve built a 45 billion annual run rate business they continue to Bring New Services to marketplace so that the gaming and Video Services will begin over the next couple quarters and they are growing steadily at double digits and pretty consistently so i think they deserve credit for that i think to steves point, look, the product side has been disappointing. The level of innovation that we saw on the product side relative to history is much lower apple had blockbuster products every two or three years historically arguably, they really havent had one in the last five or six years. Now we could argue that air pods are doing exceptionally well and that is a promising market, and that was really highlighted by earnings last night we estimate the company didnt disclose this that they probably grew 70 it could be a run rate business of, you know, 7 billion or 8 billion a year right now and the beauty of that product is its crossplatform it doesnt just work with iphones but with android phones. So the ability to penetrate a Huge Installed base could make that product sort of a real sleeper Going Forward in terms of its contribution to apple you know what i want to put up we just put up a graphic on our wall i want to put it up again because it shows that you get 26 billion of revenue from the iphone and then Everything Else you get 26 billion from all of the other parts of the business. Mac, ipad, wearables and accessories and services equal to the iphone. So the iphone is declining, but the others are increasing. Doesnt that right there on our wall, which you cant see, but im telling you what it says, doesnt that speak volumes about what the future holds, and isnt that evidence that the story is intact and okay . Well, scott, the only thing where i would differ is, im not sure that mac and ipad are sustainable growers. No, but wearables are going to increase and services are, too. No, they are, but if you add those together, theyre about 25 of the company so that equation is a little different where you have 75 of the company where revenues are likely going to be down or flat to down. And then you have 25 of the company thats growing nicely at double digits. And thats ultimately the debate as i mentioned before, this year, the weakness in iphone trumped the strong gains in the other areas. And on a go forward basis, i dont expect iphone to be as weak but, quite frankly, its unclear that the other businesses, air pods growing at 70 , will sustain at that level as well. And so i think we just have to be a little bit careful about saying its 50 versus 50 its more like 25 versus 75. Toni, its been good having you. Appreciate it. Always like the back and forth look, the stock is reacting today. And well see where it goes from here thats Toni Sacconaghi joe, you bought more as well no, i bought into i forgot you were i have owned it im not the hater i am not the hater and i heard what i needed to hear from apple which was to speak about whats happening in china. There was comfort from tim cook that the supply chain does not need to be disrupted the other thing that is being dismissed here is the aggressive buyback. They reduced the share count, the shares available by 6 in the last year. Your friends at alphabet should now try it alphabet now has more cash than apple has cash apple has done a fantastic job reducing that cash from 2017s 160 level to down to 100 the other thing is when you are looking at the iphone revenue, you probably look at this. Youre right 50 , i get that. But thats probably a trough so you can see a reacceleration in iphone revenue while you get services and wearables not this year i have no problem chasing it here where else am i going to put my money in this market coming up straight ahead, the postearnings trades on General Electric and amd going to go around the desk on both stocks. First, a sector check today as well. Just ahead of the fed. The s p waiting and watching and anticipating up 1. 6 . Were back after this. Lling pat. father kids. Nge of plans vo defy the laws of human nature. At the summer of audi sales event get exceptional offers now tell him were flexible. Dont worry. My dutch is ok. Just ok . in dutch tell him we need this merger. in dutch its happening. just ok is not ok. Especially when it comes to your network. At t is americas best Wireless Network according to americas biggest test. Now with 5g evolution. The first step to 5g. More for your thing. Thats our thing. Your daily dashboard from fidelity. A visual snapshot of your investments. Key portfolio events. All in one place. Because when its decision time. You need decision tech. Only from fidelity. Hi, everybody. Im kelly evarns heres whats coming up on tate exchange. How will the market react. Plus, apple proves its got more up its sleeve than many thought. Was there anything in the Earnings Report that should give people pause. And candy, cookies, china. Its all giving this Consumer Staples stock and the whole sector a massive run this year well give you that name and more details ahead in rapid fire. Ill see you then. Scott, back to you kel, well look forward to it two big earnings movers today. Ge shares sliding earlier today despite beating on the top and bottom lines theres amd down sharply today worst day since january after their own weak revenue guidance. Lets start with ge. Pete, some some big put at ge. Fairly early in the day they started the september, tussas noel has not at the. Quote, the stock is up on the headlines, as it has been many times before, but like in the past underlying core fundamentals are actually a bit worse and we remain underweight on this and would be selling. Ive been out for a little while now. As a matter of fact, we did have some call buying, but look at this reaction. It started off strong, scott they sold it off fairly rapidly. I tend to be a he believer that tusa has been right in the past, but if hes right about this most recent note, i would love to be in from a risk reward perspective. These puts were approximately bought for approximately ten cents. Thats a great risk reward if the stock falls apart in the next month or so. Broadly speaking, what we like right now, we agree with the sentiment, the u. S. Is, but we have a bell approach. Mobile payments, cloud computing. The other hand, things that have lagged this year, so industrials can be part of that aerospace in particular, but areas like Consumer Staples, a nice barbell approach. Pete, you and weiss own amd. I got caught. You own it. I know the stock. Got a little piggy. I bought some cheap puts, because they were very near expiration on microsoft and apple. I was hoping i would be wrong, i was wrong and the stock went up. For some reason, on this one i ignored the opportunity and got caught but heres the bottom line, as weve seen virtually every other stock, the great thing is it comes back im waiting for it to bottom out. Ill probably buy some more. I think we have given right now a little too much credit, because we have seen this disappointment happen before youve got to know how to guide, man. You just have to know how to set expectations. Hes very highly regarded at amd. I own calls presently. What do you do now . Theyre probably going to disintegrate on me the risk reward we talk about all the time they had been buying and rolling up then the 28s, 29s, 32s, 34s. You continue to look at where they were going. I kept rolling, so this one is a loss ill be out of the calls when they expire. Countdown is on. Seema mody and the team have more on what to watch for today. Scott, thats right the equity market, even Commodity Markets are anxiously awaiting the fed decision. Our traders today i scott and iuorio i think they are completely overlooking important change, fracking has changed the complexion for crude oil prices completely, and the fed is still a using the lens that they developed in the 1970s the fact that this is the case that this that we can prove this is the fact that crude oil prices didnt jump in the iranians seized that british tanker fracking has changed things completely and the fed is behind the curve. So how high could it go if we get a rate cut today well, i think that its got to go above 14 1 2 thats where im thinking of getting back in before i think gold is an interesting proxy. When the fed turns more dovish after the last rate hike, remember thats the fed, the boj, and ecb im not sure you can buy bitcoin that much, so gold seems like a good bet. That does it for us thank you both check out our website. Halftime report is back with your final trades after this this is my headquarters. This is where i trade and manage my portfolio. Since i added futures, i have access to the oil markets and gold markets. Okay. Im plugged into equities trade confirmed and i have Global Access 24 7. Meaning i can do what i need to do, then i can focus on what i want to do. Visit learnfuturestoday. Com to see what adding futures can do for you. Is it to carry cargo. He or to carry on a legacy . . Its show of strength. Or its sign of intelligence . In crossing harsh terrain. Or breaking new ground . This is the time to get an exceptional offer on the mercedes of your midsummer dreams at the mercedesbenz summer event, going on now. Lease the gla 250 suv for just 329 a month at the mercedesbenz summer event. Mercedesbenz. The best or nothing. All right. Lets answer some of your questions now. Joe, to you first. Frank in los angeles, what do you think of square . I think square is going to beat i think the revenue will be up about 50 year on year the cash app is working well i would stay with it. Bruce greenfield, indiana, for steve weiss on boeing. 325 or 375 375 next question . Look [ laughter that saves me time. Pete, give me something on pfizer pfizer took a huge i was thinking about you earlier this week. It had a huge letdown i think that creates a great opportunity, very much like merck, now back up 84. Jim, i have one for you, nokia. Hi, jim, is your new stock pick nokia a longtemple hold i think its a longterm hold this is like cisco fiveiers, it was left for dead and then got its act together nokia is a relatively new holding. Fit find out things i didnt know, i will sell it. I have more time before final trades someone is asking about unusual activity. Im going to give you twitter right now. Its interesting friday is expires. You have two days to work. Stock was trading 42 1 2 they were buying the friday expiring 44 calls, paying very little i love that risk reward with a tencent option with the potential to explode we break through 44, these things are off to the races. I own them. Something else . They told me i was doing one. Im telling you youre doing two. Cyrus one is another one. The september 65 calls they bought 9900 of those. Today another 9900 they have had earnings tonight i love the risk reward. Thank you i know people love that segment. Youre the man. Final trades mona its been good seeing you. I can do sectors cybersecurity is a longterm things globally domestically as well as gooch sectors. Im going to give you the best he Energy Company out there now. Get one oak who reported earns, continuing to knock it out of the park this taupe is going to score. Farmer jim . Alphabet. A big buyout come, but its been consolidating. Okay. Steve weiss. Dont want to confuse you, but im going with apple. I knew it. Momentum continues. Thats just fantastic amg amgen. Love this one. Countdown to the fed begins now on the exchange. Thank you, scott hi, everybody. Here is whats ahead just an hour to go we will have lots of discussion and debate about that