Transcripts For CNBC Closing Bell 20150127

Have been lost as a result of all of that. The biggest blizzard though turned out to be inside the New York Stock Exchange today. Well put. Take a look at whats happening in the market. We are geared up for a negative start then got a flurry of earnings. Caterpillar disappointing. Microsoft didnt help thing. Both stocks getting hit hard. Whats interesting, thats contributing to the dow being a weaker performer than the s p today. Its off 231 points. The s p mean while down less than 1 . So you could argue perhaps its an oversized reaction to a couple big companies, but by the way, theyre important companies, and by the way, the nasdaq also off 1. 3 . If we get a moment could we see crude oil settled higher. We did see a comeback in that sector and energy was one of the leaders to the upside in an otherwise down day. Crude oil was up 2 . It was up 3 in the settlement. Were in the electronic trading right now. In fact, i will just point out, the aaa Daily National average gasoline gauge actually rose today. He was unaware that gasoline prices could actually go up but they did overnight. First time since midseptember they have moved higher. Because of some refinery outages as well. Mysterious how those things happen this time of year. We have an extended Closing Bell Exchange. Christine short is with us. Rob Morgan Jeffrey cleveland from payden, and Rick Santelli oning us as well. What happened here david . Did the market just suddenly realize that the dollar is strong and that oil has been weak and that that was going to hurt earnings from some companies that would be affected by that . I think youre seeing the recognition by investors that is stronger dollar and Lower Oil Prices is bad for some companies. The impact of oil is relatively isolated to the Energy Companies but a stronger dollar with the s p 500 drawing 50 of its revenues from abroad a stronger dollar is definitely going to burn a little bit there. But we just needed to wait for a caterpillar and united technologyies and other companies to tell us that before we figured that out i guess. Jeffrey cleveland, how much of this is to blame on these macrospa spa macro factors . Looking at the data i thought it was all driven by durable goods. Look at treasury yields right after 8 30 a. M. New york time. You see that plunge in 10year yields and 30year yields. I thought the market was reacting to durable goods which was weaker than expected and the big way to read that i think, kelly, is perhaps investors, forecasters, got a little too enthusiastic about a cap ex boom or a pickup in cap ex given the data we saw back in q2 and q3. Maybe that enthusiasm was a little unwarranted and were seeing that fizzle out here in the data. So thats actually how i read the market today. Speaking of which christine short, were waiting for apples earnings after the close today. You have called it one of the most highly anticipated Earnings Reports of all time. I think i heard the mayor of new york city say similar words yesterday as well. Hey, look you know the holiday results are always big for apple but i think with iphone sales expected to hit a record, were certainly looking at this this afternoon. Were expecting 2. 61 and i have to say thats in line with what wall street is expecting. Usually theres a bigger divergence between our consensus and wall street. What that says to me is that this beat isnt baked in if there is a beat, so you could see the stock soar if it does beat after the bell. We already saw some notes fromu bs ubs saying theyre seeing chinese sales of the iphone outweigh phone sales here in the u. S. For the first time ever. So i think theres going to be some interesting things to watch from apple and well also get a bigger sense of how the Tech Industry is faring with this stronger dollar. Arguably the sector most impacted by a rising dollar because they get a large chunk of revenue from outside the u. S. Well see if thats across the board or just Certain Companies with management issues. You wonder kelly, whether a big beat by apple which is anticipated is enough to buoy the whole market or conversely if a miss by apple would be a bigger disappointment and bring this market even further lower here . Apple punches a lot more than microsoft in some of the indexes and you can see the impact from that companys miss yesterday. Interesting to go back and ask you, rob, whether to jeffs point here earlier how much of what people were expecting for 2015 is predicated on a capital goods corporate spending boom and how much by the way because, again, look at the Consumer Confidence numbers this morning. Even some of the hole sales data, how much might actually be consumer strength that carries us through in the end . I think, kelly, ultimately its going to be consumer strength that carries us through in the end. I think durable goods today was certainly an outlier low, and then we did see the Earnings Reports that reflected a rising dollar. I think were going to continue to see a rising dollar. Thats why i have been suggesting underweighting those big cap multinationals leaning more towards smaller Cap Companies and underweighting International Investing as well. Rick santelli kelly and i have been having a conversation today about why the markets havent responded more drastically to the elections in greece over the weekend where you have a new Prime Minister and a finance minister pounding the table loudly about no more theyre going to change things now. Mo no more austerity in that country. Why are we seeing a greater response in the markets right now . I think its a bit of kabuki theater. They need the bailout funds already promised but they know they have a great position because from the perspective of the bureaucrats in the eu its like the hotel california. They wont let you check out or let you leave, and i think the greeks are going to get a lot of what they want. I dont think theyre going to get all of what they want. But history deck tatesictates thats the case. I think the market is looking at this one accurately, and i think when it comes to Interest Rates just consider this. Were at a 1. 78 , 1. 79 before any durable goods orders came out. Were currently at 1. 82 , virtually unchanged on the day. The other thing that to many might not make sense is we really havent seen the kind of drop in yields post last thursdays ecb announcement considering the kind of data we have had. Believe me thats something to pay close attention to. You mean the soft data or the the soft data. Strong data doesnt count. Consumer confidence is gasoline. We all know thats whats driving Consumer Confidence. In terms of new home sales, it was better than expected but consider over the last ten years what the extremes have been. In the 200,000 camp a couple years ago, in the 1. 4 million camp nine years ago. It makes 48 is1 look a little different. This is interesting, theres this tension, almost this Interest Rates are caught between weaker than expected data, important u. S. Data points but on the other hand there seems to be another force and maybe it is this idea that oil is nipping higher and weve got quantitative easing in europe coming and all of those forces would otherwise be pushing Interest Rates higher. Is that what youre saying . Could be like the euro constipation constipation. You cant have everybody one way in a markets even if theyre newcomers on the bandwagon of loans and treasuries and think the market is going to move forever. When things stop making sense, even a little bit, you got to pay very close attention. Yeah. David, what do you make of the greek issue and why were not seeing a greater market response to that . As rick suggested, theyre not going to get everything they want over there. We already know that. Why have an extreme market response at this point . I think one of the biggest things is the element of contagious relative to the debt crisis in 2010 is significantly smaller. Greeces problems are pertaining to greece. They dont exist out of the country. Equity markets and rates around europe were relatively muted in the wake of the greek political election. Thats part of the reason we havent seen a kneejerk reaction. Circling back as well to the other fact quoors moving the market apple, its the biggest name to the s p but its not just the indexes. It was able to move the retail sales report recently with a debut of its iphone. If theres anybody soaking up the consumer demand that didnt show up in the Holiday Season you would expect apple to be the beneficiary. We call it a bellwether. We have ma bell reporting as well at t. Yahoo , too. Theres alots on lot on tap next hour. Jeffrey cleveland, are you expecting are we seeing a slowdown in the economy or not . With the durable goods report with some of these disappointing Earnings Reports because of the strong dollar and lower oil, are we then therefore, seeing a slowdown in the economy . Well talk about it later on what the fed is going do about that but what do you think . I dont think were seeing a slowdown. Dont call it a slowdown. I think business cap ex did really well midpart of last year. Heightened expectations that would continue. A little bit too much enthusiasm for that. Were getting pushed in the opposite direction. Jobs are better. Gas prices are lower and thats good for the consumer. Overall, the economy looks great. It looks pretty good. Is it a 4 plus economy, bill . I dont think so. Is it 2. 5 to 3 sure. Things change so rapidly. He was saying if you want to see the top line growth we need 3 plus. You folks stay right there. Well come back. Weve got a lot more to talk about with our Closing Bell Exchange guests. We have about 50 minutes to go into the close. The dow well off its lows. We were down by several hundred points. Were now down 219. Big earnings misses weighing on that index. Theres a look at the s p 500. More red than green but there are some bright spots as that index is down about 1 on the day and the nasdaq underperforming. It was just a week ago tonight that president obama declared victory on the economy. Weve seen the fastest Economic Growth in over a decade. Our deficit is cut by twothirds, a stock market that has doubled, and Health Care Inflation at its lowest rate in 50 years. Well hes right but corporate earn frtionom caterpillar and Procter Gamble is telling quite a different story as well as that troubling durable goods report this morning. Is americas economy strong or not . We were just talking about that. Well take a closer look. And brace yourselves for a huge wave of key earnings that could help decide if a selloff continues tomorrow. The numbers you need to watch out for coming up. Dont go anywhere. The closing bell continues in just a moment. Welcome back. Big selloff early this morning. The dow responding to the selloff in europe. We were down about 390 points at the low this morning. Have come back since that time but one gainer among the s p ten sector that is are listed out there, you can see, utilities are still positive. Theyve been hovering near alltime high territory as Interest Rates have still gone lower. Energy was positive a moment ago as oil prices moved higher but they have since now Energy Stocks have moved lower and technology and Consumer Staples the big decliners. And industrials might have joined the party except that oil prices are bouncing back and caterpillar had a big miss andu tx wasnt that great and look at Technology Real quick. The biggest decliner down 2. 5 as we await some critical earnings from that sector. Dominick chu is tracking this. Caterpillar falling heavy after they posted weaker than expected quarterly profits and reduced full year revenue outlook because of declining oil prices. Shares down by 7 . Protector and gamble moving lower as it too, missed analysts estimates. The Consumer Product giant blamed the strong dollar which hurt sales in will hurt sales in 2015. P g shares down by 3. 5 . On the flip side World Wrestling entertainment its shares skyrocketed after it announced thew we network had topped 1 million subscribers after its launch. Shares up by 19 . Well end by corning gaining ground after posting better than expect ed expected. Up 4 in an otherwise down tape. Thank you. We continue our look at the big move for red stocks. Back with us here we have christine short, rob Morgan Jeffrey cleveland, and we have David Leibovitz and our own Rick Santelli. We were just talking the utilities have been strong, christine christine. It would appear some people are starting to invest defensively again expecting a slowdown in the economy. Would you . You know i think you look at the companies that have been posting great fundamentals and its those that are mainly domestic. Youre seeing like we discussed with the Big Industries usually seen as a proxy of global growth. Theyre down because of the stronger dollar. Youre seeing a lot of Large Multinational Companies miss and disappoint on earnings. So i think a lot of people will be headed to those companies more domestically focused utilities, health care. Telecom. The more defensive sectors because thats where weve been seeing the gains. You can see it again today. How much of this david, is about investing in cyclical versus defensive names as opposed to rate sensitive plays. I know it wasnt you, it was Morgan Stanley who well talk to pushing out their call for the first fed rate hike to march 2016. That cant be good news for the Financial Sector certainly. Perhaps for others as well. I would agree. And im not sure that march 2016 makes a whole lot of sense for the first fed rate hike from where i sit. Turning to your question about utilities, i think you see investors retrenching a little bit. There are a lot of balls in the air right now. How weak is Global Demand actually . Is qe going to work in europe . Were seeing the effect of a stronger dollar on the earnings of u. S. Corporations. We all know when rates start to rise utilities will get hammer and thats why were still steering clear of what look like overvalued defensive names. Even as they continue their outperformance. When do you think here the fed will and should as you indicated move . Well when should they move . I think they should have already moved at this point. When will they move . Our expectation is for june of this year. One of our biggest concerns is if the Global Economy really is that weak and the fed does not hike rates. What do they have left in terms of ammunition to fight any weakness that finds its way into the u. S. Did i hear applause coming from chicago Rick Santelli . You did. I tried to bite my lips but a little glee did slip out. And the gentleman is absolutely correct. But do you blame Morgan Stanley for extending their expectations for fed policy and raising rates . Not at all. Its totally rational. The problem is not the current chapter theyre in because i happen to agree. Its all the chapters they missed. They want to keep the thermostat at one temperature for six years. Im sorry, the central bankers should be a lot more fluid. Economies are fluid. They should be fluid. Not on the downside rick . Only fluid on the upside . Upside downside. They should play pepper with the market. Things improve, they should have normalized rates. They didnt warn to be at the current level for much of the time they were there. Now in noshanother three or four quarters they should be there. But all the malinvestment that was created when they should have been fluid, thats still being tagged along with us no getting rid of that. Rob, what are you buying here . Cyclicals and defensive . Are you buying utilities . Were not buying utilities. We think this is a head fake towards a defensive stock. A lot of people are right now, but, you know, once we get once we start getting out of this Earnings Period and start looking to the next Earnings Period, we think well continue to see the economy grow and we like the cyclical sectors. Were buying technology financials, industrials and those are a little bit out of favor right now but theyll come back. I love we have so many people come through here very very smart people who are still investing for growth. Im not saying thats wrong but clearly somebody is investing defensively here jeffrey. Theyre going to those defensive sectors or the ones that are most benefiting from the u. S. Economy and not worried about whats going on overseas here. Are you guys investing for growth or are you pulling in your horns a little bit here . Well we think u. S. Economy is fine but we also think, bill, that rates are going to be low for some time from here whether thats shorting rates because we dont think the fed will move in midyear, we think it will be later, or longer term rates. We havent talked about where is the ecb going to find all the bonds theyre going to be purchasing im going to start issuing some. Good point. 50year bonds and use the proceeds to buy back i dont know. There arent enough bonds. Thats my point. But nobody wants to issue them either. The u. S. Doesnt want to issue them. Theres no public or political interest in doing so worldwide. Right. So investors are faced going into the markets against the elbows of major Central Banks that are going to be adding to their portfolios. That will keep Interest Rates lower longer. Looking for income for our clients remains paramount. High yield is an opportunity thats presented itself and we have a high diffident stock strategy. I dont know if you want to call that defensive. Its outperformed the s p over the last year. I think thats something to consider and look into as well. Fascinating. Thank you all. Appreciate your thoughts on as somebody said extending the feds Interest Rate increase to march of 2016 doesnt make a whole lot of sense. What does make sense right now in the markets . Its a brave new world. We have 40 minutes left in the trading session. The dow down 259. Dont be too alarmed. It was down 390 points a little while ago. The s p is down 23. Nasdaq down 73 still waiting for the Apple Earnings that will be coming out at the top of the hour. Coming up next a tale of two economies. President obama talking up the recovery late last leek but corporate earnings telling quite a different story. Who has got this one right . Well speak with the Morgan Stanley economist telling clients the fed wont raise rates until march of 2016. She and our team of pros right after this. You total your brand new car. Nobodys hurt,but there will still be pain. It comes when your Insurance Company says theyll only pay threequarters of what it takes to replace it. What are you supposed to do, drive threequarters of a car . Now if you had a Liberty Mutual new car replacement, youd get your whole car back. I guess they dont want you driving around on three wheels. Smart. New car replacement is just one of the features that come standard with a base Liberty Mutual policy. And for drivers with accident forgivness,rates wont go up due to your first accident. Learn more by calling switch to Liberty Mutual and you can save up to 423. For a free quote today,call Liberty Mutual insurance at see Car Insurance in a whole new light. Liberty mutual insurance. Welcome back. A quick check as to where we stand. A little more than a half hour to go. The dow is off 1. 5 . Same for nasdaq. S p holding up a little bit better. Just so youre aware, we have caterpillar, for example, off more than 40 dow points. Visa, microsoft as well. Some of the big reasons why that index is lower today. United technologies the gainer today. They reported earnings early last night because of the snow coming. Right. Those werent initially applauded by the market but it shows you they have other concerns. How strong is the u. S. Economy . Some major executives are telling cnbc theyre so worried that the fed should postpone any rate hikes until next year. I would put it off definitely. Theres no question that its a fragile economy. I would advocate that they are going to have to go into battle. If you consider battle not raising Interest Rates. Well one of our next guests says those two gentlemen will get their wish. She thinks the fed will sit tight until march of next year. Joining us is Ellen Zentner from Morgan Stanley. Also with us is david wessel of the Brookings Institute and our own steve liesman. Ellen, you got a lot of peoples attention with that forecast. Give us your reasoning on that. Thanks. Im glad to be able to take this opportunity so you can hear it from the horses mouth so to speak. Indeed. Essentially since our last forecast update that we had produced in december weve now had sharply Lower Oil Prices and a sharply higher u. S. Dollar and here is how that plays into our forecast change. Growth for the year has been taken up because on net lower energy is a positive for the u. S. Economy. That also means though that for headline inflation, were going to spend the first three quarters of this year in deflation with yearoveryear declines and headline inflation. For the fed, they look through that and they look at core inflation. So what is corep ce prices doing . In november they were 1. 4 yearoveryear. The fed only needs to see that move toward their 2 goal to be comfortable to raise rates, but our new outlook suggests we get further away from goal and that occurs through much of this year. We dont bottom until october. So thats going to have to lead the fed to a change in rhetoric. Theyre going to have to move away from that promise to raise rates around midyear because its just no longer credible. Whats so interesting about this, david, to ellens first point, is on net this is a good thing for growth. Do you think the fed will still want desperately to look through that to try and still raise Interest Rates for giving themselves some ammunition down the road or not wanting to overreact to a deflation that might ultimately be a good kind of deflation here . Well i think that the fed is watching wages pretty carefully. I take them at their word they want to be patient. They dont feel any pressure to raise rates prematurely. I think that the trouble is the financial conditions are a little confusing. A stronger dollar means tighter financial conditions lower longterm Interest Rates means easier financial conditions. So i dont think i think they will wait as long as they have to and i think there is some evidence that theyre going to have to wait at least beyond june. March, i cant see that far in advance. Steve, when alens forecast came out you called it the outlier of outliers. What do you think of what shes saying here . Let me just set the table a little bit. The cnbc fed survey came out today. They did push ahead the average month where they expect that first rate hike to happen to september from july. Its a pretty big bump for three months. The plurality though is still in july but now you have a bunch of other people who are outliers two of which are where ellen is which is well into 2016. I guess i would say its early to make that call. I probably wouldnt have made that call until i saw what happened to the employment cost index on friday. Picking up on what david is talking about, the fed wants to see wages on the way up. If they continue to decline like we got in december bls report payroll report, then i think its definitely off but that eci could go the other way and there could be some sense that wages are a little bit more buoyant than we think. Ellen, this is just so fascinating. I dont know what the fed is supposed to do in this situation. Look, were still dealing with people who say even when they do raise Interest Rates it will be one and done. Thats stan greenhouses view. Others say they missed their window. The window was early last year. Has the ship sailed and if so why . Well i think that, you know we believe that a cautious fed will delay the first rate hike but having delayed, by that time our outlook implies in march of next year well be approaching a four handle on the Unemployment Rate wage growth will be accelerating, it will look like core inflation is going to move back toward goal so they will have to raise rates at every meeting once they start because theyve delayed. There will be some catchup to do. And so in a way thats more where were out of market consensus is in the fact that we believe theyll raise rates every meeting because by then theyll need to. Theyll see that they need to in order to head off an overheating economy. So what do you think janet yellen is going to have to say to set us up. Its clear that they want to forecast this ahead of time. They want to foreshadow and let us know when they plan to do that. Theyve been using that word patience lately so do you expect a change in rhetoric from her at her next testimony coming up . The testimony, yes, most likely. Tomorrowsf fomc meeting, no we expect it to be a nonevent. We just dont think the data inhand will lead them to soften. The hurch frimphrey hawkins later in february, they havent set a date yet, is certainly a forum her predecessor has used to provide more terse language about defending inflation from the low side. Thats something she can do in february to set up expectations that patient remains in the statement in march which would remove midyear rate hike. David, i just want to go back to this point, if were talking about an Unemployment Rate in the 4 range which is a historic low for this economy, should the fed be getting ahead of that now even if it is worried about low inflation . Well, sorry sorry, for david. Okay. David . Yes. I dont think the fed is going to let unemployment get down to 4 . I think if they think its going there, theyll tighten. I think the question is if its at 5. 3 5. 2 5 and we dont have wage increases, the temptation will be to wait another two or three months and frankly i dont see the big risk. What is the risk of them waiting too long . Net interest margins on bank are a little squeezed . I dont see theres any inflation out there. It seems to me theyre making the right calculation. You have to weigh all these factors and they think the danger of going too soon exceeds the danger of waiting too long. What were you going to say, steve . I was going to write an email to david. Instead ill tell you what i was going to say on air here. Whats interesting to me right now is how little we know about the inflation process. If you think about whats going on right now, declining unemployment and yet also declining inflation. Its very much the reverse of the momentous 1970s that changed a lot of thinking about monetary policy. I was just going to say david should hold one of his terrific seminars, get bernanke down there to talk about what it is we think we know about the inflation process and how it works because neither prominent theory on inflation has worked well since the financial crisis. I totally agree. Ellen, how much of your own thinking has had to change give the often confusing environment that were navigating temat the moment. I think the discussion absolutely has to be around wages. I agree with that. And that that skug hasdiscussion has to include where is the natural rate for unemployment. The fed thinks its 5. 2 to 5. 5 and yet theres no inflation. And theres no inflation which means the natural rate of unemployment is much lower than where everyone thinks it is. So they should not move until we hit Something Like 4. 5 then. Well no, we think its probably somewhere in the high 4s and we dont get there until going into 2016. So as we get close to that we should start to see the more pronounced pick up in wage growth but thats what is exactly what yellen is waiting for. She puts a very heavyweighting on wage growth and without a more material pickup rate hikes are not in the cards. And we have a new most important indicator to watch for the next couple months. Thank you so much for being here. Thanks so much. Such an important topic with 25 minutes to go. Yes. And the dow is down 262 points. Kind of holding at these levels here after having been down sharply this morning. About a 390point decline. Weve come off the lows right now. Just ahead, stocks down gold up though. Well speak with the man whose job it is to make sure every day investors can also invest in gold. Thats coming up. Stay tuned. You show up. You stay up. You listen. You laugh. You worry. You do whatever it takes to take care of your family. And when its time to plan for your familys future were here for you. Were legalzoom, and for over 10 years weve helped families just like yours with wills, Living Trusts and more. Visit us today for legal help you can count on. Legalzoom. Legal help is here. Welcome back. 20 minutes left. I havent seen art cashin lately. I dont know if its the buy or sell side into the close but weve definitely seen a trend lower here. The dow now down 280 points. A decline of 1. 5 with the s p down 1. 25 and the nasdaq down 1. 7 . This is the dow heat map as we call it. All 30 components of the industrial average. Again, United Technologies is the biggest gainer today and the only one right now. Caterpillar ouch. High profile company, the ceo saying theyve been hurt by the strong dollar and the weaker oil price. Do not raise Interest Rates, he said this morning on cnbc and microsoft out with those disappointing earnings last night down 9 right now. And amid all of this gold is on a hot streak lately. Climbing after a weak stretch in 2014. But gold is still a favorite of many investors, of course who are always interested in hearing from guests like our next one. Lets send it down to florida where Cnbcs Bob Pisani is with World Gold Trust services ceo will ryan. Bob . Thank you very much bill and big etf. Com conference 2,000 investment professionals. Will ryan joining us. We are living in a deflationary world. That would seem to be not good news for gold and yet you are the sponsor of the gld, were seeing inflows into the gld in the last few wekts. Can you explain that . Why is that happening . Gold has had a good start to the year. The price of gold has increased yeartodate and weve had some pretty strong inflows off the back of that. But i think when people talk about Deflationary Forces and the Global Economy, you know one of the first reactions to that is governments looking to weaken their currency for competitive reasons, and currency weakness or debasement is has typically been a good thing for gold. Just a quick question, will from kelly here. Hello. Thanks for joining us. As we talk about the pressure the financial pressure on some of these Oil Producing nations, how much downward pressure might that put on gold . How much gold reserves do they have . Do you anticipate any liquidation . Its a really good question and i think one of the Key Countries involved in that was russia and we had a lot of questions when oil first started to crack and collapse like it did that russia being the largest buyer of gold from a central banking perspective, would they sill theirell their reserves. Weve seen russia coming into the market and buying more gold as a result of that. So we cant say that every country is going to respond in the same way as russia but so far weve seen positive reaction from russia and i think that sort of goes to the point that last year gold priced in other currencies, foreign currencyiescurrencies, not the u. S. Dollar did very well. Classic portfolio theory says the average investor should have 5 in their portfolio of gold just to have it there. Do you suspect most people do and back to bobs question in a deflationary environment, does that still make sense . I think that so, first of all, yes, i absolutely would agree that investors should have an allocation to gold in a diversified portfolio. We at the World Gold Council think that somebody should be between 2 and 10 . And i think if you look at the years pre and post financial crisis investors did have more al vooelocation to gold than the last couple years, particularly as the u. S. Economy strengthened. People did reduce their weighting towards gold and i think in many cases got rid of gold altogether out of the portfolio. And so now were seeing a little bit more of a reaction as some of these paradigms that people have talked about or presented these last couple years are starting to be questioned. You got a little bit of a boost this morning. Jeff gundlach was here. Hes big on gold. He says everyone who criticizes gold because it has no yield, he says theres trillions of european bond that has a negative yield. Gold has a higher yield than swiss bonds which have negative bonds. I dont get you gold bugs. You say when inflation is up gold is a good thing to own. Now deflation and youre arguing gold is a good thing to own. You try to have it both ways dont you . People say gold acts as an inflation hedge. In terms of deflation we dont exactly know because the best example of deflation in the u. S. Economy was during the Great Depression and gold was pegged to the dollar. We cant exactly say that gold was a good thing or a bad thing during that time. However, gold miners did act as a proxy and did quite well during that period. So if you proxied gold miners for goal could you maybe make that link. One thing i have learned out from hanging out with gold bugs is its always a good time to buy gold inflationary or deflationary environment. Will ryan, thanks very much for joining us. Always appreciate it. Appreciate it. Covering the etf. Com conference. Guys, back to you. We wouldnt expect him to say anything else. It would be their job to say it is a good time to buy gold. 15 minutes left in the trading session. The dow down 262 points as we head toward the close. Comingup the market moving lower on earnings missing. And a big batch moving your way. Keep it right here. You cant afford to miss it. I have the flu with a runny nose. [coughs] better take something. Theraflu severe cold wont treat your runny nose. Really . Alkaseltzer severe cold and flu relieves your worst flu symptoms plus runny nose. [breath of relief] oh, what a relief it is. Mommy hey welcome back. A headspinning week for earnings with more than 100 companies in the s p reporting. Dominic chu in the next hour theres some heavyweights on tap for the markets to digest again. Absolutely. Lets start with the biggest one of them all which is apple expected to earn 2. 60 in earnings on sales here of 67. 6 billion for its fiscal Fourth Quarter. Regard iphone sales should highlight some of the results among a slew of other things. Ahead of the news apple shares are down 2. 5 . Yahoo also out with its quarterly results. The street looking for 29 cents a share on sales of 1. 2 billion. Everybody is really wanting to know what the company is going to do with its alibaba stakes. Yahoo shares down by 3. 25 . And then theres at t. Analysts are expecting the company to earn 54 Cents Per Share for its Fourth Quarter on sales of about 34. 25 billion. At t down. Amgen, the street is looking for a profit of 2. 05 on sales of 5. 2 billion. Amgen down by half a percent. Well have complete Coverage Team coverage for you beginning in the next half hour. Myself included. Also josh Julia Boorstin and meg terrell all watching these companies, guys. Back over to you. Im hydrating. Thanks, dom. Appreciate it. Dominic chu with 12 minutes to go into the close. The dow is off, look at this heading back towards the lows. We were down a lot more but were currently minus 270 points. Just hanging onto the 17,400 mark on the dow. Well take you to the final minutes of this rough day. The heat map tells the story. A lot of red, not much green. Well be right back. In my world, wall isnt a street. Return on investment isnt the only return im looking forward to. For some every dollar is earned with sweat, sacrifice, courage. Which is why usaa is honored to help our members with everything from investing for retirement to saving for college. Our commitment to current and former military members and their families is without equal. Start investing with as little as fifty dollars. Eight minneapolis left inutes left in the trading session. The dow heading lower. Art cash ynkashcashin just came by. Its minuscule in financial terms but 50 million of stock to buy on the close, but thats already been matched up i think. You have to wonder if the buy the dippers are snowed in or just not interested. Lets ask jeremy hill joining us with Matt Cheslock. Matt, are people snowed in. Its been a disappointing day all around. Starting with the snowfall first and then earnings economic data. Theres no reason to buy anything today. People were anticipating being out today and maybe tomorrow so theres no positions on. No reason with a Skeleton Crew to put anything on going into earnings season. But we have lots of earnings, jeremy, and some highprofile companies have disappointed because of the strong dollar a lower oil price. What do you make of that . Its moveable object irresistible force, dollar versus other macro wins in the environment, particularly oil. I think right now what were seeing is a lot of people are putting on hedges so they have positions in place and our feeling is were getting a lot of hedge action right now on the downside protecting for that maybe for this earnings season people are feeling that its going to be a little bit weaker here particularly on the revenue side. I think thats kind of a logical place to be. How about that caterpillar number . They took down their top line 2015 guidance by 5 billion to 50 billion. Thats a huge decline. Are we supposed to expect other companies to do the same . Or do you think thats a unique situation . I think caterpillar has some asymmetries or idiosyncratic work particularly with its work in the oil patch, building machinery for that type of production but i really think the dollar is a problem, but eventually, kelly, thats going to be balanced out by the positivity. The ceo was saying it was oil. He didnt even really bring up the dollar. If youre not watching earnings, youre watching the fed. What about that . You know Morgan Stanley out today saying maybe march of next year before we see a fed rate increase. Whats the market going to do with that do you think . Obviously weve been buying the dips. So if youre a trader youre range bound and its been great trading. Weve seen volatilesumeatilityies 200 pounds. There might be shortterm plays and theres fire sales going on in small to midcaps. Do you know what i learned today as well its the ferries you want to count on. When the rest of new york city grinds to a halt how did you get here . I took a ferry. The hudson this is from the jersey shore. It was great. Made it home last night and in no problem. There you go. Matt thanks. Jeremy, well bring you back here. Well get to the closing countdown as we get ready for big earnings. After the market theres a look at the dow heading to the lows of the session off 300 points. Apple, yahoo , amgen. Apple and yahoo in particular having a you have to day. Lets see, can they turn sentiment in the tech space around . Thats coming up right after the bell. Shes still the one for you. And cialis for daily use helps you be Ready Anytime the moment is right. Cialis is also the only daily ed tablet approved to treat symptoms of bph like needing to go frequently. Tell your doctor about all your medical conditions and medicines, and ask if your heart is healthy enough for sex. Do not take cialis if you take nitrates for chest pain as it may cause an unsafe drop in blood pressure. Do not drink alcohol in excess. 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Weve talked about this phenomenon before. Art cashin likes to point it out, the european influence on the markets. The first couple hours of trading europe is also open at that time, and whatever influence is going on whether its buying or selling coming from europe will be alleviated when europe closes at 11 30 eastern time. That didnt happen today. Our durable goods report was very disappointing. The earnings from caterpillar, the comments from caterpillars ceo disappointing as well. We were down 390 points. Were down 284 points right now. Will things turn around with earnings coming out at the top of the hour . Well see. Apple reporting theyre down 3. 25 . Yahoo is down 3 . Amgen down half a percent. At t reporting, theyre down 1 . Obviously Mary Thompson of those apple will have the biggest impact. Without a doubt. It was interesting to watch the stock. Sold off a little bit coming into the close. The key is houp iphones did it sell into the quarter. Do you like apple, jeremy hill . I dont like apple right now because i think theres a tremendous risk around the watch. I think were hearing a little bit about some of perhaps the manufacturing problems theyre having. This earnings season i think is all about how many new iphone 6 they sold. Thats a given. Better be allowed. If they have guidance at all visavis the watch, we start to see kind of coming out of Silicon Valley a little bit of chirping about a watch. I think were going to see some price pressure. At t at t amgen, yahoo is important because they want some indication of what theyre going to do as far as Tax Strategies with selling their alibaba stake and at t not expected to receive as much attention as the other two id say but the fed meeting concludes today and were looking for a statement. Oh by the way, right. Thank you both. See you later. So were going out, big selloff today as Matt Cheslock pointed out. We may see more of this tomorrow but well wait and see. Of course, we have the fed comments coming tomorrow as well. Stay tuned. A lot of earnings coming up on the second hour of the closing bell with kelly he was. Evans. See you tomorrow, kel. Thank you, bill. Welcome to the closing bell. Im kelly evans. We want to thank the nyse facilities and dining facilities. They provided all of us here food in a neighborhood that was otherwise shut down because of the blizzard that hit the northeast today, and it was a storm for the markets here as well. We have a storm of earnings awaiting. Some huge names due to report Companies Like apple and yahoo . Lets begin with where were finishing up a session where we look like were going out towards the lows on wall street. The dow off 200 and just about 90 points. Thats good enough for a decline of 1. 6 . Interestingly enough the nasdaq was even worse. It was down almost 2 shed 90 points. The s p is little more than 1 . So the bradoad market index not quite as bad. Nicholas carlson is here from Business Insider. Welcome back. Kayla tausche has had a long day already. Cnbc market analyst Kenny Polcari is here and also with us for more on todays Market Action and the earnings out shortly, fast money trader guy adami. Welcome. And with ross gerber from gerber kawasaki. Do you think apple is going to blow it out . Apple will have a huge number today. Who knows how many phones they sold in china and im really excited because theyve taken so much share from samsung. So like last earnings they did very well. I expect more too, also from the mac. The mac i think sold very well in the quarterback. So. Just because were going to need them to deliver if you want the tech sector to turn around. It was the worst performer today because of microsoft and some others. Speaking of earnings, the parade is getting under way as you can see. Amgen earnings are out. The biotech giant results now with our meg terrell. Looking at amgen Fourth Quarter, a bit of a beat here on adjusted earnings and revenue. Eps at 2. 16 versus 2. 05. Now, importantly there also reaffirming their 2015 guidance of 20. 8 billion to 21. 3 billion in revenue. 9. 05 to 9. 40 in adjust the earnings per share. Its important theyre reaffirming that guidance because so Many Companies have been getting dinged because of dur currencies. Seeing strength from many of their new drugs. A couple of those were from price increases primarily rather than demand. Thats going to be interesting to watch. Kelly, back to you. Thats for sure. Thank you. Our meg terrell covering amgen. It looks like a relatively positive response. The shares up almost 2 after hours. We havent had as much focus lately on the pharma on the biotech sector. But were going to start to well see the numbers come out the rest of this week and into next week. And im not necessarily surprised with the amgen number. Im not necessarily surprised to see the market kind of react in a positive way on the back of that headline. Although it has been a rare outperform. I should welcome kenny to the set. Kenny polcari from oneill securities joining us off the floor. Were looking to some reports to maybe turn sentiment around tomorrow. Was that the problem . Was it all earnearnings . The tone was negative coming out of europe. So when the tone is negative they look for everything negative. On top of that the earnings today were not good. Some of it was because of the dollar which i dont think is that surprising to anyone who is invested in those stocks. They understand the risks. People shouldnt necessarily take that as a huge negative because i think thats much more of a temporary situation. Guy, is pharma biotech, could this be a port in the storm as people continue to navigate earn sntion. It has been. You know that. Hi kel. It has been a port in the storm and i think it continues to be. You lump amgen as a biotech. Theres some Major Pharma Companies that would kill to have some of the drugs in the pipeline amgen has. Amgen is a monster company. It topped out at 173, traded off, bouncing now. Im not looking through the numbers like you are because im sequestered here. Can i ask you quickly as well, against the break drop of the weak stock market has been a very low rate picture. You have talked about this endlessly. So i just wonder where you think the next move is here for rates as the fed debate continues and some of the data still comes in a little bit lower still. You know if the bond market if rates wanted to go higher if the bond market wanted to take rates higher they would take rates higher. Theyre not waiting on the fed. They never do. This is a bond move outside of even what the fed can jaw about all they want. The reality is you have a global deflationary problem, rates across the planet continue to go lower, and u. S. Rates are catching up. I mean i still think, and i have said it now for months rates are going down. People have to sort of wrap their head. I agree 100 . Guy is absolutely right. I want to pick up on this kayla. If you look through the weakest names in the dow, yes, it was caterpillar on those earnings declines, off about 40 points of the dow decline, but it was also a goldman having a negative 2 session. It was a praktor and orpraktor and Procter Gamble off 3 . You had Procter Gamble which disappointed on earnings today. Thats going to hurt the dow but goldman is more of an Interest Rate move. When you see the tenyear dip below 1. 8 on global slowdown fears on the wake of earnings and the weak december durables numbers, that Interest Rate move is really going to hurt the banks. You will see banks have weakness across the board because theres such Interest Rate driven machines almost on the flip side of utilities. Utilities and other heavy borrowers benefit from it and goldmans and other banks dont benefit from it. At t is now hitting the tape. Weve been waiting for this Earnings Report as well. Dominic chu has the numbers. What can you tell us dom . We have a slight beat here. Earnings per share at 55 cents beating the estimate of 54 Cents Per Share. At t revenues also coming in with a slight beat. They have 34. 4 billion worth of revenues. That beats the estimate of 34. 3 billion. Always a highlight with at t with regard to its wireless business, they do say wireless revenues were up 7. 7 versus the same time last year. Also wireless data billings up 18 versus the year earlier period. 1. 9 million total net additions with 5. 6 million total net additions in 2014. So all of the year. Also post paid net additions, 854,000, nearly 3. 3 million post paid nedt ads. Theyre very much about a dividend payment. They say throughout the course of last year they paid out 11 billion in dividends and buybacks in that year. Well comb through the rest of the release but for right now youre seeing those at t shares up in the extended hours trade. Hold your thoughts, everybody, for a second. I believe we can get to our report on yahoo s earnings as well. Well do that in one second. I was going to say look at how investors are rewarding at t. Taking it right up in the aftermarket session because that was not a stock that at all disappointed. They had punished that stock going into earnings and so therefore it makes perfect sense. The response here as well with regard to is this as much about the environment and the kinds of names investors are looking for . Is this about at t now perhaps being the big north american telco name . I think its a little bit of both. I think it covers a wide range you can spin it anyway you want. Its an allamerican company. Theyll look for tellico names to perform well. They used it as a source of cash. The earnings come out and they take it right back. 3390 is probably going to be a resistance point. We have the results from yahoo . Interesting stuff in this one. Julia boorstin, what can you tell us . Kelly, really quickly im going to run through the numbers but the real news here is about alibaba. Yahoo reporting 30 Cents Per Share, a penny better than expected. Down from 46 cents in the year ago period. Revenue at 1. 2 billion, a little stronger than expected but the real news is about alibaba. The Company Announcing that yahoo has announced a rend days that the board has authorized a plan for a taxfree spinoff for the companys remaining holdings in alibaba. The company saying that this will be spun off into a newly formed independent registered investment company. The stock of the new company will be distributed to yahoo shareholders. It will be a separate publicly traded company. Yahoo saying it will continue to operate its core business and hold its 35. 5 interest in yahoo japan but that the spun off company will hold all of yahoo s remaining 384 million sharesalibaba. The company saying in its Earnings Press release that with this planned taxfree spinoff, it will have returned a total of nearly 50 billion in value to its shareholders to date. So big jump there on this alibaba news which is far more important than the earnings themselves. A lot to digest. Julia, thank you. Nicholas carlson, what do you make of this . Thats big news and its very exciting for yahoo shareholders. Its what a lot of them wanted for a long time. Its going to be interesting now to see what happens to yahoo . Its a much Smaller Company now. Some of the things that activist shareholders were asking for now matter a great deal more. Such as . Cost cuts you know maybe this whole ao ll merger. If theres really a billion dollars in synergy is matters more. When you think about the activists banging the drum for a taxfree spinoff of the alibaba stake it was largely starboard value, the loudest about this issue but they also wanted this to be the first of many steps or one of many steps that the company pursues. Nicholas mentions cost cuts but they did think that the taxfree nature of it could be reached by doing a merger of equals with an aol or another basket of assets. So its expected that there could be a part two to whatever this deal looks like and that today is just the beginning of that. Ross do you buy yahoo at these levels. Its over 50 bucks right now after market . Well, i like this. I thought marissa was going to make the shareholders happy by spinning it off but yahoo is absolutely now ripe for the picking. This is such a good buy for microsoft. They tried years ago. Im curious to nicholas thoughts on this but yahoo is now just a duck and this is Marissa Mayers out package to look like a hero. You spin it off, you sell the company, you make everybody money, and you move on to something else. So yahoo looks attractive spinning off that asset i think. Nicholas . Its going to be interesting to see what happens with the market cap in the next few days. Its already up 8 people are excited about this and its true that yahoo is very the valuation is very attractive for people who might want to buy it because its just downso poorly for so long. Its cheaper than snapchat. Its true. Its still a very which would you rather own . Id rather own yahoo . Than snapchat at what valuation is the question. At ten bil. When you start to focus on whats left for example, of yahoo , nicholas what is it and what then do they do with that remaining asset . Right. So mayers is in a situation she has a lot of money left and she has to take that and shes going to invest it in her core strategy which she really needs to get revenues growing. You know i didnt see the numbers, but im curious to see if display advertising has started growing. It looks like Fourth Quarter display revenue was down 4 . About 532 million. Fourth quarter revenue in total looks like about 1. 25 billion. So thats right around about people were expecting. But thats even actually disappointing growth shrinking. Thats the big problem yahoo has had for years. It keeps getting smaller and smaller. So mayer is the one who is supposed to come in and turn that around. Shes done a great job to be a financial engineer. She was hired to be a software engineer. Now she needs to show us that product prowess and get it going. Its interesting to compare yahoo with microsoft yesterday, kenny, which missed. Its in the middle of revamping itself doing as much as you can do at this point. Investors were not pleased, not pleased with the progress not pleased with the numbers. You saw how far those shares were marked down today. Yahoo , imagine if they didnt have that alibaba factor the conversation about Marissa Mayer it might have been a very different conversation but now shes got this platform now thats a very positive conversation after this and so now whats her next move going to be. Well leave it there. Well come back and answer this question after we take a short break. Well have much more on yahoo s plans to spin off the rest of its alibaba stake and were waiting on apples earnings. Theyre due about half past. And a gentle wavelike motion. Ahhhahhhhhh. Liberate your spine. Ahhhahhhhhh. Aflac and reach, toes blossoming. Not that great at yoga. Yeah, but when i slipped a disk he paid my claim in just four days. Ahh four days . Yep. See why speed matters, at aflac. Com. 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. Welcome back. Some major news after hours. Yahoo announcing it will spin off its remaining stake in alibaba alibaba. Lets bring back guy adami and the closing bell panel and eric jackson. Your reaction to this move . Kelly, i think this was the biggest lever that marissa could have pulled to unlock value. Sort of the minimum she could do to probably get investors to be onside with her and it should be a major boost to the stock. Stock is already up after hours, but i would look for the stock to continue to move up as the Conference Call gets under way and especially into tomorrow as well. This could have another 5 6 to go before it closes tomorrow on this news. 5 or 6 on top of the 3 gain were seeing after hours, eric . Yes. Okay. Nick . Their stake its a 40 billion stake untackxed. The whole market cap of yahoo at the close was Something Like 43 billion. Its a massive win as people get their arms around that and start to look at whats the true value then of the core business and the cash they have on hand. Theyll start to bid it up. What do you value the core business at . Well, its a tough business but its all about expectations. This is not a business worth less than zero. Its doing 1. 3 billion a year ebitda. So i think conservatively at least a 6 billion business. I think probably more realistically its closer to 10 billion. Yeah, i think around 10 too. As part of the release, yahoo says it will retain its 35. 5 interest in yahoo japan which helps out its market cap a little bit. What do you make of the fact that theyre not carving out the entire business and that theyre holding onto what is a pretty sizable chunk of revenue for them there, too . Well id love to see them spin it off, kayla. I think they should and id love to see them hack 8,000 jobs in the core business too, but some interesting speculation i have heard is one reason why they kept the yahoo japan stake with the core business is theyre perhaps hopeful that maybe softbank will want to swallow all of the core business plus the yahoo japan stake sometime in the next before the end of the year. Nicholas any insight on how likely a move like that would be buying japan softbank. They have always been closely tied to yahoo from the very beginning. He was a big investor. Hes close to the company. Also they hired the former google ad sales guy. Hes now running he has a big job for softbank digital. So that makes a lot of sense. If softbank buys, it eric or ross if you want to weigh in on this one as well, what does it mean for the attractiveness of yahoo here . Well i think they are in play and softbank wants to protect its position and they certainly should buy yahoo . I still think its a more natural fit for microsoft, especially with the display ads and their bing deal and such. But i think yahoo is just a duck. This is a great out strategy for marissa. She mollifies everybody for another six months to a year and now somebody can come in and buy it and once again she can ride off into the sunset with a 300 million or whatever. Guy, do you have a view . Eric has been bullish in this stock since its been in the teens and i have been there with him. I think we sort of parted ways as we got it closer to 50 but lets not kid ourselves. She walked into a declining business and shes done nothing to improve it whatsoever. What she had working for her was this ace in the hole and shes playing her hand. Good for her. You know at 50 bucks you probably valuing yahoo s core business at effectively zero given some of the things that eric just said. So you probably still have some further room on the upside. I think the reason why the stock has rallied as sharply as it has in the aftermarket is because of the selloff we saw late in the day in the name. If you looked good point. Put a tweet out in the last half hour that a lot of people were playing it on the options side for a bearish move. Those people are clearly getting blown out. It had been atough day. Eric thank you so much for sharing your hours. Ross and guy for sticking around as well on a big move in yahoo after hours. Stick around to catch i go adami coming up on fast money at 5 00. Well be talking to a young app developer who turned down an internship with apple. Well see what hes up to right now. Straight ahead here the big event hasnt been happened. Speaking of apple on this show the companys Earnings Report are just is just moments away. Stay tuned. What can your fidelity greenline do for you . Just take a closer look. It works how you want to work. With a Fidelity Investment professional. Or managing your investments on your own. Helping you find new ways to plan for retirement. And save on taxes where you can. So you can invest in the life that you want today. Tap into the full power of your fidelity greenline. Call or come in today for a free oneonone review. A blistering pace here after hours for earnings and some big news. Dominic chu will round things up for us. Lets start with yahoo . The company has authorized a plan for a taxfree spinoff of its remaining stake in Alibaba Group holdings. That probably trumps any earnings headlines that come out. Yahoo shares are up by 7. 25 . We should also note that yahoo has already traded about 10. 5 million shares in the afterhours. They traded 27 million all the entire regular session. A very active after hours trade for yahoo . Then theres at t reporting Fourth Quarter earnings and revenue that beat analysts expectations. They provided no specific guidance. Theyre waiting for the directv deal to close before they do that. Theyre up 1. 5 . Then amgen posting better than expected results driven in bart by strong sales of its blockbuster drug embril. Shares are up by 0. 75 . Apples numbers are due out momentarily. Obviously keep it right here. Well bring you those as soon as they become available to us. Yes, we will dominic chu. Thank you. Well be back with those results when we come right back. Stay with us. So, how do you feel about cash back . I would not say im into it. But lets see where this goes. [ buzzer ] do you like to travel . Im all about free travel, babe. Thats what i do. [ buzzer ] balance transfers you up for that . Well unh. Too soon . [ female announcer ] fortunately, theres an easier way, with creditcards. Com. Compare hundreds of cards from every major bank and find the one thats right for you. Creditcards. Com. Its simple. Search, compare, and apply. [ ice rattles ] Apple Earnings are expected out any minute. Lets just remind everybody of the estimates here. Were looking at eps of 2. 60 a share. 25 year on year gain. Revenues of just shy of 68 billion, also up 18 . Our panel is back waiting on these results along with max, lou and alex. Hi, alex from jmp. Welcome one and all. Max, i want to actually start with what weve just heard from yahoo . The tech sector has been under pressure since microsofts results. Can yahoo turn that sentiment around or is it so specific to alibaba were going to need apple to deliver. Thanks for having me. Always a pleasure to make it through the storm for you guys. Glad you did. Hope everyone out there did okay, too. I think yahoo s story has to begin to be yahoo s story. The only way to get there is to spin it out. That being said youre spinning out about 80 of the market cap and we still need apple to do well because apple is the heavyweight here by market cap by sent am by concentrated ownership, and by headline attention so its absolutely going to be essential that cupertino dazzles which we expect they likely will. Lou, do you agree . We have had two people both max and our other guest saying they expect really strong numbers from apple. I do. I wasnt able to hear it but im with Business Insider with the potential for mind melting iphone numbers. The consensus is 66 million iphone sales. I think we might see a number above 70. If thats the case thats going to be a big driver. Alex are you worried about this . I think what this means is the numbers have to be mind melting or otherwise shares could move lower here. Jmp securities isnt worried. I think whats being missed in some of the other weaker tech earnings out there is that apple probably did have a mind blowing december quarter and that sucked a lot of the oxygen out of the air for other Tech Companies to perform. Yes, there are some issue was the Exchange Rate hurting earnings for other players but a big part of the problem for some of the other tech giants is apple is doing so well. You actually think this entire story fits together because apple is winning share from the rest of the sector . Yeah. Its very clear right now that apple is winning share, and it has a long way left to go. One of the things we keep pointing out in the stock is whatever this number is this quarter, this company is back on track for a midteens or better growth rate. Its still less than 20 penetrated mart phones. Less than 10 penetrated into pcs. Less than 1 traded internet of things. Theres a long runway for this company to keep performing in growth and in valuation. Well get everybody the full details here in just a moment but we do have the apple numbers starting to hit. 3. 06 is the eps number relative to the 2. 60 expectations we were using. Shares moving higher to the tune of about 4 on that. It was well above forecasts as mentioned for the earnings piece of this. The big numbers are not just going to be the numbers, theyre also going to be the number of iphones sold. Josh lipton now with us for the full results. Hi josh. Kelly, apple just reporting as you noted 3. 06 on 74. 6 billion. Remember, the street here was looking for 2. 60 on 67. 7 billion. So a beat there on the bottom and the top. Just looking through the release iphone shipments, 74. 5 million. That is much more than at least the forecast i was seeing. The street was around 66 million. Ipad shipments at 21. 4 million. The street there was looking for 22. 2 million. And mac shipments of 5. 5 million. Apples closely watched gross margins, 39. 9 . In terms of guidance for q2 apple offering revenue guides now of 52 to 55 billion. I just had the chance to speak with apples ceo tim cook. Give you some of the comments he gave about the quarter. One, he said iphone was clearly the stand out. He said apple was selling that flagship product as fast as they could make them. He talked about the strength we saw around the world, not just the u. S. Up 26 . Emerging markets up 58 . Mainland china, up 100 kelly. Talking about the ipad as well. Tim cook saying they sold more than apple thought they would and he was confident about that product product. He talked about how commerce and Consumer Satisfaction and usage are off the charts but noticed the upgrade cycle is longer for the ipad and some of the cannibalization youre seeing from six plus and apple pay clearly confident about that service. Said theyre off to a strong start. The Service Getting traction and adoption faster than they first thought. As for new products, apple watch, apple teased that early 2015 launch. Tim cook telling me hes going to give more color about that product on the call that starts at 5 00 p. M. Ill be on it and give you head looirp headlines as they cross. What a reaction here. They managed to had mind melting expectations to me guys, and it appears they surpassed them. For some quick color, the iphone business for apple is now bigger than google and microsoft combined. Incredible. Its huge. 74. 5. Max, whats your response . Its very interesting, very good. Obviously the margin is the buried lead here. A little bit of waegeness in mac, a little bit of weakness in ipad although less than had been feared. The iphone 6 is the record breaking story. It sold much more than people thought. Way move a quarter. That jacks up the margin and the average Price Per Unit sold. I think the run away success of the iphone 6 plus and the huge hunger particularly in asia for the large screen is the runaway story of why this set of numbers is so strong. Incredible. Lou, what about you . What do you do with the shares now . This is a mustown stock. We were on a couple weeks ago saying that. Its hard to imagine a year ago where apple was at trading in the 70s and everyone was dogging tim cook wondering if he was cut out for this job, if he could really deliver. Quite frankly, i know its not in his character but he should just stand up and point to the scoreboard and sit back down. These are mind melting numbers. Im really interested to get some color on apple pay. They said theyre not going to break out the data there, but as you know this is a growth driver that i have been talking about for a year that i really think could deliver a lot of upside for them over the longer term that people arent taking into account. Alex how does this change your price target for apple shares . What is it going into the report, what do you do with it now . Jmp securities is already at 150 price target which is basically just giving it a mean market multiple for the s p 500. I think you could argue with these kind of numbers that it deserves a premium to the mean market multiple. You can go higher from there. The good news for apple is the linchpin of the strength was the iphone and the iphone is really the Foundation Upon which all the other internet of things and compute and halo effect type of Technology Opportunities are there for apple. So i think theres a long way for this story and this stock to go. And, kayla, i would like to hear more about apple pay as people start to look to what could be the future drivers to keep the growth going. Especially since we didnt get news of any major breaches during the Holiday Season. You would expect tim cook to be touting the strength of it, how much pickup there was in activity over the holiday, but im most interested in looking to see if apple had any currency issues because so far as i see, theres no mention of currency no mention of any specific currencies themselves in the release, and actually theres a headline that International Sales made up 65 of the quarters revenue. For every Consumer Company thats out there saying that the strong dollar is hurting us and that deflation is 65 . Apple is basically shows us thats not the case. People would typically look to a yum brands looking for a u. S. International. Apple becomes that company and as to kaylas point they did not mention currency. So thats a Huge Positive in my mind but, you know, to your apple pay point, it might be too soon yet. Im not saying there werent any breaches but it may be too soon yet. Once it gets even more penetration, then you actually may see people trying to hack the system and create that problem. Maybe its just too soon to have that answer. But you put 74. 5 million iphones in peoples hands, many of those equipped with apple pay. As soon as you get the merchants online, then you have real activity there. Understood but until that happens, right and you dont know if everyone is just using do you have an iphone 6 . I have an iphone 5 i have a 6. I do. Do you use it for point of sale. I use it in the cab. You hold it up to the thing and you pay it in two seconds. Do you use it as well . We think its pretty important. It also hasnt been rolled out internationally so theres a couple real issues here. One is the numbers sound good the 200,000 plus locations but its actually kind of small given how many locations it needs to be in. We know for mobile point of sale and mobile payments the magic is to be ubiquitous. If youre not ubiquitous people dont ha pitch wait to using you. Its fun and cool to use your fingerprint and check out to the phone and then you go back to the other point of sale terminal and do the other 11 steps. I want to ask you here as apples cash piles are up significantly, were talking about 178 billion, its up 12 year on year. Are they going to continue to be under pressure from the icahns of the world to do a larger buy back and keep returning capital and get shares towards the 200 point . Theyre going to have to increase the buyback which everyone is going to be calling for but i think they need to start thinking about making major acquisitions again. Beats was one of the biggest ones. Theres some pain points in the future product lineup for apple, specifically the apple watch. The battery life is something everyone is concerned about. There may be an acquisition there, possibly in the Wireless Charging point and that cash pile would make it fees inl forasible for them. Alex, are they going to buy yahoo . I dont think so. They dont need to. Apple is doing just fine under its own head of steam. I think what id like to see apple do is execute well on the watch. For us its all about the second and third generations of watch because the battery life as you pointed out just isnt there right now. Also watching the competition. Apple has to keep running hard. The mean note sold out in the first day. Its not the end of the day for apple. They have to keep innovating. We saw what John Steinberg did to get his hands on one of the phones. They are quite the status symbol. Thank you so much for now. Apple shares rallying nicely on top of their Earnings Report which did beat those mind melting expectations. So whats next for the company . The big hype around apple watch, will it drive the companys earnings next quarter and what sells in the pipeline . Well talk about that when we come back in two. Welcome back. Here is a look at shares of apple. Just below the 115 mark after hours. A rally of 5 after earnings with that iphone in particular beating expectations. So as we start to think about where the company goes and how it continues to grow from here a lot of focus on the pipeline the watch, the apple watch is due out within the next two months. Lets bring in Colleen Taylor and roy choi and our panel. Colleen, what is the latest expectation for the watch in terms of timing and features . Were hoping that its going to be out sometime this year but again they have kept this really cloaked. I have been sort of refreshing my laptop right now kind of trying to hear. Were hoping theyre going to reveal that in the analyst call thats going on right now. Well well listen for that and plenty of other things roy. How important to apples future is this device or is it going to be ultimately about the iphone for years and about apple pay . Well we know the iphone and the ipad are going to be products that well see for years to come. We know the iphone has sold gangbusters this last quarterback. Quarter. We know the apple watch will need the iphone to function so we know that the iphone will be part of apples main portfolio. Nick, so does that ultimately mean that people if they buy an apple watch by definition they have to have an iphone so ultimately this is just an add on . The apple watch, apple pay, the big screen theyre all the same things. Theyre in the universe of the iphone. They make the iphone more valuable. Thats apples dna to have a totally integrated experience and thats why apple can charge twice as much as anybody else for their phones and thats why their profits are so amazing. They are incredibleyey expensive. This great mystery, where are all the gas savings going . Everybody is just buying an iphone kenny. Because hes rate. Everything is integrated no matter what you have whether you pick up the iphone the ipad, the iwatch, your mac computer at home. Its unbelievable how they have created that really that world that people just now we just operate in it. Were seeing some upward pressure. The cues, the etf for the nasdaq, is moving higher. Apple is a big component of the nasdaq, the s p 500. I imagine quite solidly the Biggest Company in the country. The more products it sells, the more money it makes from its own ecosystem, the more cash its going to have on hand the more demands it will get from shareholders to return some of that cash. 178 billion is its cash pile as of the most recent quarter. Thats up 15 according to our earnings expert and now there are going to be some shareholders of course including carl icahn saying you need a bigger Share Buy Back program and bigger dividend. How much of this cash should be invested in future projects . How much should be returned to shareholders and will an apple watch or another item in the pipeline really be able to move the needle here . What kinds of investments or acquisitions should they be making, if any . I think that its incredibly important for them to continue to invest into new things rather than just give the money back to their shareholders. I mean giving money back to shareholders shows that you dont think that you as apple can do anything interesting with this money so youre just going to give it back to the people. You dont have any new ideas. I think its important for apple to stay ahead, that they come up with more new ideas. The iphone is great but we need more in the future. Listen i think thats true, but i think at some point theres so much money there, i think the call for a bigger dividend or buyback is going to be a part of the story. Havent they already committed to buying back or giving out 100 billion . Oh yeah tons. It is true at some point the 100 billion you have in your bank account isnt going to be the reason you come up with the next product. Now i believe Credit Suisse says it should be 200 billion. Theyre printing money. Its unbelievable. They cant spend it fast enough. Roy, listen when we talk about the pipeline ultimately the apple watch is really all about driving the iphone ecosystem. Is there any competitive threat to that core product from elsewhere . Samsung is huge in the smart watch market. I think every company we saw at ces had a new wearable a new smart watch. We have pebble samsung,l g. I have an lg watch on my wrist right now. The market is just saturated with Smart Devices that you wear on your wrist, on your head, wherever. Yeah. Can we see that watch real quick as well . You said it was an lg . What phone do you have . An Android Phone . Right now i have an Android Phone and i have a windows phone. I just like to try out as many phones as i possibly can. Does the watch connect does that particular watch connect with either one of those phones . It connects specifically with android devices. Right. Thats the point. We got to watch these ecosystems as they all develop and keep an eye, colleen, like you said obsessively to see if they say anything about the timing of the watch on the call. Colleen taylor and roy choi for us this afternoon. We have another earnings alert we want to get to. Dominic chu, whats happening . Electronic arts the stock is moving higher after the video game maker posted better than expected Third Quarter results. It also raised its full year guidance. The shares are up about 3. 5 in the afterhours so far, kelly. Back over to you guys. Thank you. Well, back to apple. My next guest says you need to buy shares of the company right now because the stock will hit 120 a share by friday. Well, its at almost 115 right now. Hell tell you why when we come right back. Why do i take metamucil everyday . Because it helps me skip the bad stuff. Im good. Thats what i like to call the meta effect. 4in1 multihealth metamucil now clinically proven to help you feel less hungry between meals. Experience the meta effect with our new multihealth wellness line. I love my Meta Health Bars. Because when nutritious tastes this delicious i dont miss the other stuff. New Meta Health Bars help promote heart health. Experience the meta effect with our new multihealth wellness line. Here is a look at apple after hours. Just shy of 115. According to my next guest, apple will reach 120 by friday. Joining us with what will be driving the stock to those levels, james, were having a little chuckle because at this point 120 looks conservative, doesnt it . I think it does. We knew we were going to see some fireworks inapple. But were seeing a huge move higher as they absolutely blow out expectations for both revenue, earnings per share and the iphone unit which is was just as important as that earnings number. We knew that they were implying a big move higher. We were looking for a movement about 50 larger than the average earnings day movement in apple. And were still implying a couple more dollars to the up side before we hit that target that the Options Market was implying for friday. And you looked at the price action and maybe got a queasy stomach. What do you think about tomorrow . I think youll have a whole change in psyche tomorrow. Earnings tonight starting with apple even beyond apple . Absolutely. It will change the tone in the market and people will put the negative ones behind us, that was so last century, and now were in to all these newspapers tonight numbers tonight. We should take a look at what ali baba freudian slip i cant yahoo shares are doing. Are these two companies with specific stories in would you buy other names or just reinvest in apple . I think i would just be looking to reinvest in apple and names like yahoo here. Were wondering for a long time or the past month or so where all this extra cash that consumers have been getting is closing into due to cheaper gas prices. And i think its been going into iphones. Thats why we see such blowout numbers like this. And i think apple has sucked a lot of air out of space for competitors. Which issis why we saw poor earnings and this morning. Well have to see whether or not it is the space that will do well or the specific stocks within the space that have been strong. So no one is talk about the bears case. There are bears . I thought we threw that out the window. Sorry about that. Lets do it anyway. But maybe were seeing a super cycle. Everyone was really waiting for the big phone, they didnt buy phones for a long time and then they bought it and thats it. So now its an apple super cycle. Exactly. So what happens now . Maybe this other one thing happens which is that the apple watch isnt that great. None of these watches have been good so far. Steve jobs isnt around for this one. Maybe the new watch isnt that great. Already theyre saying that its battery wont last all day. But they know that. Thats out there. It wont be a surprise. And yet still look what is happening. I think maybe not a bearish point about apple stock, but on tech generally is the fact that apple has to carry so much of the sector on its shoulders. When you look at estimates for earnings for this quarter, growth was 3. 8 . It was only 0. 1 when you take out apple. So apple has been expected to be strong. But the sector overall is really flagging. Thats a point we have to leave it there. So what is everybody supposed to do, just strip out the rest of tech from apple . Ultimately what is good for them has to be supporting a much larger supply chain delivery system. Right. Absolutely. I think thats the plan at least in the short term until we get a better look at how the rest of the space is going to report. We had two really bad reports this morning and two really good ones today. And its important to stick with those reports as were seeing volatility in the broader market, as well. Stick with the names that have been working. And 120 by friday. Well bring you back and see if it happens. Thanks, james. That was a wild hour for earnings. More potentially market moving events. Well tell you which ones to watch for next. Etting married. Never. Psssssh. Guaranteed. You picked a beautiful ring. Thank you. Were never having kids. Mmmmmm. Breathe. I love it here. We are never moving to the suburbs. We are never getting one of those. We are never having another kid. Im pregnant. I am never letting go. For all the nevers in life state farm is there. She inspires you. No question about that. But your erectile dysfunction that could be a question of blood flow. Cialis tadalafil for daily use helps you be Ready Anytime the moments right. You can be more confident in your ability to be ready. 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What do you think, what are you focusing on . I think it will be earnings. I think once again investor in his market is all about the earnings. This big week, 140, 150 names reporting. Earnings. This big week, 140, 150 names reporting. Market is all about the earnings. This big week, 140, 150 names reporting. But it would build after hours. Apple was you touch an important such an important part of the tech eps. And facebook is an important part of the calculus for momentum names, though. He was first with the Holding Company structure where basically hes building all these different apps that are diverting people away from facebook. It will be interesting for see as it always is his comments on how all of that will work together, how the facebook ecosystem will function Going Forward and where they can make money. Thats a point. Nicholas, what are you watching . Im looking at facebook, too. Facebook is in theogle a few years ago. Instragram has not been fully monetized. Do you know what the value roughly anymore is . I wouldnt be able to guess. Many billions of dollars. A steal. Purchased for a billion as was youtube. An utter steal. And Going Forward, facebook is going to get into the video advertising market. And theyre really strong. People spend 20 of their time with their phones on facebook. Actually on this point twitter had an interesting announcement today about its video moves. Are you seeing those as potentially disruptive here for a facebook or yahoo . Really disruptive for google for sure. People are worried about google being able to keep up with facebook and video for sure. Kenny, final point. When we start to look at minus 290 on the dow kind of day. I think it itss short term. No panic. The market is just churning and were set to move on. Thank you so much for being here on this blizzard or lack thereof tuesday. Fast money is coming up in just a few moments with melissa lee. The big question tonight is will apple and yahoo hold their gains and mapping to turn around market sentiment. Were trading the Conference Calls. And i want to hear about the kid who turned down an internship with tim cook. We have him on. Fast money starts right now. Overlooking a snowy New York Times square, im melissa lee. Big selloff, but could Apple Earnings change sentiment. Shares up 5 after hours. Blowing past expectations. The Company Selling 74. 5 million iphones. Well above estimates. Yahoo also popping on news it will be spinning off its stake in ali baba. Well be bringing the details to you as we get them. We also have the latest earnings news on at and