Transcripts For CNBC Closing Bell 20170503

The final president ial debate before those key elections on sunday is starting about now, and we will tell you whats at stake for the euro and your Global Investments coming up. Meanwhile, forget sign also of economic weakness. Federal reserve looks like it is on track for another rate hike in june. Naels according to the statement they put out just an hour ago. We will have more on how the market is reacting coming up. Plus this afternoon it is all about Mark Zuckerberg and elon musk. Their two companies will be reporting earnings after the bell tonight. We will get you ready for those reports and bring you the numbers as soon as they are released. Be interesting to see how that turns out. Meantime, shares of apple still trading lower. Coming off the lows of the day, but they were down sharply on the open this morning. Ian weidner from bush securities and were going to start with ian. You were our bear yesterday during our apple bullbear debate. I mean what did you learn in that report and why do you think shares went lower today . Well, i mean at the end of the day they missed iphones. Thats the biggest deal. But what i would say is that, you know, think about this. Youve had cramer on every 20 minutes talking about the sbig interview with tim cook. I mean you might as well be doing weather and traffic, and the stock still isnt up. So to me that tells me that guys are full up long, and when i look at sort of all of the different metrics, you know, people are giving them the benefit of the doubt, that this was just a pause in front of the next cycle. But, like i said yesterday, samsung is back, sprint was talking very bullishly on that product refresh, and so to me it just seems like theres a big leap of faith here at 147. Ian, you will be excited because we have a preview of the interview that jim cramer had with tim cook, ceo of apple. Take a listen. You mentioned two troubling issues. You talked about how we are working on getting china better. Curious to know why they seem to have cool but better than last year at this time, and then you also talked about yes, people are holding back, some waiting perhaps because of a new phone. These were things you address. So i would like you to flesh them out with the people who watch, who own the phone, who are confused by this. Yeah. Well, i think the last one is kind of simple. Honestly, it is that there are more rumors floating and more press articles and mentions of new things. And when that happens, a percentage of people delay. So, yeah, we see a piece of that. That probably affects us more in china than other places. Okay. Because theres a tendency there to buy the latest thing. Although i have to say the 7 plus is an extraordinarily well there and it is up double digit from the previous year, you know, comparing to the previous generation product. But we didnt do as well on some of the previous generation iphones there, and were, you know, looking at why and trying to address that. Robert, that was a problem in the report, not enough iphones sold, and his reasoning there is to some degree people are waiting for the next one, the iphone 8. Do you agree with that . What about the weakness in china right now . Yeah, i think there are two things there. I mean iphones were, you know, flattish year over year, so, frankly, thats all we were looking for. June quarter i think will be flat, you know, up a little bit. Keep in mind, you know, theyre rebounding from a poor year last year. Stability is all we really need because we do have a new iphone coming end of september. I think with china, i mean china was their weakest market. China has been their weakest market for several quarters now, but if anything the comps are at least getting easier from china. So i think china should start looking a little better. Keep in mind china had a mammoth year two years ago, and so theyre still kind of digesting that to an extent. Robert, what about this latest Samsung Phone . It is getting quite good reviews. Appears not to have the same battery issues. Could that peel off apple followers that like the big screen and the features it offers . The galaxy is competitive because it is always competitive except for one obvious issue last year. Apple doesnt go for the majority of the market. I mean they have sort of 15 of smart phone units. Apple just needs to kind of keep the people they have, gain a little bit more each year, and keep their prices and their margins up. The prices wentz up. Their average selling price was up a little again year over year. I think asp will keep moving higher this year. So they have to keep doing what theyre doing, and i think theyre competitive because theyre the only game in town if you want ios. Ian, you made the point yesterday you felt the galaxy would be stealing market share away from apple. But, you know, if people are waiting for that iphone 8, which is the 10th anniversary which everybody is expecting something to be revolutionary, would that render our conversation today moot if people are rushing in to buy the iphone 8 again . Are they . You tell me. I havent seen anybody rushing in to buy the iphone 8. It is not available until the fall here. Right. But it remains to be determined. I think everybodys making the bet that thats going to happen. I would say this. Even though theyre only a smaller percentage of potentially smart phones, theyre over 100 of the profit of smart phones. So if samsungs back and i think it is a huge deal. You want to talk about easy comps from where they were last year till now, to me it is a big deal. If that starts to hit them in the margin side, it is going to be an issue. Ian, what about meantime what theyre doing in services and in media . Is that going to bear more fruit for this company if they continue to move maybe the emphasis over a broader, longer term horizon, away from how many iphones theyre selling and more towards that piece of the business . Certainly it is a positive thing. What i would say about services is that it is really still dependent upon the device. You know, even with the services growth, iphone is still such a large portion of the profitability here that unless people are buying the devices, then the Service Revenues arent going to go as high. Robert, how much higher does apple go here . I mean weve had a lot of people on who had buyer recommendation but the price target was not much higher than the stock is now. Where do you see it going . Our price target is 180, which is 12 times next years earnings ex kooscash. I think 180 is totally doable. A nice move up. It has been a huge year for apple. Trading just about 147 a share. Ian, robert, thank you for joining us. Thanks very much. Thanks for having me. Dont forget mad moneys jim cramer will join us next hour of closing bell with more of her interview with tim cook. Be sure to stay tuned and watch the entire interview on jims show tonight at 6 00 eastern time here on cnbc. As you mentioned earlier, it is make or break time in franls. Marine le pen and Emmanuel Macron are squaring off in a live debate, happening not. Where in particular the street will be paying attention to this debate, michelle . Hey there, kelly. We have showing you the live debate that began at 9 00 p. M. In paris. Market participants are watching this because it is a moment of very high vulnerability for Emmanuel Macron, the candidate favored by the markets because he is not seen as a great debater. He can get both you see him there righthand side of the panel. His opponent on the left, Marine Le Pen, is considered a better debater than he is, and political analysts say this moment could help her increase her poll numbers. Most, and i emphasize most but not all Market Participants favor mr. Macron because he wants france to stay in the euro and represents the stalt tus qu and they think stability. Le pen does not want to stay in the euro and represents instability. She is behind by almost 20 points, but the spread has gotten narrower in the last week, and theres deep fear that the polling is not accurately counting her supporters. Also this moment right here we are watching live on france tv they think could be a factor in bringing those polls closer together. Were going to be live all day on friday and also all day on monday after the election on sunday so we can bring you the results. If theres a surprise, guys, and Marine Le Pen does win, markets are very complacent right now, we could see a lot of volatility on monday. Thats for sure. It was interesting, michelle, to look at the reaction after. They thought the debate might be between le pen and the foreign left guy. He didnt make it. Instead it is the sort of centrist macron we see here. Does it mean some of the risk look what happened in Global Markets since that outcome. No volatility. Everything has been fine and steadily drifting higher. So is it as much of a risk if she were to pull this thing off . So the biggest fear was that it was going to be, as you mentioned, Marine Le Pen, versus mellenchon because he was the Bernie Sanders of france and both of those people have very leftist economic policies, if not their social policies. So it was going to be two people who did not believe in what a lot of economists think would make france more competitive. Their policies would have france less competitive. So the bigger risk was absolutely in the first round, whether or not we would see two not conventional candidates come forward. Now macron, as you see, ahead in the polls. There is less risk because hes got more conventional views on economic policies. Hes not a big game changer but certainly not like she is. But if the polls are wrong, i think the thing is the markets are so believing that hes going to win, that if he doesnt it is going to be trouble. All right. Well, well let you catch your flight. Safe travels. We look forward to talking to you on friday. Thanks, michelle. Thank you. We have a news alert meantime on aetna. Were at the coombs. What is up . Thats right, bill. Aetna saying it is pulling off of the individual market in virginia. Both on the Obamacare Exchanges and off the exchanges as well. Aetna is in several counties. I dont believe that they are the single insurer in any virginia county. Anthem has that distinction. But mark ridley talked about the fact they need to look at what markets theyll participate in. As many insurers, theyre saying theyre not going to participate in markets where they will continue to see losses. He said this yesterday on the analysts call. Weve already withdrawn from iowa. We will be notifying some other states here shortly, but we only had four states remaining. So our presence will be much smaller than it is this year. And, of course, he said that on closing bell, this very show yesterday as well. For a lot of insurers, even as they are submitting some initial rate filings, they are withholding their true commitment through the end of the summer. They dont have to commit until september, guys. So even insurers that are putting in rates now could still pull out if the uncertainty continues in washington. And that stock is now trading at an alltime high. As we mentioned to mark, what he is doing is pleasing wall street. Thanks, bertha. We will see you later. And we have about 45 minutes to go here. Look at this. The dow is positive. Significant maybe for why it was weaker earlier, but we are watching the votes in washington this week to see what happens if there are enough to pass the new healthcare bill and if it means the agenda is on track. The Freedom Caucus is in favor of the upton amendment as it is known that would allow states it would provide funding for preexisting conditions so that insurers could raise their premiums there. But help people pay for higher premiums. I dont want to over state it, but at the time it came out we were still negative and we had the fed decision. Tesla, fit bitd, write it down. Those are some of the big names reporting earnings after the bell tonight. We will break down the results with our team of analysts, and the second those numbers hit the tape. Still to come here. We will go back to the fed and some take aways from the twoday policy meeting that just wrapped up. You are watching cnbc, first in business worldwide. So glad youre back. Hey, ive got the trend analysis. Hey. Hi. Hi. You guys going to the Company Picnic this weekend . Picnics are delightful. Oh, wish we could. But were stuck here catching up on claims. But we just compared historical claims to coverages. But we have those new audits. My natural language api can help us score those by noon. Great. See you guys there. We would not miss it. Watson, you gotta learn how to take a hint. I love to learn. Welcome back. Dow is looking at a tiny gain of five points right now. The only major average in the green, still it has come up a few points and taken positive territory in the last hour or so. The s p is down about four right now. Look at the nas damagdaq, down point. Russell 2000 down. Definitely dispersion across the as we say. Welcome back. Some of the other markets are moving today. We have molson cores trading lower with the denverbased brewer reporting a miss. They blame weaker sales volume in the u. S. This past january and february. That stock down 4. 6 . Young brands is trading highers on an earnings beat. Lowest cost of kfc and lower taxes helped to boost profits at the fast food giant. But the pizza hut chain reported a decline in same store sales. Sales for pizza hut down 3 . The stock though is up 2. 25 right now. How about the fed . Policy makers wrapped up a twoday meeting a short time ago. Steve liesman is at headquarters in washington with some of the highlights. Kind of a quiet meeting this time, steve. Reporter yeah, but interesting though, kelly. The fed looked through recent economic weakness, a signal to markets a june rate hike remains on track here while it said, quote, growth has slowed and Consumer Spending was only modest. Went on to say, fundamentals under pinning the continued growth of consumption remain solid and, quote, the Committee Views the slowing in growth during the First Quarter as likely to be transitory. Then the fed repeated the line from march where it said specifically Economic Conditions could warrant gradual hikes in the future. That lead to comments like, they want to high again in june. Ian shepherdson said weakness dismissed, june higher likely. A pretty sizable chance of a rate hike in june. Now it is around 69 . The fed didnt change Balance Sheet language, saying it would continue to reinvest principal. Most people think a plan to reduce holdings will come later this year. Guys, if you look at the xlf or the Regional Bank indices, they got a pop as the banks have tended to trade higher when the thinking becomes more that the fed will raise Interest Rates. You see that right there in the xlf to the left of your screen there. All right. Steve, thanks very much. Steve liesman there. Lets get to our Closing Bell Exchange today with the dow virtually unchanged, the other major averages lower. David saurby is with us, steve grass el from frankel sitting next to him, and Rick Santelli in chicago. Im going to start with you, rick. What are you seeing, if anything, in terms of market response to the fed meeting . I mean the twoyear note up is three basis point, dollar index up just a tad here. Is the market starting to get ready for a fed rate increase next month do you think . I think that the markets are ready for rate increase. I just think the question is, a, how many rate increases and is the notion of reducing the size of the Balance Sheet a 2017 infomercial that happens in 2018 or not. Many traders on the floor believe thats the case. So, you know, the markets prepared for this. The moves everybody is talking about that have, you know, somewhere in the 70 range of a june tightening, those are predicated on fed fund futures which really, you know, as they go lower, the percentages go up, they didnt close that much lower soechlt we lower. So were kid of splitting hairs. The markets were prepared for this and it is evident by everything you pointed out. One thing i think is worth noting is that the markets were pulled back into that range so to speak. Loot it looked like the ten year was drifting under 228 area, back 230ish, know that it makes a huge difference, but to many theyre operating under the notion we will be in a range for a while. I think i would probably go along with that. And youre looking at some names, david, you think, you know, honey well, pnc bank, oracle even are attractive in that kind of market, right . They are because theyre more cyclically orient. They still are generating aboveaverage cash flow to the investor and the valuations are compelling to me. They do benefit when the ism index as it is today is comfortably above 50. Those you can own longer. Manufacturing index, both composite. Though the Service Index jumped positive, the manufacturing was a bit softer. Steve, earnings, clearly were in the thick of it right now. But washington still a focus for wall street as well. I mentioned earlier members of the Freedom Caucus are now saying they support this new amendment thats being attached to the healthcare bill. You still have talk of tax reform at some point. What do you see and how do you see that affecting the market right here . Well, if you look at yesterday we have the underperformance of iwm. Those are the ones that have more to gain if theres tax policy, real reform, real knockdown of rates. You and i discussed this. The world has been discussing it. Where does that Corporate Tax rate go . 35 to 20 . 35 to 30 or 35 to 25. It is anybodys guess. It is not going down to 15. So i think iwm had less to gain the higher that established rate goes. But you had asked rick is the market prepared for a rate rise. I think if you look at markets around alltime highs they would say that they are prepared for a rate rise. The market is set up to fail though. I have been lightening up on positions because we are set up were not priced to perfection, but we are set up to fail short term. And jeff gunlag said yesterday he thinks we will get a correction in the market this summer as the fed raises rates in ernest here. You notice, the market is trying to look for pro growth policies. Thats the reason the market ran, and the market can run up for the right reasons if rate rises in a slow fashion. Because if you look at the housing recovery on long housing stocks, phm and kb homes, most housing recovers happen during a rise in rate environment. It is counter intuitive, but the market can move higher for the right reasons. Global growth is in question. Look at oil, look at oil not being able to rally back to 50. Copper fell 3 1 2 as well today. In any calendar year for the last 25 years, the average selloff has been 12 within the calendar year. We havent had that, we know, since february of 2016. We are due. It is just a question. Can i manage money trying to anticipate that proverbial 10 correction. Exactly. Waiting again. Gentlemen, thank you for joining us, as always. Appreciate it very much. Thank you. Well see you later. 37 minutes left in the trading session here. The dow is up 6 points but the other major averages that you can see are negative right now. Look at the nasdaq. We get key bellwether earnings after the bell. That index is down half a percent today. The New York Times may turn out to be the biggest beneficiary of the trump bump. We will have details on the gray ladys gains right after this. The failing New York Times wrote a long front page story yet. The wall street journal did a story today that was almost as disgraceful as the failing New York Times story yesterday. Obviously thats the president referring to the New York Times as failing. The reason we bring it up is because the stock is not failing today. It is up more than 12 . The Newspaper Company reporting a Quarterly Earnings beat, thanks in part to a rise in circulation revenue. There was a surprise. The times added 308,000 Digital Subscribers in First Quarter. Thats its best quarter since it started offering digitalonly subscriptions back in 2011. Digitalonly subscription revenue added 40 from the same period last year. New york times ceo spoke with power lunch in a first on cnbc interview a couple hours ago. The story of our business and acceleration of the Digital Business predates donald trump the campaign and trumps election as president. But theres no question weve got some rocket fuel in the subscription business in recent quarters, and we expect that effect to reduce over time. But we think the underlying acceleration, which we were seeing as far back as 2015 in our digital subscription business, is going to continue. Shares of the New York Times have risen more than 40 since donald trump won the election. I will say, let me explain to you since you only read paper papers, i subscribe to some digital papers including the New York Times. I think they do the best job of engaging with readers do you read it on the ipad or website . No, ipad. Theyre better than some others. The only time i read a paper paper is on saturday and sunday and thats the New York Times when i can sit with my cup of coffee and relax. I think they do a great job, so not surprised. Here, by the way, is performance of gannett, and Tribune Company or trump which pains me to say every time. It is interesting about two fold for the New York Times is, one, can they sustain it. For everybody that did a protest subscription, which it will set you back for donald trump, will they renew. For the other papers, is everybody part of the news interest . As weve seen with the other companies as well, but i understand not everybody likes to read the physical paper. Thats okay. Every morning, too. Just think of the trees. Time now for a cnbc news update with sue herera. Hey, sue. Reporter hi. Welcome back. Here is what is happening this hour. Two people are dead in what appears to be a murder suicide at a dallas Area Community college. The situation prompted a lock down at the north lake college in irving. A witness says a man fatally shot a woman in a hallway of a campus building before then killing himself. British Prime Minister theresa may pushing back at reports that European Union officials consider britain ill prepared for brexit talks, accusing eu official also of trying to fluence the outcome of Britains National elections. We want a deep and special partnership with the European Union, and we want the eu to succeed. But the events of the last few days have shown that whatever our wishes and however reasonable the positions of europes other leaders, there are some in brussels who do not want these talks to succeed. A dramatic small plane crash. Oh, take a look at that, in washington. Captured on camera. The piper cherokee clipped power lines and rained fuel on to cars as it plummeted to the ground north of seattle. Miraculously no one was injured, but it did cause a traffic tieup and knocked out power to some 9,000 homes. Pretty dramatic stuff there. Youre up to date at this hour. Kelly, it is great to have you back. Hope you had a great vacation and honeymoon. Well see you the next hour. It is lovely to be back, sue. Thank you so much. Well see you in about an hour. Sue herera there. Im here with less than a half hour to go with mark newton of newton advisers. You want to talk about what you see breaking out today and it is healthcare, is that right . Thats right. You look relatively speaking at healthcare, we have moved to the highest level in relative terms. This is a chart by guggenheim. Ryh is the ticker. When you look at ratio also of this to the broader cap weighted, it gives investors a clue as to what the broader sector is doing, not just those that you dont get a feel. When you look at things like this, we have broken to the highest level we have seen in all time on an equal weighted bases. This means it is starting to gain broad base strength, a lot of the hmos, medical device makers, i see it as a bullish sign for this Group Heading into one of the seasonally most bearish times i of the year. We are looking at a couple of years of history, but to see this setup you are describing as bullish one, this is a sector that for sometime had done well and sochlter of late and has the different forces coming at it. Look at the front page of the journal again today and otherwise. So what propels, you know, this next move that you are talking about . A lot of it is technically derived. You consider all of the news is already out in the marketplace and yet the sector continues to do well. So it is 9 so far yeartodate with these supposed headwinds, up 1 1 2 over the last month. Continue toss do well. Obamacare repeal on the front burner. We will see what happens with that. But a lot of the stocks continue to show good signs of relative strength. Patterns like this, suggest we can move forward. Im saying these are newtons laws. So for investors, looking at equal weight as opposed to just the broad cap way makes sense. I think healthcare is the place to be in the months ahead. We see xov in the 70s. So should be in the place to be. Thank you for being here. Appreciate it as always. Bill. Your handwriting is very good. Good job. 28 minutes left in the trading session. The dow is up 6 points. When we come back, what trade secretary Steve Mnuchen told an audience of Community Bankers today about when tax reforms could become reality. We will talk about all of that with steve forbes who is in the house right now. Get ready for another earnings bonanza after the close. Facebook and tesla will be front and center. We will bring you the numbers and instant stock reaction and analysis the second they hit the tape coming up. Welcome back. Secretary of the treasury Steve Mnuchen discussing tax reform with the nations Community Bankers today. Cnbcs ylan mui is in washington with more. Reporter bill, the big question on tax reform is when. The timeline was pushed back. First it was august, then 2017. Today treasury secretary mnuchen appeared to soften the deadline more. I originally said i was hopeful we would get tax reform done before the august recess. At the time i said it was aggressive. I guess you would say it is even more aggressive now. I have decided im not going to give any other specific dates other than saying we would like to do this as soon as possible. Reporter republicans on the ways and Means Committee held a retreat over the weekend to discuss the way forward. The message from a key congressman, pete roskam, was tax reform needs to be permanent, and that means they need to pay for it but the price tag might be higher than anyone thought. Goldman sachs came out with a new analysis showing cutting the rate for passthrough businesses alone, lowing to 15 would cost two trillion dollars. It comes from a straight rate reduction and the other comes from corporations and wealthy individuals converting to passthroughs just to take advantage of the lower rate. But, bill and kelly, looks like we have to wait a while to find out whether or not it actually happens. Back to you. All right. I think were used to that and getting more used to it. Thank you. Lets talk about the president s plan to grow the economy and how tax cuts might be part of that. Joining us we welcome back steve forbes, chairman and editor in chief of forbes media. And diane swan, founder and ceo, joins us from chicago. Good to see you both. You famously, you know, based a whole president ial campaign on the ability to put your tax return on a post card. Right. And thats been talked about again. You know, they want to reduce the number of tax levels and everything. But realistically, are we going to get all of this here . They cant get the healthcare reform bill going. What do you think will happen . It doesnt matter so much when they pass this thing. The key is do they make it retroactive. Either to say, march 1st or january 1st. If they dont get a big tax cult kicking in this year, theyre going to take it on the chin electorally next year. People have to see this economy really has broken out of its rut. So big tax cut essential. One thing i hope this retreat this weekend the republicans had, they get rid of this crazy idea of a 20 border tax, sales tax, which would hit the very people who elected donald trump the worst. And it sounds, diane, like that is we no longer hear that as if it is something that definitely needs to happen. So what if it doesnt . Where does that leave, you know, the changes we might see overall in the tax code . In terms of the tax koeld, i mean unfortunately the hole it leaves in the deficit is quite large. This idea is really important on whether or not it is permanent or nonpermanent. If it is not a permanent tax cut given the way the law is now and not paid for over the next ten years it has to be sunset and that means you dont get the behavioral aspects you would like to out of Corporate Tax reform nor personal tax reform. The hole in the deficit when you are talking about the Goldman Sachs very importantly pointing out what could be big loopholes in the passthrough and people converting how they actually take their income. That makes it even larger. So were thinking four to six trillion over ten years and you are adding another two trillion for it, it is not being paid for and not thinking about the ecosystem that the federal budget is. I think senator corker made a very good point earlier today on i think it was on squawk box earlier this morning about the fact that youre not dealing with the elephant in troom, and thats entitlements. We are talking about cutting taxes and not necessarily reforming them in the way that we need to, to be competitive and at the same time we need to start bringing back the word tax expenditures. These are a cost to us if they dont stimulate the economy and they certainly dont pay for themselves also. Steve, when i hear people, proponents of the tax reform like you talk about this, i rarely hear anybody talk about the deficit that it could create if we dont pay for it in some way with a border tax or a tariff or some other program. Is it for you, is the priority more about tax reform than it is about the deficit . Priority is. First of all, youre not going to deal with the deficit effectively if you dont have a vibrant economy. We should have learned that from the 80s and 90s. Tax cuts are essential for that. The key thing is what gets this economy moving. In terms of deficits, you can do reforms in the future, but john kennedy and Ronald Reagan never fell in that trap of tying expenditure reductions to a tax cut. Im reminded otherwise you will never get them. I mean one of the arguments has been that the supply side economics would kick in. You cut taxes and the economy is revived. And not only does the economy revive but the assets of the nation grow. But im thinking about the socalled but hang on one said, diane. Let me make this point here. The brownback experiment in kansas was frying to do just that. They did just exactly what donald trump would like to do to the tax system right now federally, and they have a huge deficit in kansas right now theyre having to deal with. Kansas actually is doing better than the headlines would lead you to believe. The revenues came in. The problem is that they had spending problems. So the revenues come in when you have a big tax cut, and the key thing is how do you get this economy moving. Washington can reform itself but the key thing is get the American Economy moving forward. This whole thing of permanent versus nonpermanent, permanent means it goes beyond ten years but no tax cut is permanent anyway. We should have learned that in the mid 80s. Four years later it was raise gend. So get the tax cut done whatever way you can. Diane, what were you trying to say . Well, the 80s with a great example because by the end of the 1980s we had crowding out. We had higher Interest Rates as a result of all of the rise in the deficit, and we had very low investment in the 1980s. That was undermining us. As we started to move into the 90s and we actually started to slow down those deficits and run some surpluses, we had very high investment. So i think really we have to look at the context of these things. That was even when taxes were raised. So taxes alone are not the only lever. I think tax reform is desperately needed, particularly on Corporate Tax reform. We do need to simplify our tax code, but we need to look at it in the ecosystem of what our priorities are overall in the u. S. Economy and what are the incentives. And from these kinds of tax cuts alone you only get tenths, not percents on growth. I think thats very important, too. Okay. When you look at this, you are sort of getting this it sort of looks like santa claus. You get all of the gifts and everything is wonderful. Santa claus doesnt exist. Doesnt . My daughter is still mad about that. Wait a minute, wait a minute. Sorry about that. My daughter is still upset and she is in her 20s. My son is 19 and still believes. What can i say. Thank you both. Good to see you. Thank you. Thanks for joining us today. 17 minutes left in the trading session here. The dow is up about five points after delivering a Record Number of electric cars tesla is releasing earnings in about half an hour. We will preview a number were expecting coming up. Also, facebook is announcing hiring 3,000 new employees in advance of earnings. We will have the reason why and those numbers coming up. Top companies. S the power of a proven 15year track record. The power of an etf. The power of qqq. The thinking we put in, clients get out. Power your clients portfolio at powershares. Com qqq. Before investing, consider the Funds Investment objectives, risks, charges and expenses. Call 8009830903 for the prospectus containing this information. Read it carefully. Distributed by invesco distributors inc. Containing this information. Read it carefully. Our 18 year old wase army in an accident. 98. When i call usaa it was that voice asking me, is your daughter ok . Thats where i felt relief. Were the rivera family, and we will be with usaa for life. Rays always been different. Last year, he said he was going to dig a hole to china. At t is working with farmers to improve irrigation techniques. Remote moisture sensors use a Reliable Network to tell them when and where to water. So that farmers like ray can compete in big ways. China. Oh. He got there. Thats the power of and. Teslas releasing earnings after the bell, but investors and analysts may be more interested in the word on future plans, right . Yeah, as ever. Joins us from chicago with a little preview. Hi, phil. Hi, kellie. Welcome back. Model three, that is all people will be focused on. Not entirely, but most of the people will be focused on primarily model three and any kind of an update coming from tesla when it reports earnings within the next hour. The model three is one of three important issues to focus on. Are we still on schedule for deliveries later this year and the buildupcoming in the next couple of months. Solar city. You have the solar roof and its expected launch coming in the next couple of months. Whats the update there . Finally, totally deliveries. We have yet to get a total delivery guidance or estimate from the company for this year after delivering 76,000 vehicles last year. They have said that when it comes to the first half of this year they expect to deliver between 46,000 and 50,000 vehicles, and they delivered about 25,000 in q1. So nobody is expecting them to miss that delivery guidance for the first half of this year, but it is the fullyear guidance people will be keying in on. As always, guys, when you look at shares of tesla we want to hear the Conference Call which starts at 5 30 because thats where elon musk historically has made the most news. It is those comments especially when the q a starts and theres always one or two questions with one or two answers out of left field that have people saying, okay, did not expect that. So we have the numbers and a Conference Call this afternoon. Tough being in that limbo between the results and when the call starts. As youre saying, you are knowing it could go one way and turn around. Thank you. Exactly. See you soon. Phil lebeau in chicago. 12 minutes to go here. Dow is up 6 and everyone else in negative territory. Minutes away from facebook Earnings Report. We will preview what to expect from the social media giant, and we have a bull bear debate on facebook coming up. Hey gary, whatd you got here . This bad boy is a mobile trading desk so that i can take my Trading Platform wherever i go. You know that thinkorswim seamlessly syncs across all your devices, right . Oh, so my custom studies will go with me . Anywhere you want to go the markets hot sync your platform on any device with thinkorswim. Only at Td Ameritrade i am totally blind. And i live with non24, a circadian rhythm disorder that can throw my days and nights out of sync, keeping me from the people, places, and things i love. The people i love have always been there for me. And now, im there for them, too. Talk to your doctor, and call 8442142424 to learn more. Art cash injust stopped by a moment ago. Welcomed kelly back and said the market on close orders show minus a minor bias to the buy side of 100 million. 100 million to buy going into the close with the dow up 12 points right now. Facebook maybe the most anticipated of the Many Companies reporting earnings after the bell today. With the stock up more than 30 yeartodate, it is nice. Part of the huge move with these tech companies, but is the social media giant a buy or sell for investors . We have quint trator from capital and bryant from research group. Quentin, you are bull on facebook. Why . Because it is wayner. It is real simple. It is up 30 , 150 over the last three years, but it is not a value. I mean our next guest will say it is priced to perfection. It is growing at 23 times, if it hits next years number and priced at 23 times those earnings. So it is priced to perfection, but investors would love to get a pullback to get into this stock because it is going higher with 30 billion in cash and absolutely no debt. Theyre firing on all cylinders and will continue to do so. Brian, quints already answering for you. Is that what youre going to say here . I mean thats a fair characterization of it. I think facebook absolutely is a winner. They and google together dominate the universe of digital advertising. I think the bigger question is just one of valuation. Now, that said ive noted that, you know, consensus estimates for advertising growth in quarter are very ro bust, lets just say. Margin expectations are probably a little extreme. So there may be room for disappointment. I mean the sad thing is that my estimates are they could grow maybe 40 this quarter, but it would be spectacular. If consensus is actually closer to 50, theres a lot of room for disappointment. Now, it is possible they could grow that fast, but i think that thats probably a little optimistic. Quint, when you hear that facebook is hiring 3,000 engineers to help try to police some of the awful content on the site, does that worry you in terms of their expenses going up . No, because i think that investors will be smart enough to price that in. What i like is that theyre getting ahead of any problems. I mean a company that is getting in front of that by hiring workers, theyre saying the right things, theyre doing the right things. Again, they are priced to perfection. If they dont hit that whisper number of 1. 21 in a few minutes, i think the stock will sell off. But im telling you, when it does, if that happens, it is a strong buy on any dip. Investors shouldnt run out and chase 150 stock but when it comes in at some point it is definitely a buy because the stock will go higher after any weakness. Brian, what is facebook worth . What should it be trading at . You know, i have 135 price target on it. Some of my price target is just due to greater concerns i have about the macro environment than others do. Were seeing this in advertising right now with time warners results this morning and what were see anything the meltdown of their piers. That results to general softness in advertising full stop in the United States and i think around the world were seeing some deceleration. I think if you account for a more tepid overall environment for ad supported names, you will get a little more conservative than being aggressive on facebook. All right. Well see what the numbers look like next hour. Quint, brian, good to see you both. Thanks for joining us today. Thank you. We will take a quick break. We are coming back with the closing countdown. Time flies. When youre having fun. And then and when your coanchor is back. Yes, thats right. Look at them. Do you think this is going to be the new the outdoor interview with the sunlight and the trees . Must be california. Maybe we could start doing this. After the bell, apple stock down a bit today after releasing its earnings yesterday and mad moneys wresh jim cramer caught up with apple ceo tim cook. We will have the highlights from the interview. You are watching cnbc, first in business worldwide. With e trade you see things your way. You have access to the right information at the right moment. And when you filter out the noise, its easy to turn your vision into action. Its your trade. E trade. Start trading today at etrade. Com closing bell is sponsored by as we head to the close, just a quick picture of the house floor where theyre voting on the funding measure that will take the government up to september, the end of the fiscal year. The vote on this bill that was passed or that was reached on this deal in the wee hours of the morning on monday. So right now theyre voting on that and we will get you the final tally as soon as we know what it is, but it is probably expected to pass at this point. Two minutes left in the trading session here. Ordinarily i would show you the dow. Im going to show you the nasdaq because thats where the action has been lately, and leading to the upside. Today leading to the down side. Started with the apple earnings, and apple was down sharply but it came back late this afternoon. The nasdaq did not. It is still near the lows of the session, down 25 points. So about half a percent at 6,069. No record there today. The ten year, not a huge response to the fed meeting where they said that they were not raising rates now but, of course, the expectation is they will be raising in june. Theres an expectation this fed funds future theres a 75 possibility, and the yield on the ten year is up to 232. Whats interesting i rarely show copper, but it had a huge decline late this afternoon. That is the most economically sensitive of the metals out there. Down 4. 4 as we keep getting some anemic numbers on the economy here. Now we get some earnings out after the bell. Bob pasani and we highlighted facebook and tesla and looking for numbers from square, fitbit and aig. One of the five stocks we talk about often here, those five stocks, facebook, amazon, google of course, netflix, are now 50 of the market cap of the nasdaq 100. Five stocks, 50 of market cap for nasdaq 100. Story for today, steady as she goes from the Federal Reserve. We are still expecting two rate hikes this year, and Balance Sheet issues not mentioned in the whole fed communication. Ringing the closing bell at the New York Stock Exchange is delta. Stay tuned for the earnings coming up on second hour of closing bell with kelly evans and company. See you tomorrow, kelly. Thank you, bill. Welcome to closing bell, everybody. Im kelly evans. Lets begin with how were finishing on wall street. The dow closing higher by 5 points but only turned positive in the last hour or so of the session. More in a second on what might be in play there. The other averages not the same. Down, in the s ps case about 3 points today. In the nasdaq going down about half a percent, closed down less than fourtenths of a percent. It is interesting to be back here and see a six as first digit on a nasdaq composite. 6,072. Russell 2000 worst performing, down to 1391. It will be a very busy hour for earnings. Take a look at all of the reporters we have standing by to cover these results as they cross. Thank you, everybody, for being here. Julia boorstin on facebook, phil lebeau on tesla, d. D. Royal will have fitbit, dominic chu, and susan lee. So we will see you guys very shortly. Well see what order all of these begin to come in. Joining me on the panel we have senior markets commentator michael santoli. Good to see you again. Great to see you. Glad to have you back live in these markets. The nasdaq odometer rolled to six, beyond that not much happening. Vice chair and head of Investment Group is with us. Along with neil hennessy. A great group for this after noochblt welcome, everybody. Mike, thats what i was going to say. There were interesting comments from david eihorn talking about the amazing performance of facebook and apples and everybodys of the world. Granted, the nasdaq is taking a pause but he would liken it to the bubble we saw in 2000. Yes, and particularly tesla is one he was pointing to, where it is not a profit story unlike the other stocks. But i think theres a sense in which with lack of imagination or lack of confirmation the economy is accelerating, do you throw new money into the leaders of the nasdaq. It also made sense by the way today that those stocks took a breather after apple and the rest of the market held together fine. Matter of fact, firmed up slightly after the fed statement because bank stocks were almost up threequarters of a percent. Does the fact facebook is up 30 this year, apple Something Like that, does that mean youre happy to look and play around in other parts of the market . I think theres a lot of value out there. If you just take facebook right now, theyre selling, their price to sales ratio is 16 to 1. So you will pay 160 million for 10 million in revenues when you can buy a lot of companies for half of their revenue, for, you know, say five million for ten million in revenue. I look at apple. Great company. Plenty to say the least in cash, and their earnings were up but they missed revenues. They were supposed to come, i think, at 52. 9 billion for the quarter and the analysts expectations were 53. 02. I mean really . If youre going to invest for the long term, theres plenty of value out there. So you liken a company like apple, neil, even though it is part of this whole phenomenon of a couple of very small number, big cap tech names just running this year . Well, there are. But you have, for instance, tesla. Tesla is an emotional trade. Theyve never cash flowed out. They dont have earnings. What are you going to do on Something Like that, but it is an emotional trade. When you get emotion involved in any type of investment decision, at some point in time it is going to get ugly. Yeah. Tesla shares were down in the session today. Of course were awaiting results. Facebooks after hours. Charlie, you know, what we have stopped talking about is the financials. What we have stopped talking about is the trump trade and even the industrials and materials. Is that all by the wayside for the time being . Well, temporarily. Weve clearly got a couple of things going on. One of the things, there hasnt been a lot of news on the factors that helped those names like tax cuts and higher Interest Rates and less regulation. But the other phenomenon is that the move to passive means that people are putting money into index funds, which tend to be market weight base. When new money moves into s p 500 fund or a nasdaq 500 fund, more money goes into apple. More money goes into large cap tech names that have been on a roll. We are getting momentum and reinforcing what the ratings were. In our opinion it is making stuff overpriced. Charlie, arguably the biggest for these kind of investments is the s p 500 fund. Do you see that playing out across those 500 names . It feels like it is more concentrated in a smaller number of them, right . Right. If you look at the numbers of the s p 500, names like apple and alphabet are representing a big part of even the s p 500. Not as big as, youre right, the nasdaq. But the s p 500, these big names are a bigger and bigger percentage. So it is just reinforcing. Every time money moves out of the mutual fund into a passive index fund, theyre buying more apple, theyre buying more google. Yeah. Mike, were arguably still at the beginning of this. No doubt about it. Although i will say youre not seeing all of the sectors move in one direction. In fact, thats one reason the measured volatility level of the market is so low. A day like today you had kind of a give and take among the sectors. You are not necessarily seeing the entire index go up and down. Matter of fact, also said last month in april, 63 of active Mutual Fund Managers think weve reached the benchmark. It is a more selective market right now. I know. I wonder if thats sustainable though . No. I mean statistically we have had a no, but they do have thats spaces when it works for a while. It seems one of the arguments for investing in an active manager, especially when the market is not doing well thats right. The problem is we saw in 2008 that wasnt really the case, and lately the market has been fine. Yeah. You know, the degree to which you might be able to out perform an badly performing market is not the greatest sales proposition for a lot of investors. Quick question on a totally different note. What do files to bankruptcies say . This is one of the slow roiling times of crisis, but to throw it in the fact with the bucket, it looked pretty good by the way, the Federal Reserve came out, were not mentioning it was apparently so dull. You name the food Companies Reporting this morning and some of the movers there as well. Does any of this feel to you it is going to vie for attention Going Forward . Not immediately. It feels like all of the information is coming out, whether it is, you know, the economy looks like it is going to pick up in First Quarter. The earnings are much better than expect, but we knew that would be the case. All of that confirms why you own stock. They dont kind of drive you to get more aggressive, and thats why the market has been stopped. Anything, neil, you would say about the decision by the fed today or the fact they might be hiking rates at the next meeting . Didnt do much here, basically said they think the weakness in the First Quarter will kind of pass and not much more in the Balance Sheet. Do you pay allot of attention to it or just keep your head down and focus on micro . Ip of i think theyre between a rock and hard spot. You cant really raise Interest Rates and, you know, continuously every quarter. Theyll probably raise them a quarter, 25 basis points, you know, twice a year. If you raise them too quick, then you put the financials under a lot of pressure because they have to mark the mark. If theyre going to have to mark the mark, knowing that the fed will go up every quarter, theyre going to stop lending, say, on a house because they know it is going to be worth less in three months on their books. That could really stop the economy. So theyre caught between a rock and a hard spot. I agree with charlie. The biggest problem were facing right now are the index funds and the amount of money thats going into them. That could really blow up. Im just jumping in here, neil. Were going to pivot. Tesla results are out. Lets go straight to phil lebeau with the report. Reporter kellie, it is a wider than expected loss from tesla. A loss of 1. 33 per share. The estimate was for a loss of 82 cents per share, but revenue better than expected at 2. 7 billion for the quarter. What everybody will be focused on, what is the companys guidance when it comes to the model three. Remember, production has been scheduled or theyve talked about starting it in july. They are saying they are scheduled for that production to begin in july, and that at some point in 2017 they expect production to hit 5,000 model three vehicles per week, and that goes up to 10,000 vehicles model three vehicles per week in 2018. Again, that is the early guidance in terms of model three, which is really what will be moving this stock. The company reporting a wider than expected loss, slightly better than expected revenue. But the model three guidance, i think thats whats going to be moving the stock. Guys, back to you. Phil, if you dont mind. Repeat it one more time. What is the guidance they gave for model three . Theyre on schedule for production to begin in july. Thats also when they will be giving guidance in terms of full companywide vehicle delivery for second half of the year once they begin production of model three. At some point in 2017 they expect to build 5,000 vehicles per week of the model three, and then it moves up to 10,000 per week in 2018, at some point in 2018. Okay. Got it. Thank you so much, phil. He know theres a lot of information in there. As you mentioned, maybe were looking at the stock reaction, which was initially positive. When you see such a big miss on the earnings front. But, again, they did beat on the revenue in this quarter, and to have people what is to come with the cheaper mass model three. Definitely not current earning why you own tesla. It is top line on track. Seems like production for that 2018 production figure seems to be in line, at least from what theyre saying right now. Thats why i think the stock is holding on. Phil, what more would you add . And, kelly, lets clarify this here because in their letter theyre a little bit vague here. They say model three production as they ramp it up, will be 5,000 vehicles per week in 2017 and then 10,000 vehicles per week in 2018, but that vehicle production. Doesnt say how much of that, 5,000 plus 10,000, will be model three vehicles versus Overall Vehicle production. So in other words when tesla says in this report, phil, they might get up to 5,000 vehicles this year and 10,000 next year, thats total production . Per week, per week. Right, per week, of course. But thats total tesla production cars . Thats the way it appears to read in their investor letter. It does not say specifically model three will be 5,000 per week. That was our first read of it. As you go back and read it more carefully, it is as we understand it, 5,000 vehicles per week including model three production, and then at some point in 2018 10,000 vehicles per week. We know theyre not running 52 weeks but it would be half a million vehicles. Their guidance is they will be at 500,000 vehicles in production by the end of 2018. So if they hit this mark of 10,000 per week at some point in 2018, they will get that guide yanls. Again, we dont get fullyear guidance for this year until later this summer when they begin model three production. Then they will give us their overall guidance in terms of what they expect to deliver this year. Right, absolutely. Tesla shares have turned well, i should say theyve turned around from turning around. They were up and down in the report, mike. Now theyre still up 1 age. Again, we dont have the call, that will give us more information next hour. Yes. To the extend it is about this cycle of car production, it is about the 2018 numbers. Thats been something for years basically people have been promised and promising. So i think thats what theyre going to look for. There are so many other moving parts, whether it is the solar city business, whether it is further capital down the road, how much debt, all the rest. Charlie, are you sorry, a tesla investor or driver here . Absolutely not. This is one of the classic cases of one of the great proven facts of Behavioral Finance which is a planning style. People are way too optimistic when they make estimates on this kind of company. We think that theres a long way to go here. The market cap of tesla is more than gm and ford combined. We would say it is an overpriced stock. Lets check in real quick. Those earnings are out. Our d. D. Roy has the results. Hi there, kelly. It is a beat on top and bottom lines and that could be driving the stock up. After hours up 11 at the moment. Lets go over the numbers. Revenue came in at 299 million versus estimates of 280. 8 million. Ets, the company is reporting a loss of 15 cent versus analyst expectations of a loss of 18 cents. The q2 guidance was light on both the revenue and ets, but for the full year guidance the numbers look a little better. The revenue, basically the revenues in line with analysts expectations. On the fullyear ets is slight beat there. There were a couple of misses. Devices sold, for instance, the actual number was three million devices sold or units shipped, and analysts expectations were for 3. 4 million. But so far investors seem to like what theyre seeing because stock is up 9. 3 at the moment. We will hear more color from the Conference Call. The company has been plagued by challenges recently including supply issues with flex 2 as well as reported production issues on the upcoming smart watch launch. We will hear more color on that and perhaps an update on their reorganization, which theyve been taking place since the fourth quarter. Kelly, back to you. Thank you, d. D. Shares again coming off highs there. Theyre up about 8 still. But the big news out, facebook. Lets get to Julia Boorstin with the results. Julia. Hey, kelly. Facebook revenue beating expectations. The company reporting revenue of 8. 03 billion. Thats up 49 from the year ago quarter. This also higher than the expectations of 7. 84 billion. Now, earnings per share coming in at 1. 04 but thats not comparable with the analysts estimates that we were dealing with. So it is unclear if that is a beat or a miss, but we can tell you that the daily and monthly active users are both coming in better than expected. Daily active users 1. 28 billion versus estimates of 1. 26 billion. Monthly active users, 1. 94 billion. Thats 300,000 more monthly active users than expected. Average revenue per user higher than expected at 4. 23 per user. Now, the company doesnt provide any guidance in this Earnings Report, but they will be likely providing a little morin sight into their guidance, especially when it comes to things like Capital Expenditures on the Earnings Call that starts at 5 00 p. M. Eastern im sorry, 5 00 p. M. Eastern, but also talking to Cheryl Sandberg on the phone shortly, and we will get back to you as we work out more of the details in this release. Guys, back to you. Good stuff, julia. Facebook shares down nearly 2 . Julia, if youre still there, you mentioned the daily active users, that came in at 1. 28 billion. What was the estimate you said the street was looking for . For daily active users, the street was looking for 1. 26 billion. So just a hair above expectations for daily active users, and monthly active users coming in stronger than expected also. Facebook used to report mobile active users, but now because so many of their users are mobile all this do is daily and monthly overall uses. Thank you, julia. Mike it tells you a lot if they dont have to break out mobile anymore. Thats right. This was the whole bear chase in 17. In two weeks it is the anniversary of ipo for facebook. Now mobile is basically synonymous with the business. I do think this is really much more about the field position of the stock. Reaction here going into the numbers, 142 stock two weeks ago. That last 10 or so that was tacked on was probably not because people thought the quarter would be a blow out. It was the momentum of those big tech stocks. It is not that much of a concern to sell off 1. 2 . Julia has a little more now. Julia. Yes, kelly. Quickly, to clarify that earnings number 1. 04 versus estimates of . 57. Back to you. When we see there were estimates on the street looked like 1. 12 which looked like a number, but the comparable is 87 cents. You know, it is so annoying when they report in line with accounting standards. On the top line, on the bottom line, no matter where you look, it is amazing to see a fiveyearold Company Growing like that, a public company. Remember when it was facebook. Com . I know we dont have to take this walk on memory line every time they report. Quite remarkable. 450 billion market cap or there about and key projected to be growing in terms of top line through next year. Thats a unique piece of it. Not just theyve gotten so big. Neil, is it too expensive for you . Facebook is expensive for me. Where the irony here is that facebook in after hours trading is down, and theyve created a huge profit and beat analysts expectations, yet tesla never talks about cash flow or when theyre going to earn money or whatever and their stock is up. So these are irrational trades in my opinion that at some point in time people will understand youre better off maybe paying a little bit more for a company that actually has real live earnings in cash flow. Charlie, anything you would add to that . Just on this spectrum i actually agree with that, that facebook is more real, the profits are more real. It is less of a shot in the dark, and theyre going to benefit from some of the tax law changes. So of all of the crazy valuations going on right now, facebook is less crazy. L. Lets go to square now. Has results from that company. Deidre. Hey, kelly. This is the Third Straight quarter that square, the Payments Processing company run by jack dorsey and cofound by him, the Third Straight quarter beat expectations. Earnings per share, a loss narrower than the street was expecting, a loss of 4 cents versus 8 cent. Revenue bigger than expected, up 22 year over year. 451 million was expected. Also remember that you have to look after the payments company, gross payment volume, that came in line with estimates at 13. 6 billion. Also just want to mention a full year adjusted eps guidance was raised to 15 to 20 cents. That is higher than 15 to 19 cents previously. Q2 guidance however, a little bigger loss in terms of eps than was expected, but share square shares, excuse me, in after hours up more than 5 . The company has been going from strength to strength and investors have been optimistic about the Growth Prospect as it continues to diversify revenue stream. There are some questions whether this kind of growth can continue. Kelly, back to you. Yeah. Up 5 . Try saying square shares five times. The company is up 5 after hours. A strong little sub sector. Paypal has been at a new high. It seems people are not paying for, you know, here and now earnings. It is all about being in the right place in terms of broad changes. I will say First Quarter is the strongest of the four for square, some seasonality there. Speaking of a note, make a grade valuation. No, but it is interesting, here theyre continuing to report a loss but the idea is theyre able to kind of leverage what they already have by getting more, you know, stations across the country but also, of course, by doing lending and different times of things, doing Small Business services, which is a big part of the story. It is almost like you pick i know this is the market but, you know, one quarter the street hates that story and thinks theyre going nowhere, and threequarters later theyre up another 5 . I think the whole idea of becoming more deeply embedded with the customers is there. We also are assuming this space will be consolidated up at some point down the road. It is not an immediate part of the story, but paypal and all of the rest along with square has potential to be. Kwee have to go. Neil, were you trying to Say Something . I wanted to make sure you got it in before we go . No, i wasnt going to say anything but thanks for asking me. Yeah, no. Hey, well give you the chance since you have the soap box. Anything you would add on square or any of the other earnings that can have come out so far before we leave you . I think square or paypal if you look at the business lane, what happens, i mean it is the anticipation of higher Interest Rates into the future and the amount of money they will earn off the taxes before they have to release them to the states and the feds. I think thats pretty much the story behind it. Square isnt that much over valued from where we stand. It is about four times on a price to sales basis. But we cut it off at 1. 5, not clearly anything like some of the other companies out there. Which shall remain nameless. Gentlemen, thank you both. Thanks for having me. Thank you. And theres more earnings yet to come. You also are looking at a live shot of the floor of the house where lawmakers passed a funding bill to avert a government shut down. Were going to take a quick break here. Shares of tesla modestly higher, facebook lower after reporting their earnings. Up next, we have analysts ready to react to both results and whether you should buy or sell the stocks right now. And is the market starting to ignore what President Trump has to say about tax and healthcare reform. Critic and trump supporter jim grant weighs in, still to come on closing bell. You are watching cnbc, first in business worldwide. Ge, hard work and a plan. At baird, we approach your Wealth Management strategy the same way to create a Financial Plan built to last from generation to generation. Well listen. Well talk. Well plan. Baird. Wont replace the full value of your totaled new car. The guy says you picked the wrong insurance plan. No, i picked the wrong insurance company. With Liberty Mutual new car replacement™, you wont have to worry about replacing your car because youll get the full value back including depreciation. Switch and you could save 509 on auto insurance. Call for a free quote today. Liberty stands with you™. Liberty mutual insurance. Lets[ whimpers ] dog. Find pingpong. Okay, lets go. Find your awesome with the xfinity x1 voice remote. Thats amazing i am totally blind. And for years ive struggled with non24, a circadian rhythm disorder that can turn my sleep cycles upside down. It kept me from doing the things i truly love to do. Sometimes id show up early; sometimes i was too late. And sometimes, even though i was there. I didnt really feel. There. Talk to your doctor, and call 8442342424 to learn more. Ma welcome back. We promised more earnings. Mere they are. Aigs results with dom anyone chu with the numbers. Kelly, we have stock up 2 , 454,000 shares after hours volume, this after aig reports earnings that come in at 1. 36 per share on adjusted basis, beating the average analyst estimate of 1. 08. We are combing through here right now. It is not entirely clear at first blush what the revenues or Sales Numbers here. We are looking through that. It is an earnings beat right now. We have the stock reacting fairly positive to the idea they added 2. 5 billion to share purchase program. If you add it to the authority they had before, it brings the total repurchase authorization around 3. 8 billion total. Shares up on that bit of news. We are talking about a stock in aig that has fallen by 5 oar 6 over the course of this yeartodate period, up 10 over the past 12 months. An underperformer relative to other parts of the market, especially financials in terms of the insurance side. We will key an eye and see whether the shares move any more on this particular release. Worth noting, kelly, this Conference Call for aig does not happen until tomorrow morning at 9 00 a. M. Dont expect headlines this afternoon. Back to you. Yes, dom. Thank you. I spoke with the cfo who said it shes theyre making what they have to make. Leading to decline in the stock, the ouster of the ceo. Shares up 2 after hours and im sure investors will look at the core roe 2. Double digit number. Interesting to see what difference a quarter can make for aig. We have an Earnings Report on kraft heinz to get to. We have a miss for kraft heinz on the bottom and top line. Quickly through the eps. 84 cents adjusted lower than what analysts expected and pencilled in. This owes to organic net sales decreasing, falling 2. 7 , more than analysts expect. The ceo himself has now admitted to a slow start to the year for kraft heinz. First report card since they pulled that 143 billion acquisition bid for unilever. Particularly move to Cheesecake Factory. Also missing on the top and the bottom line. This is first miss for Cheesecake Factory in eight report cards. Comps, same store sales less than expect. Back to you. Wow. Even cheesecake suffering this sort of restaurant recession, whatever we want to call it. Interesting. Down 4. 5 , theirs after hours. Facebook reporting First Quarter earnings. Lets check in on how the stock is trading after hours. It is barely higher right now. It was weaker at first. Lets bring in fan seen line, kevin landis and james chutnuck with us. Lets begin with you, james, because you are more cautious. Maybe more cautious is about the best we can do here. Why when it comes to facebook . I mean look, the quarter was good, theyre growing and you cant ignore it if you are an advertiser, but you have to think about a couple of things. First of the matter is where are the incremental drivers going to come from . We already know it is priced in that ad is going to slow. But were seeing nothing out of the fact they will be expanding inventory much more aggressively on adjacent portfolios like messenger, and instagram is starting to peak. Those are the questions. On top of that theres a lot of issues around the live video, the fake news. How will you combat that . What are the implications of engagement . As you have growth on adjacent portfolio apps, is there a question of cannibalization on facebook core. So there areness questions that i think need to be answered because the issue is the expectations are the greatest, delta between the written consensus estimates. Theres a mismatch there. Fran see, that doesnt have you more cautious in this environment. What about an ad spending slow down our guest in the last hour spoke of . I think as we see ad dollars will continue to come in, especially as tv advertisement dollars switch from a more traditional media into something more effective like facebook. I think it will still continue. I think instagram is a great story of how advertisers are starting to be able to, you know, get more users and more engagement. When we look at, you know, the potential of these factors and whats app, think it is a great story thinking about facebook over the next five to ten years. Kevin, i guess the question when it comes to a stock like this, which is seen as just being perfectly positioned to benefit from some of these very longrunning trends is when do people get too certain that it is only up from here . Basically this last little acceleration in the stock up into, you know, the 150s maybe has people wondering if it just has been carried along with the rest of the momentum. Is there a gut kmk along the way or do you think basically the fundamentals will under pin this for a while . You know, i guess there are two harbingers of a top i suppose if you were going to try to find one, assuming there is one. One might be that theres just exhaustion and all i hate with that happens. Theres no time to get it back. Kevin well get back at another point to talk about this. Kevin landis, francine, chuck. Move to tesla. Joining us to discuss those are drew cuts and mark spiel el. Great to have you back. You take the bullets for being the bear on this company, and theyre short really. But what in this particular quarter would you say youre most focused on when it comes to your feelings about this company . Well, it doesnt change any of my feelings. Nine quarter is a disaster. This company had an operating loss of 257 million, selling luxury, expensive electric cars with zero competition. It cost them around 80,000 ballpark to build each of those cars and they have no competition. Within a year there will be four competitors in that segment who will just destroy them. Mercedes, audi, porsche, and those cars will be sold subsidized. To get to the point because theyre focusing on model three, it is costing 80,000 to build the cars with asp of 106, how are they going to make a profitable model three with an asp of 43,000 . The battery will be maybe 15 kilowatt hours. That only saves them 3,000 on the battery. Steel instead of aluminum, a few hundred dollars. No way for that car to be profitable. Lets bring you in here. How would you respond to the prospect of making it profitable and to ramp up guidance. Are better than most of the rest of the industry. Looking at current profitability or napkin map on profitability hasnt been instructive to determine what the market share shifts are going to be. Disruptive stocks only come in one flavor, and that is expensive. The key is determining how big the disruption is. I think amazon and retail in computing, netflix in media are instructive. Those were incredibly expensive stocks for a long time, a few stems beyond tesla in maturation, but transportation is a big opportunity and moving faster than anybody else. We have to keep moving, guys. Thank you. Im sorry to cut this off so quickly, but this wont be the last time we talk about tesla. I appreciate your time. Drew cupps and mark speegel there. We will keep an eye on the shares. Again, much more ahead on facebook earnings. Julia boorstin, just spoke to Cheryl Sandberg who will join us next. Also uber and google having a courtroom showdown over selfdriving car technology. We will get you details on the contentious case coming up. And, when were not in those rooms, we want our shows to go with us. Anywhere . You got that right, kid show thing. Get a directv allincluded package for 4 rooms. Only 25 a month, price guaranteed for 2 years. Available for at t unlimited plus customers. Welcome back. The dow the only major average to close positive today. Meanwhile, after hours in earnings, interesting results. You should see the notes. We have a Dozen Companies that reported. Facebook, tesla, mike, have been the big ones, we briefly mentioned aig. Fitbit was up big after hours, not that that one is all that vital, shall we say, to how people trade the markets tomorrow. Square did pretty well. What do you make of kraft heinz and Cheesecake Factory down . Kraft heinz reminding everybody of the conundrum these companies are in which is weak organic growth and what can they do on the operating basis to make the bottom line feel better. That probably will be the conversation. Cheesecake, that stock was roaring, way up. Theres a lot of air under it, and i think thats why any little disappointment, down 5 . There we go. Apple ceo tim cook sitting down exclusively with our jim cook on the heels of yesterdays Earnings Report. Here is what he told jim about the business. For this year we think we can become a fortune 100 Company Without adding something new. So it is looking at our existing services. We also said were going to double the services business. Our objective is to double by 2020. You know, that projection is the sum of new services and existing services. Weve got jim here now with more reaction. I guess still a preview, jim. Thanks for letting us play so much before you deliver the goodies later. I think that theres tons. Theres a lot of things we havent talked about including some news. But i would go into this, kelly. This answer was in response to a question i had which said, listen, why dont you use some of this cash to expand in Service Stream that wall street likes so much. This is the razor blade that goes with the razor and the phone, and he did leave open that possibility. At the same time i was pressing him over and over again to make sure that people understood that he understood if they wanted a higher price earnings multiple they have to have more of a recurring revenue stream that goes with 150 million subscribers they have. We were talking to people about this services business, jim, we just played that sound bite from where he said he wants to double it. But the bear case on this is, okay, if they stop selling so many phones Going Forward it is going to Hurt Services too, right . Can apple be a Services Company outside of the iphone . No, look, you need to see the ecosystem constantly growing, which includes the mack and tablet. I know theyre footnotes, after thoughts, but i think it is wrong. Whenever you build an ecosystem, any time someone buys an apple product theres a possibility they will take it. We are in front of the iphone 8, which will you hear tim cook say caused a bit of a pause because there was more chatter about it than other iterations. I belt china after speaking to them and i felt better about the Service Stream. I think people that watch this talk will recognize theres more to it than if they do 51 million phones or 52 million phones or 50 million phones. It happened before the news that qualcomm perhaps will try to stop them importing. I say good luck to qualcomm, probably not going to happen. I think theres a lot of news in our interview. Thats a good point about the qualcomm suit. Theyre trying to keep them i dont need the details, dont need to go into it, but qualcomm has been throwing everything at everybody. While theyre taking all of the hits themselves, right . Maybe we can just expect this is part of the battle these companies are waging with the stakes being so high. Separately with the Samsung Galaxy phone, jim, do you think it has a real possibility of kind of stealing a bead on apple here . I asked pointblank about that. Matter of fact, i made sure it was my last question and i think people will think they will be very surprised at the answer because the answer is basically, are you kidding. I mean it is just not happening. I just think that, by the way, the most important part i got was about what apple is going to do with jobs. What apples position is both in the nation and the world, because we do break some news there that i want to be able to save for mad money because ive given away some of the nuggets, but there was a ton. It is the longest interview we have ever done for mad money. These are good teases. Your posture was excellent. His im not so sure about, but anyway it was a lovely interview. Thanks for joining us. Hes lost 30 pounds, kelly, through the i watch. Thats not the news im going to break but i thought it was pretty stellar issue that he brought up. It is not like Weight Watchers where people buy when oprah loses weight. Never mind. True. Jim, look forward to it. Thank you so much. Appreciate it. Great to have you back. Thank you. Best wishes. Thank you, sir. Jim will have more of tim cook on mad money at 6 00 p. M. Eastern. Longest interview tim cook has given, so dont miss it. Up next, facebook ceo Cheryl Sandberg spoke with our Julia Boorstin. Find out what she has to is a about earnings. Jim grant is here to tell us whether investors and the market are starting to tune out President Trumps statements about taxes and jobs. Stay with us. N welcome back. Facebook shares are down about 1. 5 . They just beat wall streets earnings estimates and julia boor system spoke to coo Sheryl Sandberg. She joins us with highlights. Thats right. I got off the phone with Sheryl Sandberg and she explained what drove the companys better than expected earnings in the quarter. Take a listen. The business is making the shift to mobile. Businesses know they need to reach the current and future customers where the customers are and thats on mobile. Facebook and instagram are the two largest mobile advertising platforms that there are. Were experiencing strong growth in users and experiencing strong groelgt in advertising. I think those two go together. I asked her about concerns that facebooks Revenue Growth will slow in second half of the year. She satisfied theyre constantly monitoring ad low. She said theyre making progress with instagram ads and see potential for ads within messenger. I asked her about the decision to hire 3,000 more employees to monitor videos, this on the heels of uproar over a murder video streamed on the platform. I asked if she was doing this because advertisers were starting to jump ship. Were in constant conversation with advertisers but we have not seen a revenue impact from this yet, so thats not why we did this. We did this because, as mark said in his post, theres no place for this kind of content on facebook. And we are going to take every step we can, and that includes hiring more people in big numbers as you saw, but also building better tools to keep our community safe. As for facebooks mismeasurement issues last year, sandberg says theyre always working on this issue and now theyre particularly focused on working with third parties for measurement. Back to you, kelly. Thanks for bringing that to us, julia. Our Julia Boorstin, just having spoke with facebooks coo. The future of ubers Autonomous Program may be in jeopardy. We will tell you why coming up. First jim grant much grants Interest Rate observer. He isnt a believer in selfdriving vehicles. Why he thinks there wont be anna ton must revolution next. At the right moment. And when you filter out the noise, its easy to turn your vision into action. Its your trade. E trade. Zbll has the latest for us. Deidre. Hey, kellie. The hearing has been under way for hours now and still no decision. A judge is trying to decide whether to grant the demand to halt ubers walk in selfdriving cars. Guys, that doesnt mean there hasnt been plenty of drama. Let me run you through briefly a timeline of the case involving two of the biggest players in autonomous driving, and the guy at the center is anthony lebodowski. Until last week he headed up ubers autonomous driving unit. One of the things to come out this morning in court was the revelation he received 250 million in uber stock that vested one day after he left waymo. That was months before uber acquired his company. Uber said it was willing to stae makes it to trial. If the judge does issue the injunction which could limit ubers selfdriving work until the trial now set to the trial. And he has called the driverless car exist earn and it could have huge implications for the Growth Strategy and the 70 billion valuation. Thank you. For more on Driverless Cars and potential troubles in the road to automation lets bring in grant here at post 9. You had something to say about this and the latest grants. I didnt know i was an expert on autonomous field and my expertise comes from a risk theorist named john adams who is a Professor Emeritus and the professor points out that everything is great about autonomous driving and vehicles except for the people ud let us say which people . Let us say that youre a cyclist and you are tooling down the road and theres an Autonomous Vehicle behind you. If that was not autonomous and a peopledriven car you know full well that the engineers wherever they are are going defer to you as a human being because the first time that there is a murderous episode with the cyclist so you think people will start bicycling in lanes of traffic. They will bicycle where they want to and pedestrians will take over the road which they relinquished 100 years ago. I love this being a new york pedestrian. A deferential paralysis. Is that only true in urban areas and exactly where uber needs to have it . Theres no way to say well make fifth avenue for Autonomous Cars . There will be some adaptation, im sure, and there will be a revelation that tomorrow well see no. The reader of grants said that about a hundred years ago i was covering deluxe check printing and he said, he was bullish on it and Time Magazine runs a cover story that says the death of a check in the 1970 or something and he said notice that were still writing checks and that the people had something to do with this revolution and they chose not to go to it. So does that mean if i put the investors punctuation mark on this not necessarily, but i think the time line for full implementation and i grew up in the era of the saturday evening post and i remember so well the pictures and renderings to be sure of an imaginative artist of a family driving down the hallway except the parents were in swivel seats and turning backward with children and they were playing monopoly as the car was going 100 miles an hour and that was in 1953. And well leave this in the realm of the flying car and thats all of the time we have for this segment and im fine with that and its been illustrative on its own. Come back any time. Well, like, tomorrow . Tomorrow, the next day and the one after and well press you on some of the other things. Jim, thank you for being here. Jim grant of grant Interest Rate observer. Amazon making an interesting move with the web services division. Well have those details right after this. Oh yeah. No. At cognizant, were helping todays leading manufacturers make things that think and do automatically. Imagine that, a world of new Digital Products and services all working together for you. Can i borrow the car when its back . Get ready, because were helping leading Companies Lead with digital. So what else is new . Humm. Shes doing good. She needs more care though. She wants to stay in her house. I dont know even where to start with that. First, lets take a look at your Financial Plan and see what we can do. Ok, so weve got. Well listen. Well talk. Well plan. Baird. Take a look at shares is of amazon which are down slightly after hours, about a quarter of a percent there, but the Company Announced its cutting prices for its Amazon Web Services in some regions and offering a me up front Payment Option for threeyear terms. Its a 61st time amazon has cut prices. Its a highly competitive space and perhaps thats why investors are taking it this way. The shares are down fractionally on this news after hours. Facebooks Conference Call is going to begin in just a couple of minutes and teslas kicks off at 5 30 p. M. Eastern. Well tell you what to look for right after this. We, the entertainmentloving people, want all our rooms to be tv rooms. Because those are the best rooms. Because they have tvs in them. And, when were not in those rooms, we want our shows to go with us. Anywhere . You got that right, kid show thing. Get a directv allincluded package for 4 rooms. Only 25 a month, price guaranteed for 2 years. Available for at t unlimited plus customers. Im dr. Kelsey mcneely and some day you might be calling me an energy farmer. Energy lives here. Kevin, meet yourkeviner. Kevin Kevin Kevin Kevin Kevin Kevin Kevin kevin kevin trusted advice for life. Kevin, hows your mom . Life well planned. See what a Raymond James Financial Advisor can do for you. Welcome back. Lets get another check on the names moving on earnings, facebook and tesla, chiefly. We have Conference Calls coming up for the two companies. Facebooks mike begins in a couple of minutes and tesla begins and it will move around a lot. Its such a battleground stocks and youll have capital raises down the road and just how they can handle the debt load they have. Solar city and how it gets integrated and can they really believe the production numbers . Clarifying the 5k and 10k figure. What it includes and doesnt include. Facebook . Are costs going to have to ramp up . Head count will continue to go up and thats the longer term story about margins and not about this quarter. Listen for that as well. That does it for closing bell. Lets go to fast money. Fast money starts right now live from the nasdaq marketsite overlooking times square. Pete najarian, tim seymour and guy adami. Is the apocalypse already here . A top analyst took down media stocks on a cutting that shocked the street and hell be here on why its only going to get worse. Jim cramer will be here to talk about the most important thing apples ceo tim cook just told him. When we started off with the two big names that just reported earnings and facebook crushing expectations, but the stock is down a