What is the distance between an inflationary narrative and something similar to goldilocks . That will be the key question. What is the difference in terms of how big the change has to be in the number for people to either be talking about gloom and doom or everything is perfect . Annmarie he said stagflation risk off. If it is north or at 225, goldilocks back on. Jonathan he does not detain stagflation. Looking at apple. Up i almost 6 . Sales declined less than fearful. Lets talk about the financial. The biggest stock buyback ever. 110 billion. The top five biggest buybacks in the history, it is apple, apple, apple, apple, apple. Lisa is this a growth stock or value stock . Is this a stock that has so much money and a company that has so much money the best thing you can do that is give it back . That will be a key question of how you value some of these names that have become more established in their upstart beginning. Annmarie it is a massive buyback but it is only 4 of total Market Capital of apple. Richard windsor calls it fat whittle age versus fighting for survival. Basically what this report shows, they are stabilizing and there is no growth. Jonathan is that what just happened . Just to clarify. Morgan stanley, going to get in trouble here, alleviated concerns about china, notable improvement in china jp morgan better than feared launchpad into the ai upgrade cycle. This is what its about. What today and bill in september . Is that going to be the character over at the stop for the next six months . Lisa how much earning season as this been a measure of how much was baked into the stock price rather than what they delivered . They did not deliver any kind of gain. They expect a sales gain but you dont necessarily see this potential for gangbusters growth in china. The most competitive market in the world talking about how they are going to have to try to compete. It is an interesting moment in terms of a redefinition of a company that used to be absolutely skies away fighting for your life. Jonathan chinas a bit of a mystery. We will talk about that in a moment with our guest. S p is positive. These scores look like this going into payroll coming up on the program, Chris Verrone. Pierre ferragu on apples recordbreaking buyback plan. In sarah house with the payrolls report on deck. We begin with our big story, Chris Verrone saying this. At a minimum, be more discriminating as to what you own here and use any overstock rallies to reduce exposure to clear laggards as that listed starting to grow even longer. Chris is with us. Good morning. Before we get to payrolls, what can we take away from apple this morning . Where the stock opens today will be a big level. He broke it broke early this year and clearly will bounce there and open about 185 this morning. I would probably be more inclined to be a seller on that move or at least take some chips off the table. This was not a good trend going into these numbers. We are skeptical things rally and downtrends and apple fits that description. I would put microsoft in that camp to be fair. This is a stock people talk about as a leader. Microsoft has not made relevant since november. That is the fact. It made sixmonth lows versus the s p. There is a subtle shift change that has been with us the last couple of months. I think it has become moreover in recent weeks. Tech stocks are oversold. What you do on dowsers . I think you what to reduce your exposure. Jonathan equal weight versus theqs . That is starting to flash on my post of the narrative has been a lot of these tech earnings with google, microsoft. Anything versus qqq, you are starting to see would people would least expect it is correct face, start shifting subtly. If you look at equally weighted tech, that broke about a 15 month relative performance of trend over the last few weeks. I want to be aware of that. This is not an outright call to be a seller of tech but to be more discriminatory. This was easy in tech in the last year and a half. Lisa i was they can, how does this make sense given people expect rates to remain higher for longer . From a theoretical point of view , how does this make sense . I might politely disagree on the higher for longer here. You get such a clue to where the consensus is with the emails you get every day, what is talked about on financial media. Lisa us. I just heard stagflation. Things have quietly stalled out. Coming into this week, look very overbought. I think you have to see subtle clues the turn utilities. It is always a message when you have utilities moving with bond yields higher. I have seen that a few times in our career. It is generally meant the move is closer to ending them beginning. I think the strike throughout the correction, one that appreciated things in this entire last five weeks, exit active rate. If yields were going to get away from us, is that what we would expect . Started to see faltering the relative performance of tech. I at least want to be open to the idea were close to the end of the move in yields than the beginning. I almost like a pariah suggesting that. Lisa i am trying to understand how this narrative has shifted. Last year it was rate hikes are going to disproportionally affect tech, that the higher the rates go the worse for tech. If rates go down, that would give a boost to tech because evaluations and where they are at. Now it is the opposite . I am skeptical of what narratives change to fit the price action. I think you have seen it with that respect on how yields respond with tech. Where ive seen it recently is this idea utilities are improving because they are in ai. That is silly. Youve heard, utilities because the power demands, that sounds like narrative creep. Maybe own them because there is a counter that seems to be more sense. When you start to get pockets of narrative creep, i think the rate tech one is one of those and maybe utility ai stories another. If you want ai, own ai. Lisa i can keep going with narrative creep and you can keep shutting me down. If the that is what to be cutting rates, it is in the face of weakness. Today is a great example. It would get a number in the jobsite comes in substantially lower than expected, this makes rate cuts more likely on the table but why would you would to broaden out into more exposed stocks if that means a consumer is weakening . I think the markets perception of whether the economy or consumer is we getting for strengthening, i will take that opinion over mine any day of the week. I want to look at things like industrials versus utility or to really get an understanding of the market, economy, consumer to be weakening. We have seen modest softness over the last five or six weeks. In the context of the uptrend. This begs a broader point, do i really want the entire call to pichai whether payrolls are when 25, 175, or 250 today . At the end of the day, we went into this correct but we went into this correct face and midtolate march fully confirmed bull market. I think you have to give markets the benefit of the doubt. Irrespective of what the data looks like over the next 5, 6, 7, 8 weeks. We had oversold the last couple of weeks and i think theres been changes to sentiment. This obsession was stagflation and weaker growth has served to chip away at probably some of the bull sentiment that was out there. Jonathan we will go to equities and then bonds and i will turn to foreignexchange. It is 7 00 p. M. In tokyo. What are we looking from japan . The foreignexchange . What a move in yen. Career type move in yen this week. We have found the limit. We are at 153 and change this morning. In the spirit of what puts a top on yields, puts a cap on yields, that is another thing. Dollaryen has been so closely correlated to bond yields. The fact your seeing some type of a ship. In the face of record yen shorts , they better watch their back. Jonathan we had 160 on monday. To be at 153 is remarkable. Im trying to work at the big issue for a lot of people, the end of u. S. Exceptionalism and beginning of convergence, the end of divergence and the beginning of people starting to pile into that trade. Too soon to get excited . I thought Something Interesting happened last two weeks on that score. The ftse 100 u. K. Come index with no tech, only 1 is tech. Jonathan guy johnson because it jurassic park. New alltime high. First to come out of this new correction and no tech. Interesting clue. Look what is breaking up in china, all of these basic resource stocks. That is a clue. I think there are little hints. It is a market that goes like it has one foot in old regime and one put in new regime and youre in a nasty bloody war to see who wins the heart and soul of this market. I am leaning more toward the stuff in the ground, the real stuff, basic resources, parts of the market that dont necessarily rely on tech to put value higher. Lisa do you think it is peak u. S. Exceptionalism or the rest of the world is building up to the United States . I will let far more intelligent people answer that. I will say the i think the idea the dollar is strong this year is a misconception. I know dxy is up but up against what . It is down meaningfully against gold. These have not been new real highs in u. S. Equities this year. These have been nominal highs in u. S. Equities. If you look at s p versus gold, that is not come close to taking out the 2021 highs. That is not bearish or bullish. I want to be a little bit careful how we talk about dollar. I know looking at the chart when you say it is up this year people are bullish, i would be careful with that. Jonathan i am looking at g10 on the bloomberg terminal. It is against every single currency in g10, the dollar is stronger but we should measure it against gold . I think when we are talking about fiat, it is who is slightly less bad than the other. I think when we are talking about stuff moving copper and gold, hard assets over financial assets, that is how i would approach currency. Jonathan interesting. Chris, good to hear from you. Chris verrone of strategic. Lets get you up to speed. Lets get a check on expedia and the premarket session, falling nearly 11 . Bookings in the First Quarter missed estimates and cut Sales Forecast for the year. Yet another postpandemic darling showing a slowdown in consumers willingness in the u. S. To pay have been travel. Booking, said reservations would slow, airbnb for its part had said it would be hard to match the 2023 season. Amgen shares for their part are surging in the premarket, almost 14 thanks to their push into obesity drugs. The ceo said he was very encouraged by a trial of a very experimental drug. If approved, patients would use a handheld autoinjector just once a month or even less frequent single injections compared to others that you have to take once a month and that potential competition has sent shares down more than 4. 5 this morning. The second boeing whistleblower has died also a former quality auditor boeing supplier Spirit Aerosystems who raise concerns about the safety of the 737 max jet died two weeks after developing breathing problems according to the seattle times. In march, another whistleblower reportedly died from a selfinflicted wound. That is your bloomberg brief. Jonathan thank you. Ive next, recordbreaking buyback. Theres going to be a lot apple is going to throw. I think potentially higher price points that part of that buyback was increase. Jonathan a conversation of next. Good morning. Creates a logo, website, even social posts. In minutes how . A. I. impressed ay i like it who wants to come see the future . get your Business Online in minutes with godaddy airo its basically tennis for babies, but for adults. It should be called wiffle tennis. Pickle yeah, aw whoo these guys are intense. We got nothing to worry about. With e trade from Morgan Stanley, were ready for whatever gets served up. Dude, you gotta work on your trash talk. Id rather work on saving for retirement. Or college, since you like to get schooled. Thats a pretty good burn, right . Got him. Good game. Thanks for coming to our clinic, first ones free. Jonathan equity futures positive on the s p 500. The jobs report is just around the corner. 240 is the estimate in our survey. Yields are a bit lower. 4. 5671. A recordbreaking buyback. There is going to be a lot apple is going to throw out there. I think that is why there excited. I think potentially higher price points. Again, driving live on the cash flow potential going into calendar 2025 and one that buyback was increased. Jonathan the latest come apple shares rising. Second Quarter Results surprising to the upside things to better than expected sales in china. Forecasting return to growth in announcing a record 110 billion Share Buyback plan come the largest in u. S. History. A neutral rating and 175 price target on shares of avril and joins us now for more, pierre ferragu. I want to go to sales. Do you the sales declines are behind us . Yes. I think policy enriching stabilization. It doesnt look what were going to see a major correction. I would say yes, the big line behind us. Were not going to have a significant change from where we are today. Jonathan jp morgan are talking about a launchpad into the ai upgrade cycle. How much of a launchpad do you see in september . I would be very careful about that. If you look at what people tell me, it doesnt look like it will be a cycle where generative ai is a revolution in terms of hardware. I think it is a revolution in terms of features. I have heard this argument asking moore whether we could get into a nice cycle. I think it is too early to say and it wouldnt be prudent generative ai, how you get that into an iphone and create the well factor that really gets people willing to accelerate, we need to be convinced of what it would look like. Jonathan we are not convinced what is going on in china, either. There seems to be a disconnect between what is happening on the ground from the company and what independent researchers are seeing as well. What explains that distance between the company and independent researchers . It is very surprising. It is a major surprise. I thought we were clearly expecting to create a much lower point in china. Unfortunately, i dont have an one nation for you. It is something i will have to the next several days. How the disconnect could be explained. What we see is some chinese players coming back into the market, coming to the higher end of the market putting at risk the 20 Million Units out of lack of competition in china. Did well in early weeks but did not convince consumers. That would be one explanation but we need more research. As i said, very significant surprise. Lisa tim cook saying that reality is different from what you may read at times about what we see in china. This raises the question of how much apple needs to address xi jinping diplomacy and what the line is from authorities in terms of discouraging or encouraging people or allowing them to buy iphones Going Forward in the region or whether it even matters. In other words, how much you have how much you have to have clarity to have faith in the stock . Normalizing a couple of shares the positive aspect, it doesnt create that much of a Downside Risk. I think the iphone is mostly like a standpoint. The only thing that can really create a surprise for me on the iphone is a significant cycle. And of course if that happens, it would have to be related to china the new features the company is working on. That is where we stand. Not much happens on the iphone front into we cd the cycle. My point is talking about september is too early. Lisa is this a growth stock or buyback basically afford and it is still a compounding struck. If you add up the kind of Pricing Power of the franchise, which means prices can go into low Single Digits every year, Growth Potential in services and excellent to very good buybacks come it is still compound earnings in mid to high Single Digits. That is a good compounder. It is trading at 50 premium at the s p name that had the same kind of gross potential outlook. It is an expensive compounder i would say. That is why we are very neutral. We dont see major issues where expectations are, it is just that compounds. Annmarie services was a relative bright spot for apple but they are dealing with a lot of regulation around the world. Is there a ceiling on how much they could bring in from services . The ceiling is the right way to think about it more than Downside Risk. What you see the last two or three years, regulatory pressure. Basically, like, now the risk of the major plan down feels very odd. In the low teens with reviews from google. The stock continuing to grow even as the tech rate is coming down. The volume going up. All these things are nice, healthy, i would say love teen scores low teen scores. That growth is still very high quality. Jonathan you are one of the best. Neutral on the stock, 175 price target. In the premarket we trade at 183 and posited by close to 6 . Coming up next, trade is moving up. Theirry wizman joins us next to discuss on this payrolls friday. Jonathan town on the we come up on the session. S p 500 is positive. Nasdaq is positive. In the bond market, quite a turnaround this week. Five consecutive weeks, yields have been climbing on a tenure maturity. Lisa, we are about to snap that street. Lisa fed chair powell had a very big opening to come out and out hawk himself, talk about how they cannot take anything off the table. They dont want to get this wrong. He basically said, you know what . The next move is probably going to be a cut but we got this as we heard bill dudley say. The stock market is betting the fed is going to cut rates much more quickly and the bond market is and i think that is jonathan the number one thing you will hear this morning around the payrolls report is going to be the phrase asymmetric risk, conversation weve had on this program the last couple of days following those comments from chairman powell in the News Conference. I limited time to go to this for you. Sudden weakness and implement could push for the fed to cut rates and would be less responsive to more upside to prices. The markets reaction function should mirror the feds asymmetric policy reaction leaving assets more responsive to weaker than expected data than to an upside surprise. Lisa upside surprise, no hike because they took it off the table. Downside surprise, cuts. They want to cut rates and that will give a boost to stocks, period, the end. Jonathan can spike off that number. We can get a different view in a moment maybe. I want to talk about dollaryen. What a turnaround. Ha